Bitcoin order book trading
Technical analysis, trading ideas & strategies. General questions about altcoins. Thread guidelines: Be excellent to each other. All regular rules for this subreddit apply, except for number 2. This, and only this, thread is exempt from the requirement that all discussion must relate to bitcoin trading. This is for high quality discussion of. The server collects order books from exchanges and trades from aicrypto4.de, calculates the charts from raw data and pushes the data to connected clients in real time. Below is a brief explanation of technical details. Collector subsystem - Server part. The server requests order books from 12 Bitcoin exchanges every 15 seconds. Chart below is a combined cumulative order book view. At the top right of this message you can switch horizontal axis to display selected currency or a relative value. Relative value shows price change as percentage. E.g. for exchange foo with the middle price point of $, 1% value is the same as $ in the currency view.
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The presence of dark pools reduces the utility of the order book to some extent since there is no way of knowing whether the orders shown on the book are representative of true supply and demand for the stock. Order books continue to collate an increasing amount of information for traders for a fee. While this extra information may not be very significant to the average investor, it may be useful to day traders and experienced market professionals who rely on the order book to make trading decisions.
Stock Markets. Trading Basic Education. Investing Essentials. Penny Stock Trading. Your Money. Personal Finance. Your Practice. Popular Courses. What Is an Order Book? Key Takeaways An order book is an electronic list of buy and sell orders for a security or other instrument organized by price level.
Order books are used by almost every exchange for various assets like stocks, bonds, currencies, and even cryptocurrencies. These lists help improve market transparency as they provide information on price, availability, depth of trade, and who initiates transactions. There are three parts to an order book: buy orders, sell orders, and order history. Compare Accounts. This information is displayed on two sides of the order book known as the buy-side and sell-side.
Although the two sides display opposing information, the concepts of amount also referred to as size and price are relevant to both. Simply put, the amount and price per order display the total units of the cryptocurrency looking to be traded and at what price each unit is valued.
In the example below there is an open buy order in the amount of This means the entity who opened this order would like to purchase The count refers to how many orders are combined at this price level to create the amount, whereas the total is simply a running total of the combined amounts. When there is an abundance of buy orders demand at a specific price level, something known as a buy wall is formed.
Buy walls have an effect on the price of an asset because if the large order cannot be filled, neither can buy orders at a lower bid. The price will not be able to sink any further since the orders below the wall cannot be executed until the large order is fulfilled — in turn helping the wall act as a short-term support level. Traders will often move orders ahead of the wall to get executed first. At any point before an order is executed matched with a counterparty it can be canceled.
The temporary nature of order books makes analysis challenging and fraught with potential attempts at manipulation. Traders can place large limit orders that they have no intention of filling in an attempt to give the appearance of a desired market sentiment. When smaller traders view a large wall ahead of them, the logical reaction is to move orders ahead of it to prevent the wall from absorbing all potential trades.
As others do this in mass, a second wall is created with legitimate orders. The manipulative trader effectively moved up the limit orders on the books, and increased the price people are willing to pay.
There are two potential motives for this:. Selling — the trader is trying to reduce the size of his BTC position, he can influence a higher asking price before offloading his BTC. Watch for a fairly large sell order after the bid wall is removed to recognize this. Building support — the trader has already established a BTC position and is trying to reduce the vulnerability of a large sell order moving the market downward.
Usually this scenario is followed by a fairly large BTC purchase and a lot of momentum higher.