What is an order book and how does it work?

Trading starts with data, or more simply: information. An order book is where that information lives. It shows all the buy and sell orders for a specific cryptocurrency in real time, giving traders a clear picture of what people are willing to pay and what they expect to receive.

What can you see on an order book?

An order book lists two main sides: bids and asks. “Bids” are buy orders showing how much buyers are willing to pay. “Asks” are sell orders showing how much sellers want in return. Together, they show the current demand and supply for a crypto asset like Bitcoin or Ethereum. The highest bid and the lowest ask meet to form what traders call the “market price.”

How does an order book work during a trade?

Let’s say you want to place a buy or sell order, that order enters the order book. If the price matches another order on the opposite side, the trade is completed automatically. For example, if you place a buy order for Bitcoin at $50 and someone is willing to sell at that price, the system matches both and executes the trade. This process happens continuously, often in fractions of a second.

Why the order book matters

The order book is a window into market activity. It helps traders see where most buying or selling pressure sits. If there are many buy orders at a certain price, that price often becomes what is referred to as a support point (a level where buying interest helps stop the price from falling). On the other hand, if there are many sell orders, it can form what’s called resistance (a level where selling pressure makes it harder for the price to rise). Understanding this helps traders plan when to enter or exit the market.

What liquidity means

Liquidity is a measure of how easily assets can be bought or sold without large price changes. A deep order book, with many orders at various prices, means high liquidity and smoother trading. A shallow order book can lead to sudden price swings, especially with large trades. Platforms like Rain aim to maintain healthy liquidity so users can trade quickly and confidently.

Limit and market orders

When placing an order, traders can choose between different types. One type is limit orders. A limit order sets a specific price, and holds until the market reaches that price. Another order type is market orders, where buys or sells are executed immediately at the best available price. Both appear in or interact with the order book, depending on how they are placed. You can read more about the order types offered on Rain and how they work here.

Accessing the order book on Rain

You can get access to the order book through Rain Pro, our advanced trading platform. You can see live updates of buy and sell orders as they happen. This helps you make better decisions when choosing your price levels or timing your trade. It also reassures you that trading happens transparently based on real supply and demand. You can access Rain Pro by enabling the option on your Rain profile. With over 300 trading pairs including USD, USDT, USDC and more, Rain Pro also gives you access to globally competitive fees of 0% maker and 0.05% taker fees. Read more about the features here.