Summary
The Orderbook displays current buy and sell interest for a security at different price levels. Buy orders are shown as bids, while sell orders are shown as offers.
Each visible level normally includes a price and the quantity available at that price, subject to the rules and data provided by the relevant market.
Why it matters
The Orderbook provides a view of immediate market liquidity and the prices at which participants are currently willing to buy or sell. It can help investors understand the Best Bid, Best Offer, Bid-Offer Spread, and the visible depth available beyond the first price level.
This information is especially relevant when considering how an order might be executed in a less liquid security.
How to read it
The highest displayed bid is the Best Bid, and the lowest displayed offer is the Best Offer. These prices form the top of the Orderbook. Additional levels show buy interest at lower prices and sell interest at higher prices.
Quantities may be aggregated when multiple orders are entered at the same price. A larger displayed quantity can indicate more visible depth at that level, although it does not guarantee that the quantity will remain available.
Things to keep in mind
The Orderbook can change rapidly as orders are added, amended, executed, or cancelled. Displayed orders are not completed trades and may be removed before execution.
Not all trading interest is necessarily visible. Hidden orders, orders on other venues, and future market orders may affect execution. A market order can also trade through several price levels when the quantity available at the Best Bid or Best Offer is insufficient.