An order book is an electronic list of buy and sell orders for Adara’s offered asset types by price level. The order book lists the number of assets being bid or offered at each price point, or market depth.
The Order Book Widget visualizes a real-time list of outstanding orders for a particular trading pair, order books represent the interests of buyers and sellers, offering a window into supply and demand. To become comfortable reading order book, it is essential to understand four main concepts: bid, ask, amount and price. This information is displayed on two sides of the order book known as the buy-side and sell-side.
Order book depth (total quantity of orders) can be used as a way to quantify the market’s intentions to buy and sell. One way traders can view order book depth, in addition to the method above, is to use a depth chart that shows the cumulative bids and asks in the current market.
Price and Amount
Although the two sides display opposing information, the concepts of amount (also referred to as size) and price are relevant to both. Simply put, the amount and price per order display the total units of the cryptocurrency looking to be traded and at what price each unit is valued.
The Buy Side
The buy side represents all open buy orders below the last traded price. This offer from the buyer is known as the “bid.” It effectively voices the trader’s interest, stating something like, “I am bidding on X units you own at a specific price in the hopes of purchasing them.”
Once the bid is matched with an appropriate sell order, the trade can be facilitated.
When there is an abundance of buy orders (demand) at a specific price level, something known as a "buy wall' is formed.
Buy walls have an effect on the price of an asset because if the large order cannot be filled, neither can buy orders at a lower bid. The price will not be able to sink any further since the orders below the wall cannot be executed until the large order is fulfilled – in turn helping the wall act as a short-term support level.
The Sell Side
Conversely, the sell side contains all open sell orders above the last traded price.
This price is known as the “ask.” It states, “I am asking someone to buy X units I own at a certain price.”
The opposite of a buy wall is formed when there is an abundance of sell orders (supply) at a specific price level, known as a sell wall. If there is a very large sell order unlikely to be filled due to lack of demand at the specified price level, then sell orders at a higher price cannot be executed – therefore making the price level of the wall a short-term resistance.