Chapter 8: Order Book Guide

The order book shows real-time supply and demand for a security.
Understanding it is essential, especially in smaller markets like Malta where liquidity can be limited.

This guide builds on the Company Pages Guide and explains how to interpret trading activity.

Progress: Chapter 8 of 16

📌 What You Will Learn

📊 What is an Order Book?

An order book is a list of all buy and sell orders for a security.

It shows:

💡 The order book reflects real-time market sentiment.

📈 Bid vs Ask

🟢 Bid (Buy Orders)

The highest price someone is willing to pay.

🔴 Ask (Sell Orders)

The lowest price someone is willing to sell for.

Example:

This means:

📉 Spread

The spread is the difference between the best bid and best ask.

Spread = Ask − Bid

Example:

A smaller spread means:

A larger spread means:

📦 Market Depth

Market depth shows the total volume of buy and sell orders.

Example:

This indicates:

⚖️ Buy/Sell Ratio

This compares buying pressure to selling pressure.

Example:

Interpretation:

📊 Additional Metrics Explained

💰 Best Bid / Best Ask

The top prices currently available in the market.

📉 Spread vs Close

Shows how current prices compare to the previous closing price.

📊 Average Level Volume

Average size of orders at different price levels.

📍 Range Position

Indicates where the current price sits within a recent range.

💧 Why Liquidity Matters

Liquidity refers to how easily you can buy or sell a security.

In smaller markets:

This makes the order book especially important.

🧠 How to Use the Order Book

A simple approach:

  1. Check the spread
  2. Look at buy vs sell volume
  3. Identify market pressure
  4. Assess liquidity before trading

Then combine with:

⚠️ Common Mistakes

💡 Order books can change quickly — always use them together with broader analysis.

🔗 Related Guides

⬅️ Previous:
7. Company Pages

➡️ Next:
9. Profit & Loss