An order book is the live list of resting buy orders, called bids, and sell orders, called asks, for a single contract, ranked so the best prices sit at the top.
Last reviewed 18 September 2025 · Educational, not advice
An order book is the running record of every resting order for one contract. Buyers post bids, the prices they are willing to pay, and sellers post asks, the prices they are willing to accept. The book stacks bids from the highest down and asks from the lowest up, so the best bid and the best ask face each other at the top. Nothing happens until a new order crosses that gap and matches a resting order on the other side, at which point a trade prints and the book updates.
The distance between the best bid and the best ask is the spread, and it is a real cost of trading. To buy immediately you pay the ask, and to sell immediately you take the bid, so you cross the spread on the way in and again on the way out. A narrow spread usually signals more competition and activity, while a wide spread means trading is expensive before you account for any fees. The spread is the first thing to read on a book, because it tells you the toll for acting now.
The second thing to read is depth, the amount of size resting at each level. A book can show a tight spread at the very top yet have little behind it. If you try to buy more than the size available at the best ask, your order walks into the next levels and fills at worse prices, an effect called slippage. Depth tells you whether the quoted price is real for the size you want or only for a single small order sitting at the front.
Order books connect directly to the orders you place. A limit order rests in the book at a price you choose and gives you price control without a guaranteed fill. A market order takes whatever the book offers right now, guaranteeing a fill but not a price. Knowing which one you are using, and reading the depth first, is the single most useful habit for avoiding a fill that is far worse than the screen suggested. Not every venue exposes a full book, so always check how a given platform is structured.
Suppose a contract shows bids at 53, 52, and 50 cents, and asks at 56, 58, and 61 cents. The spread is three cents. There are 40 contracts offered at 56 and only 15 at 58. A market buy of 50 contracts fills the first 40 at 56 and the next 10 at 58, so the average price is worse than the 56 on the screen. The headline price was real, but only for the first slice.
Illustrative only. Numbers are examples, not a quote or a prediction, and exclude fees.
A deep book does not make a trade safe, and a tight spread is not a reason to trade more. Prediction markets can lose you money, and a thin book can turn against you fast. Stake only what you can afford to lose, never to chase a loss, and never on borrowed money. If it stops feeling like a free choice, step back. In the United States you can call or text the helpline on 1-800-GAMBLER or visit ncpgambling.org.
It is the live list of resting buy orders, called bids, and sell orders, called asks, for a single contract. The best bid and the best ask sit at the top, and a trade happens when a new order matches a resting order on the other side.
The spread is the gap between the best bid and the best ask. You pay the ask to buy and take the bid to sell, so you cross the spread on entry and again on exit. A wide spread is a real cost before any fees.
Depth is the size resting at each level. A tight spread with little behind it means a larger order walks into worse prices, which is slippage. Reading depth tells you whether the quoted price is real for your size.
No. Some venues run a central limit order book you can read in full, while others use different models or show limited depth. Always check how a given platform structures its market before assuming the quoted price is available in your size.
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