How to Read an Order Book
An order book is a live list of every unfilled buy and sell order for one trading pair, sorted by price, with buyers stacked below the current price and sellers stacked above it, and reading it tells you what your order will actually cost before you place it.
Updated · By RampAtlas Research
Key takeaways
- An order book is a live list of every unfilled buy and sell order for one trading pair, sorted by price.
- Bids sit below the current price and asks sit above it, and the gap between the best bid and the best ask is the spread.
- Depth is the quantity resting at each price, and it determines how far a large order pushes the price against you.
- A market order walks up the book filling against successive price levels, which is why a big one fills worse than a small one.
- The book only shows resting limit orders, so it describes current supply and demand rather than predicting the next price.
In this guide
An order book is a live list of every unfilled buy and sell order for one trading pair, sorted by price, with buyers stacked below the current price and sellers stacked above it, and reading it tells you what your order will actually cost before you place it.
Most beginners never see one, because the simple buy button hides it behind a single quoted price. That quote is derived from the book. Looking at the book directly is how you find out what the quote is not telling you.
The two sides
An order book has a bid side and an ask side.
Bids are offers to buy. They are sorted highest first, and the top of the list is the best bid, the most anyone is currently willing to pay. Asks are offers to sell, sorted lowest first, and the top of that list is the best ask, the least anyone is currently willing to accept.
The two lists never overlap. If a new buy order arrives priced at or above the best ask, it does not join the book. It trades immediately against the orders already there and the book shrinks by that amount. Everything resting on the book is, by definition, an order that has not yet found a counterparty.
That is the first thing the book tells you. Every row is a limit order someone placed and is waiting on. Nobody is obliged to fill it.
The spread
The gap between the best bid and the best ask is the spread. It is the single most useful number on the screen.
If the best bid is 60,000 and the best ask is 60,006, the spread is 6, or 0.01%. Buy immediately and you pay 60,006. Sell immediately and you receive 60,000. The round trip costs you the spread before any fee is charged, which is why the spread is a real cost even though it never appears as a line item.
Spreads are narrow on heavily traded pairs and wide on thin ones. A wide spread is a warning that there are few participants, that your order may sit unfilled, and that exiting will cost as much as entering. It is worth checking before you buy an asset you have not traded before, and it is the reason two exchanges quoting the same asset can charge you different amounts at identical stated fees.
Depth, and why size changes the price
Next to each price is a quantity. That is depth, and it is what separates a book that can absorb your order from one that cannot.
Suppose the ask side looks like this.
| Price | Amount | What a 0.3 unit order takes | What a 3 unit order takes |
|---|---|---|---|
| 60,006 | 0.5 units | All of it, and the order is filled | All of it |
| 60,020 | 1.2 units | Nothing | All of it |
| 60,100 | 4 units | Nothing | Part of it |
A market order for 0.3 units fills entirely at 60,006. A market order for 3 units walks up three levels, so its average fill price is well above the best ask you saw quoted.
That difference between the price you expected and the price you got is slippage, and it is caused by depth rather than by anything the exchange did. Large orders on thin books move the price against themselves. This is why the same trade costs more on a venue with less liquidity, and why comparing exchanges on headline fees alone gives the wrong answer for large purchases.
Many interfaces show cumulative depth as a chart beside the book, sometimes called a depth chart. The steeper the wall on each side, the more the market can absorb without moving.
What the numbers on screen mean
A typical book displays four columns per side.
| Column | What it shows |
|---|---|
| Price | The level |
| Amount | The quantity resting at that exact level |
| Total | The running cumulative quantity from the top of the book down, which tells you how much you can buy before reaching a given price |
| Value | On some venues, amount multiplied by price |
Rows are often grouped, or aggregated, into price increments so the display stays readable. Changing the grouping changes how the book looks without changing anything real, so compare like with like when moving between exchanges.
Recent trades usually sit next to the book. That list is history rather than intent: it shows orders that already filled, with the side that initiated each one. The book shows what is available now. The trade list shows what actually happened.
What the book cannot tell you
Three limits are worth holding onto.
The book shows one venue. Price on another exchange, or on a dex, can differ, and the depth you see is not the market's total depth. Related to that, some reported volume across the industry is wash trading rather than genuine interest, which is one reason RampAtlas scores exchanges on published, verifiable characteristics rather than on self-reported activity. Our Methodology page sets out what goes into a score.
Using it before you buy
The practical routine takes about fifteen seconds.
- Check the spread as a percentage of the price.
- Look at the cumulative total on the ask side and confirm that the size you want to buy sits comfortably inside the first few levels.
- If it does not, split the order or use a limit order and wait.
That is the entire benefit of learning to read a book as a buyer. It converts a purchase from a guess into a priced decision, and it is the reason the trading interface is usually cheaper than the buy button on the same exchange. The choice between the two order types is covered in Limit vs market orders, and the costs the book reveals are in Spread and slippage.
Where to look at one
Any exchange with a trading interface exposes a live book, and the depth on a given pair differs from venue to venue. Compare what serves your jurisdiction on Buy Bitcoin or Buy Ethereum, read the operator detail on Kraken, Coinbase, or Binance, and set two venues side by side on Compare. Asset background sits on Ethereum.
Frequently Asked Questions
What is the difference between the bid and the ask?
The bid is the highest price a buyer is currently willing to pay and the ask is the lowest price a seller is currently willing to accept. You buy at the ask and sell at the bid, so the gap between them is a cost you pay on every round trip.
Why did my order fill at a worse price than the one displayed?
Because your order was larger than the quantity resting at the best price, so it filled against successive levels further up the book. The displayed price is the top of the book, not a quote for any size.
Does a big wall of orders mean the price will not go past it?
Not reliably. Resting orders can be cancelled instantly, and some are placed to be seen rather than filled. A wall tells you what is on the book at this moment and nothing about what will be there in the next one.
Should I read the book if I am only buying a small amount?
The spread is worth a glance even on a small purchase, because on a thinly traded asset it can exceed the trading fee. Depth matters much less at small size, since a small order usually fills inside the first level.
Why do exchanges show different books for the same coin?
Each exchange has its own set of users and its own resting orders, so each has its own book. Prices stay close because traders arbitrage the differences, and depth does not, which is why large orders cost noticeably more on a smaller venue.