What is an Order Book?
An order book is a digital list of buy and sell orders for a specific asset, organized by price level. It is used by exchanges to match buyers and sellers. The order book displays the interest of buyers (bids) and sellers (asks) in real-time, providing transparency and insight into market depth.
Here is how it works:
- Bids and Asks: The order book lists all buy orders (bids) and sell orders (asks). Bids are buyers willing to purchase the cryptocurrency at a specified price, while asks are sellers willing to sell at a specified price.
- Market Orders: These are orders to buy or sell immediately at the best available current price. Market orders will match with the existing bids or asks in the order book.
- Limit Orders: These are orders to buy or sell at a specific price or better. Limit orders are added to the order book and will only execute when the market price reaches the specified limit price.
Spot & Perps
Our Order Book is offering two types of trading: spot trading & perps trading.
The key difference between spot trading and perpetual (perps) trading lies in how the trades are executed and the nature of the contracts:
Spot Trading
- Immediate Settlement: In spot trading, you are buying or selling an asset (like Bitcoin) and taking immediate ownership. You own the asset outright after the trade is completed, and there’s no leverage involved (unless margin trading is used).
- Simple Buy/Sell: Spot trading is straightforward—you buy low, sell high, or vice versa, and the trade is settled immediately at the market price.
Perpetual Futures (Perps) Trading
- No Expiry Date: Perpetual contracts are derivatives that allow you to speculate on the price of an asset without owning it. Unlike traditional futures, perps have no expiry date, so positions can be held indefinitely.
- Leverage: Perps allow traders to use leverage, meaning you can trade larger positions with a smaller amount of capital. This can amplify both potential gains and losses.
- Funding Rates: To keep the contract price aligned with the spot market, perps use funding rates. Traders holding long or short positions may pay or receive fees based on these rates.
In short, spot trading involves buying or selling the actual asset for immediate settlement, while perps trading allows you to speculate on the price of an asset without owning it, often using leverage, and involves funding rates to maintain price balance
