The order book shows every buy and sell order waiting to be filled at every price level. Learn how to read bids, asks, and market depth to understand what's really driving short-term price moves.
The order book is a real-time list of every outstanding buy and sell order for a stock, organized by price. Also called market depth, it shows exactly how much supply and demand exists just above and below the current price — information a plain price chart doesn't show directly.
The bid is the highest price a buyer is currently willing to pay; the ask (or offer) is the lowest price a seller is currently willing to accept. The gap between them is the bid-ask spread. A tight spread on a heavily-traded stock reflects deep liquidity; a wide spread on a thinly-traded one means even a modest order can move the price significantly.
Below the best bid and ask, the order book stacks additional orders at successively worse prices — this is where the term "depth" comes from. A large cluster of buy orders sitting just below the current price suggests meaningful support if sellers push price down to that level; a thin book with few resting orders means price can move through a level quickly with relatively little selling or buying pressure.
Level 1 data shows only the best bid and ask — what most basic quote feeds provide. Level 2 data shows the full depth of the book across multiple price levels and, on some platforms, which market participant is behind each order. Level 2 is standard equipment for active day traders but adds little value for longer-term position trading, where the multi-day trend matters far more than the order sitting two cents below the current price.
Order books can be manipulated — orders can be placed and cancelled within milliseconds purely to create a false impression of supply or demand (a practice called spoofing, which is illegal but still occurs). Large institutional orders are also frequently routed through dark pools specifically to avoid showing up in the public order book at all, so depth alone never tells the whole story of real supply and demand.
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