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How an order book works

Lesson 1 of 9, beginner, about 2 minutes.

Most crypto trading happens on order books: a list of what people will pay and what they'll accept. Buyers post bids, sellers post asks, and a trade happens only when one meets the other.

Reading the ladder

The highest bid and the lowest ask form the inside of the book, and the gap between them is the spread. Orders at the same price are usually filled in the order they arrived, which is why being first in the queue is worth something to professional traders.

The ladder shows the sizes waiting at each price. Green bars are bids, red are asks, and the middle column is the price itself.

What moves the price

A price moves when an order is big enough to eat everything at the inside level, or when traders simply pull their orders. The two look identical on a price chart, and quite different on the book.

Bid sizePriceAsk size
100,0305
100,0203.1
100,0102.4
100,0001.2
1.699,990
2.199,980
499,970
3.399,960
A small example order book (made-up sizes in BTC). The best bid is 99,990 and the best ask is 100,000, so the spread is 10.

Try it on live data

Check yourself

Answer all 3 to finish the lesson.

1. What is the spread?
Show the answer

The gap between the best bid and the best ask. It's the distance between the highest price buyers offer and the lowest price sellers accept.

2. At the same price, who is usually filled first?
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Whoever arrived first. Most venues use price-time priority: at any price, the earliest order is filled first.

3. Which of these can move the price without any trade?
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Traders pulling their resting orders. If the best ask disappears, the best ask is higher. That's a price change with no trade at all.