Order Book
Lista eletrônica das ordens de compra e venda em aberto para um ativo, organizada por preço, que revela a liquidez e forma o preço de mercado.
Key points
- An order book is the electronic list of all open buy and sell orders for an asset, organized by price.
- The top of each side forms the best bid and the best ask, and the distance between them is the spread.
- The amount of orders around the current price reveals liquidity depth and helps predict the impact of a large order.
What is an order book?
An order book is the real-time record of intentions to buy and sell an asset on an exchange. On one side sit the buy orders, ranked from highest to lowest price; on the other, the sell orders, from lowest to highest. It is from this meeting of supply and demand that the market price forms at every instant.
How it works
Each participant who wants to buy or sell at a specific price places a limit order, which stays in the book until it is executed or canceled. A market order, on the other hand, executes immediately against the best available offers on the opposite side. When a buy order and a sell order cross at the same price, the trade happens and both leave the book.
The depth of the book, that is, the volume of orders accumulated at each price range, determines how much a large trade moves the quote. A deep book absorbs orders without much variation; a shallow book makes the price jump between levels. That is why the book is a direct reading of the asset's liquidity.
Market makers keep orders on both sides to profit from the spread, and their presence is what makes many books deep and stable.
Why it matters
Reading the order book helps decide how to execute a trade: a market order is immediate but pays the spread and may suffer slippage; a limit order avoids that cost but may not execute. For anyone moving larger amounts, assessing depth before trading reduces surprises in the final price.
Risks and limitations
The book only shows the orders visible at the moment and can change in fractions of a second, including large orders that appear and disappear. In illiquid assets, the book is shallow and unreliable as a reference. Not every trade goes through a book: models such as automated market makers use pools instead of stacked orders.