📕 Order book 📗

An order book is a collection of the currently open orders for an asset, organized by price. An order book displays the number of orders at specific price levels.

The order book helps to make a personal strategy to get the maximum profit from trading.

The order will remain in the order book until one of the conditions is met:

🔻 Transaction closed — having reached the set price level, another bidder will buy or sell the required assets at the wilted rate.

🔻 Deal canceled — traders have the right to cancel any order at any time.

Who fills the order book:

🔹 Trading bot — automatically increases the volume of sales and purchases

🔹 Scalper — uses large orders of other traders earning small sums on small value fluctuations of assets during one day

🔹 Market maker — provides liquidity to the order book and earns on the difference of bid and ask rates

🔹 Private investor and trader — main players of the exchange

🔹 The business investor or trader — the main market engine

Disadvantages of the stock market which must be taken into account when forming a trading strategy:

• Hidden bid — the table shows only 100 units of an asset which is insufficient for assessing real liquidity
• Fictitious order — manipulations of marker-makers to change asset price, order is cancelled when investors place stops or actively buy assets
• Incorrect data

What is important to know about the order books:

🔻 The more buy and sell orders in the market the more liquid the order book is. Greater liquidity guarantees the closing of larger orders without significantly affecting the price.

🔻 Whales’ orders considerably influence the price because they siphon liquidity from the order book and create a high level of slippage.

🔻 Limit orders can cause you to lose a trading opportunity if the market does not reach the prices you have set.

🔻 Stop-market orders are safer than stop-limit ones since they guarantee the sale of assets and the closing of a position in any market condition.

🔻 Fast parsing of offers by large bids in one direction indicates a strong pressure of participants on quotations.

🔻 There is a high activity in the market during the release of important news with a high level of spreads and an abundance of private multidirectional transactions.

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