Crypto trading can be done with ease once you master order books that display real-time information from buyers and sellers on cryptocurrency exchanges. An exchange order book might be confusing at first glance, though, but it’s mostly due to the fact that each exchange shows the information in different formats. It is important to spot the commonalities in every exchange book in order to decipher critical data.
Buy-side & sell-side
There are four main areas to note in an exchange order book: bid, ask, amount, and price. These can be found on both sides of the exchange book known as the buy-side (open orders created by buyers) and the sell-side (open orders created by sellers).
The bid
While reading the exchange order book, you’ll see the amount and price columns. They show the essential information about each order, that is, the amount of cryptocurrency that can be traded for a given price. Here, the buy-side will display what the buyer is willing to spend for each order, which is also known as the “bid.”
The ask
The sell-side must also be understood in order to read an exchange book. Here, the sell-side will display the price, or the “ask,” at which a seller is ready to offer their amount of cryptocurrency.
Effectively reading the order book can lead to more knowledgeable trading decisions. Check out more of trading tips and techniques here.