Order Books Explained
Updated by Zino
What Is an Order Book?
An order book is a dynamic electronic list of buy and sell orders for cryptocurrencies (coins) that contains the number of coins to be traded and the price to be traded at.
To be able to use an order book, it's important to understand some key terms: buy at, sell at, price, amount and volume.
For the purposes of this explainer, we will be using the BTC/NGNT order book from the Buycoins Pro app.
Buy at vs Sell at
Orders in an order book are separated into two sides: bids (buy orders) and asks (sell orders). Buy at are the price a trader is willing to buy at and Sell at are the price a trader is willing to sell at.
Color displayed as
What it means
Buy at? (Buy Orders)
Price & quantity a trader wants to buy at
Sell at? (Sell Orders)
Price & quantity a trader wants to sell at
The order book sorts open orders by price — each unique order price gets a row, and the quantity of every order at that price is combined in its row.
Displaying open orders by price and quantity gives traders a look into the supply and demand forces of the market at every point in time. When you place a limit order, your order shows on your order book in the "Open Orders" tab and shows up on the order book row for other traders to engage with.
Price Vs Amount
On the order book, you can view the price coins are being traded at and the amount available to trade. The Market Size (Amount) shows how much BTC the trade has available for sale and the Price shows the NGNT price they wish to trade at.
The image above means that the trader who opened the buy order (buy at) would like to purchase 0.019841 BTC at 19,309,572 NGNT/BTC.
Market Orders Vs Limit Orders
A market order is an order to quickly buy or sell at the best available price on the order book. Because market orders need liquidity to be filled, they are executed based on the limit orders that were previously placed on the order book by other Buycoins Pro traders. This means that it's important to pay attention to the prices displayed on the order book before completing a Market Order.
A limit order is an order that is placed to buy or sell your coins at a specific price. The process of buying and selling is then automated by Buycoins. For example, let’s say that the current market price for DOGE is N500, but according to your analysis, you think it would be a better buy at N398.50. You can then place a limit order at N398.50 and the trade will not execute until the coins can be bought at that price or a favourable price. i.e any price below your buy order limit.
- Last price that was traded on Buycoins Pro.
- Percentage change (over 24 hours) in the selected trade pair. i.e how much the coin price has increased/ decreased against the trading pair.
- Highest Price that has been traded over the last 24 hours.
- Lowest Price that has traded over the last 24 hours.
- Total volume traded (Buy and Sell) over 24 hours.
- List of buy trades and quantities the trader(s) would like to buy.
- List of sell trades and quantities the trader(s) would like to sell.