Hello everyone and Assalam U Alaikum,
Welcome to my homework post for Respected Professor @yousafharoonkhan who has delivered a very informative and detailed lecture.
What is meant by order book and how crypto order book differs from our local market.
Order book can be termed a book containing the information about the orders placed. So, when any order of buy or sell is placed, it is written in the order book with all necessary details. It may contain information about date of the order, kind of the order (Sell or Buy), order amount and for what item it has been made. So, it can be said that a book containing the information about orders alongwith all necessary information is called Order Book.
Crypto order book is not much different as it contains information about orders of crypto pairs like STEEM/BTC. When any trader wants to buy BTC by selling STEEM, he will place an order at current price or may set an order at a specific price. On the other hand, the trader can by STEEM by selling BTC and all such details are recorded in the crypto order book and it is visible to all under concerned pair head and in this case, under BTC/STEEM pair, all information of sell and buy orders will be visible.
Below are some points of difference between crypto order book and local market order book.
Crypto order book is uses online environment while local market order needs no internet while recording orders and it is prepared manually.
In local market, order book is used without any pair. A single median is used to make transactions and that is currency. While crypto trading order book uses trading pair system.
There is always a chance of missing any transaction in local market order book because it is prepared manually, while in crypto order book, there is no chance of missing any order and order automatically recorded when a trade is activated.
Accessibility is yet another point of difference. Crypto order book is visible to everyone and there is no such issue. Anyone can access crypto order book and see all the transactions being made. On the other hand, in local market, there is no such facility for general traders. It is kept confidential and owner has complete control over order book. Only particular sellers/buyers have access to this order book.
Trading pairs have their graphs of price movement in crypto market and one can analyze and predict the future price of any pair, but it is not possible in local market as there are no such graphs and pairs are available.
Explain how to find order book in any exchange through screenshot and also describe every step with text.
Order book can be found on any exchange easily. As, I have been using Binance app for this purpose, I will explain how to find order book on Binance app. There are two ways to explore Binance exchange, web browser and app and I am using Binance app for this purpose.
Login to Binance app and the main page will open. There is an option of Market at the bottom of the main page, click on Market.
By clicking on Market, the next page will open as given below and there you can see different pairs available for trading. There are also different markets like Spot, Futures, Zones etc are available. Here you can search for your desired pair and click on the pair.
Any asset can also be searched by typing in search option as I have done in the below screenshot. I have selected STEEM/BTC for this time and I click on it.
The next page will open as given below and there is a graph showing price fluctuation and below there is an option of Order Book that I have circled in this screenshot.
To see Order book, we will have to scroll down and you will see the order book in the form as given below in the screenshot. In this screenshot, you can see Order book and also option of Market Trades that are giving data of trades being traded right now.
Pairs refer to trading pairs in crypto world. For example, STEEM/BTC is a pair and any asset can be exchanged or traded for each other. Steem can be obtained through buying and BTC will be sold out for this purpose. Similarly, when a trader wants to buy BTC for STEEM, he will sell his Steems and in return will get BTC.
This pair can be crypto assets, or a crypto asset against fiat currency, for example, BTC/USD. In this example, BTC is a crypto pair and USD is a fiat currency and in previous example of STEEM/BTC, both are crypto assets and they have been paired with each other for buy and sell purpose.
Support and Resistance.
Support and resistance are used for analysis purposes. These both are price levels which are set by the trader and where the price is bouncing back and the market is expected to take a pause. These can also be the points where correction phase is expected to start in the market.
Support is a level where a market goes downwards and at a support level it bounces back and goes upwards in opposite direction.
Similarly, Resistance is a price level, in which a market goes upwards and then at this resistance level, it bounces back and moves in opposite direction to downwards.
These levels are drawn by the traders that can help them in analyzing the market and to enter and exit the market. In crypto trading, Support level is considered best to enter the market by buying an asset and then when the market goes upwards and touches or goes near to the Resistance level, it is deemed to be the point where the trader should exit the market by selling the asset.
In the above screenshot, I have mentioned Support and Resistance levels and you can see how the market has responded to these levels. Whenever market touches these levels, it is pausing and bouncing back in the opposite direction. These are very helpful tools for the traders to analyze the market and enter and exit the market at best time. These are very important technical tools that are considered to be essential for analyzing any market.
Limit order is a type of order which is different from the existing market price of the asset. It can be both Sell and Buy and it can be placed at any time. When the price reaches the price of the limit order, it is triggered automatically. For example, a trader wants to buy at lower price than the existing price at the moment. Suppose a trader wants to by STEEM at $0.50 and now its value is $0.63, in this case a limit order will be placed and when the price reaches the set price at $0.50, limit order will be activated.
Same is the case in Sell Limit orders. Suppose I want to sell STEEM at $ 1 and now its price is $0.63, so a limit order will be placed at $1 price of Steem and when its prices will reach set price, limit order will be executed.
In Market Order, a trader buys or sells the asset at the current existing price of the asset. These are instant orders and are executed immediately. At every price, there are traders who are willing to trade in this market, and whenever a trader is willing to sell or buy any asset, it is executed. For example, Steem price is $0.63 right now and I want to sell Steem now. In this case, I will place order to sell and it will be executed immediately. Similarly, If I want to buy Steem at current price, I will place a buy order and it will also be executed immediately.
Explain the important features of order book with the help of screenshot. In the meantime, a screenshot of your exchange account verified profile should appear
I do have a verified Binance account and I will share screenshot of my verified account here.
