Question 1

What is an order book?

Accepted Answer

An order book is a list of all pending buy (bid) and sell (ask) orders for an asset, sorted by price. Traders use order books to assess current market supply and demand, liquidity, and potential support/resistance levels.

Question 2

What are bid walls and ask walls?

Accepted Answer

A bid wall is an unusually large buy order at a specific price that acts as a support level, defending against price drops. Conversely, an ask wall is a large sell order that acts as a resistance level, suppressing price increases.

Question 3

How do I interpret the bid/ask ratio?

Accepted Answer

A bid/ask ratio above 1 means buying pressure is stronger than selling pressure, suggesting potential price increases. Below 1 indicates stronger selling pressure and possible price declines. However, this ratio can change rapidly, so it's best to use it alongside other indicators.

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