<p>Irrespective of bullish or bearish outlook, there are two attitudes a trader can have in the market: <em>active</em> or <em>passive</em>.</p>

<p><em>Limit orders</em> and <em>stop orders</em> are "passive" trades because they don't move market price. These types of orders are offers to buy or sell bitcoin at a certain price. Passive orders are placed in the exchange order book and remain waiting there until cancelled (by the trader) or consumed by another trader.</p>

<p><em>Market orders</em> are "active" trades because they consume <em>limit</em> and <em>stop</em> orders in the order book. A <em>market order</em> is executed immediately and moves market price ("last" price) to the level of the last order it consumes. Market orders are not shown in the passive order book, instead they are shown in the trade history column to indicate market activity</p>

<p><strong>Example</strong></p>

<p>Three traders: A, B and C. Market price is at $1,200.</p>

<p>A wants to sell 1 BTC at $1,201 and places a limit sell order in the order book and waits.</p>

<p>B wants to sell 0.5 BTC at $1,202 and also places a limit sell order and waits.</p>

<p>C wants to buy 1.4 BTC as soon as possible at any price near market price. Because C doesn't want to wait, C executes a market order for 1.4 BTC. It consumes A's order for 1 BTC and consumes 0.4 BTC of B's order at $1,202.</p>

<p>After execution of C's buy market order:</p>

<ul>
<li>last price moves to $1,202</li>
<li>C has bought 1.4 BTC</li>
<li>A has sold 1 BTC</li>
<li>B has sold 0.4 BTC</li>
</ul>

<p>C's market order for 1.4 BTC is entered in the trade history as the latest buy.</p>

<p>A's order is removed from the order book since it has been "filled". </p>

<p>The remaining (unconsumed) 0.1 BTC of B's "partially filled" limit sell order remains in the order book until another buyer consumes it, or until B cancels the order.</p>

<p><strong>Summary</strong></p>

<p>Traders who intend to buy or sell at specific price levels place their offers to buy/sell in the <em>order book</em> as passive orders. Active buyers and sellers consume passive orders via immediate market orders. Market orders move price and are entered in the exchange's <em>trade history</em>.</p>

<p>"Market size" is the total of all passive orders waiting in the order book. As traders place and cancel passive orders, market size changes.</p>

<p>"Trade volume" is the total of all active trades (market orders as reflected in the trade history) for a particular period of time.</p>

CC BY-SA 3.0
2017-06-25T16:07:53.957Z
2017-06-25T18:58:44.783Z
2017-06-25T18:58:44.783Z
venzen
<p>I am new to trading. On the left side is the order book and on the right, the trade history.</p>

<p>I can see that the order book keeps updating. The number in the market size column increases and decreases, but I don't see any update in the trade history. May I know why? Does the trade history only reflect part of all trades?</p>

<p><a href="https://i.sstatic.net/RdCCA.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/RdCCA.png" alt="enter image description here"></a></p>

CC BY-SA 3.0
2017-07-13T00:05:19.003Z
I'm voting to close this question as off-topic because learning how to read an exchange order book has nothing to do with bitcoins or cryptocurrencies.
rny
CC BY-SA 3.0
2017-07-17T21:38:44.127Z
Perhaps you can post this question on a different stack exchange site, like https://money.stackexchange.com/
Jestin
CC BY-SA 3.0
2017-08-08T11:30:09.403Z
I understand the point of contention - that this Stack Exchange should address technical matters pertaining to Bitcoin - and that a flood of questions such as "Why is Coinbase taking forever to verify my real-life identity?" is a potential liability. However, if we acknowledge that Bitcoin has an economic/financial dimension, and that its exchanges have idiosyncratic peculiarities of market making and representation, then the question is rudimentary, and my answer, below, all-encompassing. Read it, then argue this question post is not useful. Reject lesser, yes, but why destroy value?
venzen
<litecoin><trading>
How to read an exchange order book?
Marco
# How to read an exchange order book?

(Asked by: username_0 on 2017-06-25)

I am new to trading. On the left side is the order book and on the right, the trade history.

I can see that the order book keeps updating. The number in the market size column increases and decreases, but I don't see any update in the trade history. May I know why? Does the trade history only reflect part of all trades?

[![enter image description here](https://i.sstatic.net/RdCCA.png)](https://i.sstatic.net/RdCCA.png)

**Tags:** litecoin, trading

> **Comments:**
> **username_1**: I'm voting to close this question as off-topic because learning how to read an exchange order book has nothing to do with bitcoins or cryptocurrencies.  
> **username_2**: Perhaps you can post this question on a different stack exchange site, like https://money.stackexchange.com/  
> **username_3**: I understand the point of contention - that this Stack Exchange should address technical matters pertaining to Bitcoin - and that a flood of questions such as "Why is Coinbase taking forever to verify my real-life identity?" is a potential liability. However, if we acknowledge that Bitcoin has an economic/financial dimension, and that its exchanges have idiosyncratic peculiarities of market making and representation, then the question is rudimentary, and my answer, below, all-encompassing. Read it, then argue this question post is not useful. Reject lesser, yes, but why destroy value?  

---

## 1 answers

### Answer by username_3 on 2017-06-25. Score: 6 | Accepted answer

Irrespective of bullish or bearish outlook, there are two attitudes a trader can have in the market: *active* or *passive*.

*Limit orders* and *stop orders* are "passive" trades because they don't move market price. These types of orders are offers to buy or sell bitcoin at a certain price. Passive orders are placed in the exchange order book and remain waiting there until cancelled (by the trader) or consumed by another trader.

*Market orders* are "active" trades because they consume *limit* and *stop* orders in the order book. A *market order* is executed immediately and moves market price ("last" price) to the level of the last order it consumes. Market orders are not shown in the passive order book, instead they are shown in the trade history column to indicate market activity

**Example**

Three traders: A, B and C. Market price is at $1,200.

A wants to sell 1 BTC at $1,201 and places a limit sell order in the order book and waits.

B wants to sell 0.5 BTC at $1,202 and also places a limit sell order and waits.

C wants to buy 1.4 BTC as soon as possible at any price near market price. Because C doesn't want to wait, C executes a market order for 1.4 BTC. It consumes A's order for 1 BTC and consumes 0.4 BTC of B's order at $1,202.

After execution of C's buy market order:

* last price moves to $1,202
* C has bought 1.4 BTC
* A has sold 1 BTC
* B has sold 0.4 BTC

C's market order for 1.4 BTC is entered in the trade history as the latest buy.

A's order is removed from the order book since it has been "filled".

The remaining (unconsumed) 0.1 BTC of B's "partially filled" limit sell order remains in the order book until another buyer consumes it, or until B cancels the order.

**Summary**

Traders who intend to buy or sell at specific price levels place their offers to buy/sell in the *order book* as passive orders. Active buyers and sellers consume passive orders via immediate market orders. Market orders move price and are entered in the exchange's *trade history*.

"Market size" is the total of all passive orders waiting in the order book. As traders place and cancel passive orders, market size changes.

"Trade volume" is the total of all active trades (market orders as reflected in the trade history) for a particular period of time.


---

