What Is an Order Book in Trading? How to Read It (Beginners)
The order book is a list of all limit orders to buy and sell an asset, sorted by price. It shows who is ready to buy and sell how much right now.
How the order book works
At the top are sell orders (ask), usually in red. At the bottom are buy orders (bid), in green. In the middle is the current price. The gap between the best prices is the spread.
| Price | Size | Side |
|---|---|---|
| 100.30 | 2.0 | Sell |
| 100.20 | 5.5 | Sell |
| 100.10 | 1.2 | Sell |
| 100.00 | 3.0 | Buy |
| 99.90 | 8.4 | Buy |
If you buy 3 units at market, you'll first take 1.2 at 100.10 and the rest at 100.20. That's how slippage happens.
What the order book tells you
- Liquidity. A dense order book means trades go through without losses.
- Large orders near round numbers — possible levels.
- Gaps — places where the price can jump through quickly.
But large orders can be pulled in a second, so the order book alone isn't enough to make a decision. How order types work is covered in limit vs. market orders and in the lesson on brokers, accounts and order types.
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- The order book is a list of limit orders by price.
- The gap between the best prices is the spread.
- Large orders can disappear, so don't trust them blindly.
Frequently asked questions
Where do I find the order book?
On any exchange next to the chart; the tab is usually called Order book.
Do market orders show up in the order book?
No. A market order is filled immediately against existing limit orders; only limit orders sit in the order book.
Do investors need the order book?
Hardly. It's useful for short-term trades and for understanding at what price a large order will fill.
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