Glossary
What is an order book?
In one sentence
An order book is the live list of buy and sell orders for an asset, showing what people are willing to trade at and in what size.
Centralised exchanges match trades using an order book: bids on one side, asks on the other, sorted by price. When a buy and a sell overlap, a trade executes.
Reading one tells you things a chart does not. The depth — how much size sits at each level — indicates how far a large order would push the price. A thin book means small trades move the market. The gap at the top is the spread.
Treat apparent walls of orders with some scepticism. Orders can be cancelled instantly, and placing large orders with no intention of filling them, to create a false impression of demand or supply, is a known manipulation tactic called spoofing.
For example
Decentralised exchanges mostly do not use order books; they price trades from liquidity pools instead.