Crypto Trading 101: How to Read an Exchange Order Book

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Summary

In the example below there is an open buy order in the amount of 20.24 at a price of $8218.50. When there is an abundance of buy orders (demand) at a specific price level, something known as a buy wall is formed. In this case, the buy wall is helping the $6,263 price level of bitcoin act as short-term support. This information is displayed on two sides of the order book known as the buy-side and sell-side. The Buy Side The buy side represents all open buy orders above the last traded price.

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It takes two to tango in the world of crypto trading, where a dynamic relationship between buyers and sellers is always on display in something called an order book.

A tool that visualizes a real-time list of outstanding orders for a particular asset, order books represent the interests of buyers and sellers, offering a window into supply and demand.

But while all order books serve the same purpose, their appearance can differ slightly among exchanges. That said, they are all built with the same features and functions.

Examples from Coinbase Pro, Binance, Bitfinex and Kraken are shown below:

To become comfortable reading order books, it is essential to understand four main concepts: bid, ask, amount and price. This information is displayed on two sides of the order book known as the buy-side and sell-side.

For the...

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