What Are the Order Book and Order Depth?

When trading digital assets, you will frequently encounter the concepts of "Order Book" and "Order Depth." They are used to display current market orders and liquidity, serving as important references for understanding market supply-demand dynamics and price trends.

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I. What Is the Order Book?

The Order Book is a real-time list of all unfilled orders in the market. It mainly includes two types of orders:

• Bid Orders: Orders from users who want to buy an asset at a specific price.

• Ask Orders: Orders from users who want to sell an asset at a specific price.

The Order Book is continuously updated as users place, cancel, or execute orders, reflecting the current supply and demand across different price levels.

Simply put: 👉 Who wants to buy at what price, and who wants to sell at what price—all are shown in the Order Book.

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II. What Is Order Depth?

Order Depth is a cumulative summary of buy and sell orders across different price ranges, based on Order Book data. It is typically displayed as a depth chart or cumulative volume.

Order Depth helps users assess market liquidity and price stability:

• More orders within a price range usually indicate greater price stability, making sharp price swings less likely.

• Fewer orders in a price range make rapid price fluctuations more likely.

For example:

• A large number of buy orders near a certain price → often forms a price support.

• A large number of sell orders near a certain price → often forms a price resistance.

Simply put: 👉 How much volume the market can trade at different price levels—that’s Order Depth.

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III. Differences and Functions of Order Book vs. Order Depth

Order Book	Order Depth
Displays all current buy/sell orders	Reflects market liquidity & support/resistance levels
Shows order quantities at each price level	Shows cumulative buy/sell volumes across price ranges

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IV. Why Is It Important to Understand the Order Book and Order Depth?

By observing the Order Book and Order Depth, you can:

• Gauge the balance between buying and selling forces in the market.

• Assess price stability within specific ranges.

• Choose more reasonable order prices and trading timings.

• Reduce the risk of slippage caused by insufficient liquidity.

NewCoin Reminder: The Order Book and Order Depth only reflect current market conditions and do not predict future price movements. It is recommended to combine them with other market information and risk management strategies for trading.