Order Book

An order book is the real-time list of buy orders (bids) and sell orders (asks) for an asset on an exchange, organized by price level. The gap between the highest bid and the lowest ask is the spread, and the depth of orders at each price shows how much can be traded before the price moves. Reading an order book helps traders judge liquidity and likely price impact before placing an order. Centralized exchanges typically use an order-book model, while many decentralized exchanges instead use liquidity pools and automated pricing formulas.