Reading the Order Book and Buy vs Sell Flow
Price charts show you what already happened. The order book and live order flow show you what traders are doing right now.
Bids and asks
The bid side lists buy orders waiting below the current price. The ask side lists sell orders waiting above it. The gap between the best bid and the best ask is the spread. A tight spread means a busy, liquid market. A wide spread often appears around news releases or at quiet hours.
Order walls
Sometimes one price level has a much larger order than its neighbours. This is called a wall. A big bid wall can slow a fall, and a big ask wall can cap a rally. Walls are not guarantees: they can be pulled at any moment, and some are placed only to influence other traders.
Market orders vs limit orders
- Limit orders sit in the book and wait. They provide liquidity.
- Market orders hit the book immediately. They are what you see on the live orders map and in the buyers-vs-sellers bar.
When aggressive buyers keep hitting the asks, price rises. When sellers keep hitting the bids, price falls. That's why the 5-minute buy/sell split is useful: it shows who is being aggressive.
Patterns worth watching
- Absorption: heavy buying, but the price doesn't move up. A large seller may be soaking up the demand.
- Exhaustion: a burst of very large orders at the end of a long move, followed by quiet. The move may be running out of fuel.
- Breakout confirmation: price breaks a level and orders per minute jump. More participation makes the break more believable.