The order book is a list of all outstanding limit orders to buy or sell a cryptocurrency. It is divided into a bid side and an ask side. In the former, prices are sorted from highest at the top to the lowest at the bottom. In the latter, it is the other way around. Each price level contains the following on Binance (order books on other exchanges might slightly differ):
- Amount: The number of units from the order at this specific price level attempting to be traded. In other words, how many coins (e.g. BTCs) are available to be purchased or sold at this price level.
- Total: How much it would cost you to buy or how much you would receive if you sold
When traders want to buy, they look at prices on the ask-size to find out what price the sellers are willing to accept. Vice versa, when they want to sell, they look at the bid-side to see how much buyers are willing to pay. Trade is executed once a buy order finds a seller or a sell order finds a buyer.
Using the orderbook to determine entries
It is important to understand what an order book is and how its market depth chart can help you in determining entries for your trades.