What Is a ‘Limit Order Book’ and How Is It Visualized for Depth Analysis?
A limit order book (LOB) is a real-time record of all outstanding limit orders for a financial instrument, organized by price level. It is visualized for depth analysis as a cumulative graph showing the total volume available at each price level on both the bid (buy) and ask (sell) sides.
The shape of this curve indicates market depth; a steeper curve means less depth, and a flatter curve means more depth.
Glossar
Depth Analysis
Analysis ⎊ Depth analysis, within cryptocurrency, options, and derivatives, represents a granular examination of order book dynamics to infer latent supply and demand.
Limit Order Book
Depth ⎊ The Limit Order Book, a cornerstone of modern trading across cryptocurrency exchanges, options markets, and financial derivatives platforms, fundamentally represents an electronic ledger detailing buy and sell orders for a specific asset.
Limit Order
Instrument ⎊ A limit order is an instruction to trade an asset at a specified price or better, providing the trader with precise control over the entry or exit cost, unlike a market order.