In plain English
What Order book means
The buy side of an order book contains bids; the sell side contains offers or asks. The best bid and best ask form the top of the book, while additional price levels form its depth. When an incoming order can trade with a resting order, the matching system executes it according to the venue’s rules. Some orders or liquidity may be hidden or undisplayed.
Why it matters
An order book is the mechanism behind many exchange-traded executions and helps show how available prices and quantities are arranged. It does not function as a complete map of every market. Forex is largely over the counter, so a broker’s book, liquidity feed, or depth display may be narrower than the global interest in a currency pair.
Example
In a simplified book, bids are 50,000 EUR/USD at 1.08498 and 40,000 at 1.08495; offers are 25,000 at 1.08500 and 60,000 at 1.08503. A market buy for 40,000 units would first match 25,000 at 1.08500, then 15,000 at 1.08503, assuming those orders remain available.
Quick answers
Common questions
What does “top of book” mean?+
Top of book refers to the best currently displayed bid and best currently displayed ask, often including the size available at each price. It is narrower than full depth-of-book data.
Is there one order book for spot forex?+
Generally no. Spot forex is an over-the-counter market with multiple banks, dealers, platforms, and liquidity providers. Any order-book or depth view may reflect only a particular venue or provider network.
Sources