Order book

The order book of an exchangeGlossaryExchange (crypto exchange)A trading platform where buyers and sellers trade bitcoin with each other via an order book. The price results from supply and demand; fees usually follow the maker-taker model.On the learning path: Stage 4 · Step 1 – Ways to get Bitcoin →In the glossary →× collects all limit ordersGlossaryLimit orderA buy or sell order with a price limit: it is only executed at your price or better. That secures the price, but not the execution – the market may never get there.On the learning path: Stage 4 · Step 3 – Buying Bitcoin →In the glossary →× still waiting to be executed – split into buy orders (bid) and sell orders (ask).^[1]

What an order book looks like

Heavily simplified for BTC/USD (example values, not the current price):

Side	Price per BTC	Quantity
Sell (ask)	$80,020	0.15 BTC
Sell (ask)	$80,010	0.05 BTC
Buy (bid)	$79,990	0.10 BTC
Buy (bid)	$79,980	0.30 BTC

The lowest ask is $80,010, the highest bid $79,990. The gap of $20 is the spreadGlossarySpread (bid-ask spread)The difference between the buy and sell price. With many apps, the spread is the real fee – it just doesn’t appear as a separate item on your statement.On the learning path: Stage 4 · Step 2 – Choosing a provider →In the glossary →×. A tight spread indicates a liquid market and low trading costs.^[2]

What happens in the order book

• Limit order: if it isn’t executed immediately, it goes into the book.^[1] Whoever fills the book this way is a maker.
• Market orderGlossaryMarket orderAn order that is executed immediately at the best available price in the order book. You get speed but no price guarantee: with large amounts, the price can differ from the last price shown.On the learning path: Stage 4 · Step 3 – Buying Bitcoin →In the glossary →×: is executed immediately at the best available price on the other side.^[1] Whoever takes orders out of the book this way is a taker – more under maker and taker feesGlossaryMaker and taker feesA fee model used by exchanges: whoever places an order in the order book and so provides liquidity (maker) usually pays less than someone who immediately accepts an existing order (taker).On the learning path: Stage 4 · Step 1 – Ways to get Bitcoin →In the glossary →×.
• Market depth: shows how much is available at each price level. If you buy 0.1 BTC with a market order in the example, you get 0.05 BTC at $80,010 and 0.05 BTC at $80,020 – an average of $80,015. The thinner the book, the more larger orders move the price.

Do you need this as a beginner?

Not necessarily: many apps (brokersGlossaryBroker (crypto broker)A provider that sells you bitcoin or buys it from you at a displayed price, instead of letting you trade in the order book yourself. The costs usually come from the spread, a fee or both.On the learning path: Stage 4 · Step 1 – Ways to get Bitcoin →In the glossary →×) don’t show an order book but quote you a price directly. The order book does explain, though, why the buy price is usually a little above the price displayed. Understanding fees shows what other costs apply.