Foundations · Chapter 4 of 31
How does the order book work?
The live list of buy and sell orders that sets the price, and what the bid, the ask, and the spread tell you.
An order book is the live list of orders waiting to be filled. Buy orders are bids, sell orders are asks, and a trade happens when the two meet. The book is how price is actually formed.
Bid, ask, and spread
The highest bid and the lowest ask are the best available prices. The gap between them is the spread; a tight spread means a liquid, actively traded market.
Depth and slippage
Depth is how many orders sit near the current price. A thin book means a large order moves the price more, an effect called slippage.
How to read it here
Liquidity shapes how cleanly a signal plays out. A thin book can exaggerate a move that a deep one would absorb.
Now watch this signal update in real time across the market.
See it liveEducational content, not financial advice.