@veronicesan
How to analyze order books on crypto exchanges?
Order books display real-time buy and sell orders on exchanges, helping traders assess market depth and potential price movements. Key aspects to analyze include:
Bid and Ask Prices – The highest buy (bid) price and lowest sell (ask) price define the spread. A tight spread suggests high liquidity, while a wide spread indicates low liquidity.
Market Depth – A deeper order book (more buy/sell orders) results in greater price stability, whereas a shallow order book makes prices more volatile.
Wall Formations – Large buy or sell walls indicate strong support or resistance levels. For example, if there’s a large buy wall at $30,000 for BTC, it suggests strong buying interest at that level.
Order Flow – Watching how orders are placed and executed helps traders gauge market sentiment (bullish or bearish trends).
By understanding order books, traders can anticipate price movements and make informed trading decisions.
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