Reading orders and prices.

An order book shows all outstanding buy and sell orders for a given trading pair, ranked by price. On one side is the buying demand (bids), on the other the selling supply (asks or offers). Each line shows a price and the quantity requested or offered at that price level.

At the top of the bids is the highest price someone is currently willing to pay, and at the bottom of the asks is the lowest price someone is willing to sell at. These two prices are usually close together, but rarely exactly equal. The difference between them is called the spread.

The spread is the difference between the highest bid price and the lowest ask price at a given moment. A small spread usually indicates a liquid market with a lot of trading activity, while a large spread indicates less liquidity or more uncertainty among market participants.

In practice, the spread acts as an implicit cost: someone who buys directly at the ask price and immediately sells at the bid price loses the difference, even without the underlying price having changed. For large, heavily traded pairs such as bitcoin against euro, the spread is usually small; for smaller or less liquid tokens it can be considerably larger.

A market order is executed almost instantly at the best available price in the order book at that moment. A buy market order is matched with the cheapest sell offer, a sell market order with the highest buy bid. The advantage is speed and certainty of execution; the disadvantage is that you have no control over the exact price.

For a large order size relative to the available liquidity at that price level, a market order can 'eat through' multiple price levels, causing the average execution price to deviate from the initially shown price. This effect is called price impact and is covered in more detail in the guide on slippage and price impact.

A limit order lets you set the price at which you want to buy or sell yourself. The order is only executed once the market reaches that price (or better), and otherwise remains open in the order book until it is executed or cancelled. The advantage is price certainty; the disadvantage is that the order may never be executed if the market does not reach the set price.

Limit orders that have not yet been executed add liquidity to the order book, which is why many platforms charge a lower fee for them than for market orders. This lower cost can, over time, outweigh the uncertainty about whether and when the order will be executed.

In addition to market and limit orders, many platforms offer additional order types. A stop order only becomes active once the price reaches a certain level, and then usually turns into a market or limit order. This is often used to limit losses or to enter a position once a price breaks a certain threshold.

Some platforms also offer a 'post-only' option, which only accepts an order if it is not immediately executed (thus adding liquidity), and an 'immediate-or-cancel' option, which handles the executed portion immediately and cancels the rest instead of leaving it in the order book.

The most commonly used chart format for crypto prices is the candlestick chart, where each 'candle' shows the opening, highest, lowest and closing price within a chosen timeframe, for example one hour or one day. A green or white candle usually indicates that the closing price was higher than the opening price within that timeframe, and a red or black candle the opposite.

Adjusting the timeframe changes the level of detail: a short timeframe of a few minutes shows short-term fluctuations, while a daily or weekly timeframe gives a broader picture of the trend over a longer period. Below the chart, platforms often also show trading volume, which indicates how much activity took place during that timeframe.