How to read an order book
The two coloured columns on the trade screen explained in plain English, and what they tell you before you place an order.
What you need first
- A Usko account, so you can open the trade screen and follow along.
- No money at risk. You can read an order book all day without placing an order.
The order book is the list of everything people currently want to buy and sell in one market. It looks technical, but it only contains three ideas.
Step 1 — Find it on the screen
Open Trade and choose a busy market such as BTC/USDT. The order book sits beside the chart as two stacked lists of numbers, usually one tinted red and one tinted green.
Step 2 — Understand the two sides
- The bids (usually green, at the bottom) are people offering to buy. The highest bid is the most anyone will currently pay.
- The asks (usually red, at the top) are people offering to sell. The lowest ask is the cheapest anyone will currently sell at.
The two sides never overlap. The moment a buyer offers as much as a seller wants, they trade and both orders leave the book.
Step 3 — Read a single row
Each row has a price, an amount at that price, and often a running total. A row saying 0.8 at a given price means somebody is willing to trade 0.8 units there. The running total adds up everything from the middle of the book outwards.
Step 4 — Look at the spread
The gap between the highest bid and the lowest ask is the spread. A narrow spread means buyers and sellers almost agree, which usually means a busy, liquid market. A wide spread means they do not, and a market order there may cost you more than the last traded price suggests.
Step 5 — Look at the depth
Depth is how much volume is stacked up near the current price. Plenty of depth means a normal-sized order barely moves the price. Thin depth means even a modest order eats through several rows and fills at progressively worse prices — this is called slippage.
This is exactly why a limit order is useful in a thin market: it refuses to trade above the price you named.
Step 6 — Watch the trades ticker
Near the order book is a list of trades that have just happened, with a price, a size and a time. The order book shows intentions; the ticker shows reality. Comparing the two for a few minutes teaches more than any explanation.
What the order book cannot tell you
It is a snapshot of this second, not a forecast. Orders appear and vanish constantly, and a large order sitting in the book can be cancelled before anyone trades against it. Read it to understand the cost of trading right now — not to predict where the price is going.