An order book is a record of buy and sell orders for a specific asset. It helps traders see the current demand and supply, allowing them to make informed decisions.The order book typically displays two main sections: the bids and the asks. Bids are offers to buy, showing the price and quantity buyers are willing to pay. Asks represent sell orders, indicating the price and quantity sellers want. This information helps identify market trends and price levels.In trading, the order book plays a crucial role in matching buyers and sellers. When a buyer places an order that matches a seller’s ask, a trade occurs. The real-time updates in the order book can provide insights into market depth, which indicates the volume of buy and sell orders at different price levels.Market participants, including traders and algorithms, actively use order books to execute strategies. Understanding the dynamics of an order book can enhance trading strategies and manage risk effectively.