Observe Market Depth Through Order Book

Understanding the Order Book is crucial for traders who want to analyze market dynamics and make informed trading decisions. The Order Book provides a visual representation of current buy and sell orders for a particular trading pair, offering insights into market depth, liquidity, and potential price movements.

What Is an Order Book?
An Order Book is a real-time ledger that displays all buy and sell orders for a trading pair on a platform. It provides traders with critical information, including the number of assets available for purchase or sale at various price levels.

What is market depth?
Simply put: The depth of the market consists of orders, also known as order books.
Market depth indicates the state of supply and demand for an asset, it shows the amount of pending orders at different price levels. Generally, multiple orders in an order book indicate higher liquidity in the market, while fewer orders indicate lower liquidity. If the number of buy orders far exceeds the number of sell orders, this may indicate an upward trend in the price of the asset. By looking at orders, traders can get a clearer picture of market liquidity, price support and resistance points, and thus make more strategic trading decisions.

You can view the order book on the trading page, green for buy orders and red for sell orders.
The price in the center is the latest price of 1.3897 and the flags are mark prices.

Therefore, we can use the size of the order to determine how active the trading is at the moment. If the spread between the orders is small (1.3897 and 1.3896 in the chart), it is usually possible for the order to be filled at a similar price even if it is not filled at the particular price.

Since orders can be canceled at any time, the market is only one of the tools used to assist in this judgment.

Disclaimer: Cryptocurrency assets are volatile products and are high risk investments. Substantial price fluctuations may cause the value of your holdings to increase or decrease significantly at any time. Therefore, before deciding to trade, please evaluate the risks involved based on your financial strength and experience. Your actual returns and losses will depend on a number of factors including, but not limited to, market behavior, market trends and the size of your trade. None of the information provided in this post constitutes investment advice and BYDFi does not recommend that you buy, sell or hold any cryptocurrency. Please do proper research and consult your financial advisor before making any investment decision.