Understanding the basic concepts of the order book

Secrets of Professionals: How to Read the Order Book

If you open the trading platform and see flashing red and green numbers in the order book, this post is for you.

What is a order book?

The order book is a list of buy and sell orders for an asset. Bid ( buyers ) are waiting for a lower price, while Ask ( sellers ) are looking to sell at a higher price. Between these two categories is the spread - the area where actual transactions take place.

How to analyze the order book?

When analyzing the order book, pay attention to the green walls representing support levels, and the red walls forming resistance levels. Disappearing walls are particularly important as they may signal a possible price movement in the near future.

Simple Strategy for Beginners

When you see a large green wall, you can try to buy near it, setting a close stop-loss. When a large red wall appears above, it is worth considering the possibility of taking some profit. In situations where there are more buyers than sellers, a price increase of the asset is likely.

Important nuances

Large players often create false walls to mislead. True mastery is to analyze not only the numbers but also their dynamics over time.

Remember that the order book is a powerful market analysis tool, but it requires practice and experience for effective use.