An order book is the exchange’s running queue of who wants to buy and who wants to sell a security, and at what prices. Buy orders (bids) sit on one side and sell orders (offers) on the other. Matching engines pair compatible orders to create trades. Depth in the book shows how much volume sits at each price level.
Key takeaways
- The order book shows real demand and supply at different price levels.
- A thin book can mean wider spreads and more price jumps on small trades.
- Limit orders rest in the book; market orders take liquidity from it.
- Reading the book helps you choose prices more carefully than guessing at random.
Why it matters in Ethiopia
On a young exchange such as the ESX, order books can be thinner than on long-established markets. That makes patience with limit orders and attention to spread especially useful for new investors.