Important Features of Order Book.
I will try to explain features of order book with the help of screenshot. When we open Order Book of any pair, as in the below screenshot, there are two options of Bid and Ask. Bid word is used for Buy orders and Ask is used for Sell orders. Moreover, Buy orders are also in green color and Sell orders are in red color. There is also detail of every order that how much have bought and how much have been sold. So, in this way, one can understand that how much trading on the pair is being done.
These orders are being placed from all over the world and trading is being done continuously. After a few minutes, you will not be able to see the previous orders and new orders have been placed in the market.
Now I will try to explain how to place buy and sell orders with the help of screenshots.
Buy order is an order that is placed to purchase any asset with fiat currency or some other crypto asset. For this purpose, the pair of both the crypto assets should be searched and selected to place an order. After logging in to the app, click on Market and then search for the pair to be traded. I have selected ETH/USDT in which I will explain to buy ETH by selling USDT. Below is the screenshot to explain it.
After searching ETH/USDT, click on the pair and then Click on Buy.
After clicking on Buy, the next page will open as given above. Here market price of the ETH is given and then I select 100% of the USDT to purchase ETH. Below is the available balance of USDT available. Now the total amount of ETH that will be purchase will appear in the box below the current price of ETH. Now by clicking on BUY ETH, an order will be placed and ETH will be bought.
In this section, I will try to explain how to place sell orders in spot market. First of all, click on the market and then select the pair to be traded. I have selected ETH/USDT pair and I want to sell ETH for USDT.
Click on Sell and the next page will open as follows. There is the current price of ETH and select how much I want to sell. I have selected 100%. As my balance of ETH is too low, the amount I will get of USDT is 0. After filling all these figures, then click on Sell ETH and a sell order will be placed.
How to place Buy and Sell orders in Stop-limit trade and OCO ,? explain through screenshots
In this section, we will discuss about stop limit order. When a trader wants to place a stop limit order, there are two options.
Stop Price. It is a price when it is reached a limit order will be placed. So, at this point of price, Stop Limit Order becomes Limit Order.
Limit Price. At this limit price, the order is likely to be executed and an order is activated.
Expert traders use this stop limit order as they have enough knowledge about support and resistance and these price levels have been taken from technical analysis. So, before placing Stop limit order, enough analysis should be carried out in order to obtain correct level price.
How stop-Limit order is placed?
Open Binance app and then click on Market, as I have explained all these steps above then select the desired pair and click on Buy. The below screenshot will help us in understanding how to place stop limit order.
I have selected XRP/USDT pair and I have tried to explain how to fill these prices in the above screenshot. First of all, select Stop Limit order as I have circled in the screenshot. As you can see the current price of XRP is 0.95 and I want to purchase it on 0.72 So, I have set Stop Price at 0.75 and Limit price at 0.72, so when price will go at 0.75, stop price will become limit price and a limit price order will be placed and on the price of 0.72, the order will be executed.
Same is the case with sell limit order. This below screenshot will help in understanding how this order will be placed.
Select Stop Limit and then fill the stop price and Limit price and select how much you want to sell. In this way this order will also be placed.
How to place buy/sell order in OCO?
OCO (One cancels the other order) is a type of order in which limits on both directions are set. If the price goes up, the limit order will be executed and if price goes down, then stop-limit order will be executed. And in case, any order is fulfilled, the other order will be cancelled. OCO order is placed keeping in view specific price levels. If price breaks a resistance level, it can be supposed that market will go up further. On the other hand, if market breaks a support level, it can be supposed that market will go down further.
Now, I will try to explain how to place orders is OCO with the help of screenshots.
Buy OCO Order.
First select the desired pair and then select OCO and I have circled it. Now select the limit price and I have set $1 limit price. On the other hand, Stop Limit Order, I have set stop price at $0.75 and limit price at $0.70.
If market goes up and it reaches $1 price, order will be executed and stop limit order will be cancelled automatically. On the other hand, if price goes down and touches $0.75 that is stop price then limit order of $0.70 will be executed and other limit order will be cancelled.
Sell OCO Order.
Similarly, OCO sell order can also be placed while filling limit price and stop limit order.
In the above screenshot, I have set $1.09 price as limit price and also set a stop limit order. In case any of the orders is executed, the other order will be cancelled automatically.
How order book help in trading to gain profit and protect from loss?
Order book can help traders in many ways. As we have discussed many things above regarding how to buy and sell at market price or set limit orders for this purpose. All these tools can help traders in gaining profit.
For example, when a trader saw a sudden increase in the price of an asset and it is touching a resistance level, a bounce can be expected from this level, the trader can sell his assets at current higher market price and when the price comes down again, he can buy again that asset.
Similarly, when there is a decrease in price, and trader thinks that price is at support level and a bounce back is expected, the trader can buy asset at low price and afterwards when price goes up, he can sell these assets at higher price. In this way, he can gain profit.
Crypto order book can be helpful in this way and a trader can watch volume and volatility of an asset at certain price levels.
If a trader thinks that he can miss out any price movement, then limit orders and OCO orders can be placed and in this way, trader can benefit from such trading. Order book can be helpful in this way and a trader can gain profits with the help of order book.
Crypto order book is a very helpful tool in trading crypto assets and a trader can analyze the market on the basis of orders being placed in the market that are being shown in order book. The behavior of the traders can be analyzed through crypto order book.
Thanks in anticipation.