What is an order book?

An order book is constantly updated in real-time throughout the day, which means they are dynamic and reflect the real-time intent of the market participants. There are typically four parts to an order book: buy orders, sell orders, price and size. Buy orders contain buyer information, including all bids, the amount they wish to purchase.

What are the 4 parts of an order book?

There are typically four parts to an order book: buy orders, sell orders, price and size. Buy orders contain buyer information, including all bids, the amount they wish to purchase. Sell orders contain seller information, including all offers, the amount they wish to sell.

How are buyers and Sellers represented in an order book?

Buyers’ and sellers' interests are represented via order books. An order book depicts the dynamic connection between buyers and sellers by visualizing a list of outstanding orders for a specific asset in real-time. The quantity of orders being bid on or offered at each price point, also known as market depth, is listed in an order book.

How do traders use the order book?

Traders can also use the order book to help pinpoint a stock’s potential support and resistance levels. A cluster of large buy orders at a specific price may indicate a level of support, while an abundance of sell orders at or near one price may suggest an area of resistance.