What is “Order Book” meaning?

An order book is a digital record used by exchanges to display the buy and sell orders for a specific financial asset, like stocks, commodities, or cryptocurrencies. The order book shows the quantity and price of orders, helping traders see the supply and demand in the market. It is a crucial tool for understanding market depth and price movement.

Example

“By analyzing the order book, the trader saw a large sell order at $50, which indicated resistance, and decided to wait for a better entry price.”

How is “Order Book” used in business?

In business and trading, an order book is used to assess market sentiment and determine the optimal price for executing trades. Traders and investors use order book data to gauge liquidity, detect potential price movements, and identify opportunities for arbitrage or other strategies.

Pro Tip

Keep an eye on the order book’s depth and volume; large orders can indicate significant price movement or potential market manipulation.

Related Terms

Market Depth, Liquidity, Bid-Ask Spread, Trading Volume