In plain English
What Order book means
The order book shows where participants are willing to buy and sell. Bids sit on one side, asks on the other, and the best prices form the top of book. As orders enter, change, execute, or cancel, the book updates continuously.
Why it matters
Order books are the core price-discovery mechanism on many electronic venues. They show visible liquidity, help explain spreads and market depth, and determine how market and limit orders interact with available counterparties.
Example
If the book shows buy interest at 1.0998 and sell interest at 1.1000, then a market buy order will typically execute against the resting asks starting at 1.1000. The exact fill depends on available size and venue rules. This is a simplified example.
Quick answers
Common questions
Does every market have an order book?+
No. Order books are common in electronic and exchange-style markets, but some markets are dealer-quoted or OTC and do not show the same structure.
Is the order book the same as depth of market?+
They are closely related. Depth of market usually refers to the visible size at multiple price levels within the order book.
Sources