What is an Order Book?
The order book displays the limit buy orders and limit sell orders for an instrument, giving an indication of the demand and supply dynamics in the market.
The order book comprises asks and bids:
- Asks are sell orders at the highest price traders wish to sell a particular quantity of a contract.
- Bids are buy orders at the lowest price at which traders want to buy a particular quantity of a contract.
The order book is displayed in the order book panel on the Interdax trading interface (highlighted below).
Using the order book for BTC-PERP as an example, the best price you can buy at is $7616.00, which is the lowest ask on the order book (highlighted above). The best price you can sell at is $7607.00, which corresponds with the highest bid on the order book.
What is Order Book Depth?
The order book depth below shows the cumulative volume of the size of asks and bids at a given price level.
- The ‘Size’ column shows the size of the orders at each price.
- The ‘Total’ column shows the cumulative size of the orders at each price.
For the order book displayed above, the maximum number of BTC-PERP contracts you could buy immediately is 115,876 at a price of $7628.50. If you wanted to buy 116,000 contracts, then 115,876 would be bought at $7628.50 while the remaining 124 contracts would be purchased at $7632.00 (which is the next closest ask on the order book).
The maximum number of BTC-PERP contracts you could sell immediately at $7619.50 is 118,317. If you wanted to sell 120,000 contracts, then 118,317 would be sold at $7619.50 while the remaining 1,683 would be sold at $7618.00 (which is the next closest bid on the order book).
The order book depth is displayed at the top of the panel. You can adjust the layout of the order book by using the four buttons on the bottom left-hand side of the panel.
You can also change the price increment used in the order book by clicking on the '+' and '-' symbols at the bottom right-hand side of the panel.
Buy Walls and Sell Walls
Buy (or sell) walls are visible on the depth chart, which are defined as areas with an abundance of buy (or sell) orders. Buy and sell walls act as support and resistance respectively.
If a large buy order cannot be filled, then the price will not move below this level. Similarly, if there is a large number of sell orders at a particular price and there is not enough demand to fill those orders, then the price will remain below this level until these large orders are filled.
The order book, and its depth, constantly change as market conditions evolve. Many traders may not announce their intentions by placing an order on the book or they may place an order and cancel it later on.