Order Book
An order book is a record of buy and sell orders for a security or other asset that is maintained by a broker or other market maker. The order book lists the number of shares being bid or offered at each price point, as well as the market participants behind the orders. Order books are used by market makers to provide liquidity to the market and to facilitate price discovery. They are also used by investors to gauge market sentiment and to determine the best price at which to buy or sell a security.
History of the Term
The concept of an order book has been around since the early days of stock trading. In the early days of the stock market, brokers would keep a record of all the orders they received from their clients. This record was known as the order book. As the stock market evolved, the order book became an important tool for market makers to provide liquidity to the market and to facilitate price discovery. Today, order books are used by market makers, institutional investors, and individual investors alike.
Comparison Table
| Order Type | Bid Price | Ask Price |
|---|---|---|
| Market Order | Current Price | Current Price |
| Limit Order | Specified Price | Specified Price |
| Stop Order | Specified Price | Specified Price |
Summary
An order book is an important tool for market makers, institutional investors, and individual investors alike. It is a record of buy and sell orders for a security or other asset that is maintained by a broker or other market maker. The order book lists the number of shares being bid or offered at each price point, as well as the market participants behind the orders. For more information about order books, please visit Investopedia, The Balance, and Investing.com.
See Also
- Market Maker
- Bid-Ask Spread
- Limit Order
- Stop Order
- Market Order
- Price Discovery
- Liquidity
- Institutional Investor
- Individual Investor
- Stock Trading
