Order Book

An order book is an electronic list of buy or sell orders of securities organised as per price levels and time priorities. This means that a person having a higher price on the buy side or lower price on the sell side will get priority over others to execute the trade in price level priorities. If the prices quoted are the same, whoever places the order earlier in time will get the higher priority. Traders can see the buy and sell interest in the stock by looking at which prices have the greatest volume of shares using order book. This helps traders to understand in which direction and how far (by magnitude) the stock is likely to move in the future.

Order books are extremely dynamic in nature, and update in real time during intraday trading. All order-driven markets use order precedence rule and trade pricing rule.

Below is an example of a simple order book with best bid at 82.75 and best ask at 82.90.