Order Book refers to an electronic record of all buy and sell orders placed for a particular security, such as a stock, commodity, or derivative contract. It is a real-time, continuously updated list that displays the quantity, price, and type of each order, helping traders and investors understand market activity and liquidity. The order book plays a crucial role in determining the supply and demand dynamics of any financial instrument.

At the top of the order book, the best bid (highest price a buyer is willing to pay) and the best ask (lowest price a seller is willing to accept) are displayed. The difference between them is known as the bid-ask spread, which indicates market liquidityónarrow spreads suggest higher liquidity, while wider spreads reflect lower liquidity or volatility. The order book is typically divided into two sides: buy orders (bids) and sell orders (asks), each arranged by price levels.

Market participants, such as retail investors, institutional traders, and market makers, use the order book to assess price trends and make informed trading decisions. For example, if there is a large concentration of buy orders at a particular price level, it may act as a support zone, whereas a large number of sell orders could indicate resistance.

Understanding the order book helps traders identify potential entry and exit points, gauge market sentiment, and anticipate short-term price movements. However, it is important to note that the order book only reflects current visible orders; some institutional traders use iceberg orders or hidden orders to conceal their full trading intent. Hence, while the order book provides valuable transparency, it should be analyzed alongside other market indicators for a complete trading strategy.