#### <center>My Dear Friend You Are Welcome To My Homework Post, That Was Given By Professor @awesononso on the topic : **The Bid-Ask Spread (Part II)**
##### 1. Define the Order Book and explain its components with Screenshots from Binance.
To a novice in a crypto industry nor a layman understanding, a order book is a list of assets which a customers have ordered, for especially assets that are still in progress. But when it comes to the crypto industry order book is define in a different way which is totally different from a layman view.
In a nutshell, the **Order Book** is define as an electronic list of the currently open buy and sell orders for a particular cryptocurrency that is arranged by price level. The order book is what shows the representation of the interests of both the buyers and sellers in a visualized form for a particular cryptocurrency in real time.
Looking at the above image, is a screenshot that is showing the order book of the ETH/USDT pair on Binance. The green color in the order book is where the buy orders of a particular price levels is show, whereas the red color in the order book show the sell orders.
Basically, the order book are of three (3) components:
* **Buy Order (Bid Side):**
The buy order is the order where the information of buyers are contains, its involves the amount that a buyer is willing to buy and also all the bids. From the screenshot above we can see the **Bid Side** of ETH/USDT pairs indicate in green color.
* **Sell Order (Ask Side):**
The sell order is the order that contains the information of seller,such as the amount that the seller is willing to sell and also all the offers. The screenshot above is the **Ask Side** of the order book of ETH/USDT pairs that is indicate in red color which stand for **sell order.**
* **Trade:**
The trade side is where the **Price of USDT** is show the amount is meant for ETH and Time are all display at the Trade.
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##### 2. Who are Market Makers and Market Takers?
In a very simple understanding, **Market Makers** are those traders that create buying or selling order that cannot be carried out instantly. This category of traders place they order using the limit order. When it comes to the **Market Takers** they are the traders that buy or sell crypto instantly by using the market order in placing trade. Now looking at both the market makers and market takers it means that the market markers are the traders that initiate the order book and a market taker fill up the order book that is initiated by the market makers. For a better understanding to who market maker and market takers are let's look at the example below:
For instance, let's say that you want to sell or buy BTC in Binance exchange and you place a market order at the time you're buying or selling doing this using the market order simply means you are a market taker. But In a case where your order is placed on limit order means you are a market marker. Although the trading fees for both the market maker and market taker are different because of the liquidity they consume. The market maker is charge higher fees than the market taker.
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##### 3. What is a Market Order and a Limit order?
A market order is the type of order that is executed instantly when a trade is placed by the market taker. Let's say that if you are buying or selling BTC using a Market order, it simply means that you are buying the BTC at the current market price.
When talking about a **Limit Order** is simply the type of order that is placed by a market market to buy or sell cryptocurrency for a specific price. The limit order is arranged on the order book awaiting to be filled at soon as the order is placed by the market marker. These type of order is usually carried out when a trader want to buy crypto at a lower price. The trader will placed his trade using the limit order that is below the current market price.
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##### 4.Explain how Market Makers and Market Takers relate with the two order types and liquidity in a market.
Just as I have earlier said about the market maker and market takers in question two, I said that the market takers fees are higher than that of the maker makers because of the liquidity they consumed whereas the market marker are charged less for they contribution in the exchange. Once the market markers has placed a limit order, there will be an increase in liquidity of the assets. What am trying to say here is that when there is an increase in iniquity it is done by the market makers, but when there is a decrease in the liquidity it's the market taker. In a nutshell, both the market maker and the market taker are designed to help keep the asset safer from being manipulated.
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##### 5.Place an order of at lease 1 SBD for Steem on the Steemit Market place by
**a) accepting the Lowest ask. Was it instant? Why?**
**b) changing the lowest ask. Explain what happens.**
**(Make sure you are logged in to your wallet).**
##### Accepting the Lowest ask
At as the time when I was performing this homework task, I login to my steemit wallet and the **Lower ask was value at 0.082895**. As soon as I placed the order and click on buy I discovered that the lower ask then changed to **0.082923** which make the transactions not to be executed in instantly.
##### Changing the lowest ask.
As I when I perform this transaction the lowest ask price was **0.082895** and I quickly changed it to **0.082899** and place an order. After placing the order I then clicked on okay and instantly the order became executed.
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##### 6.Place a TRX/USDT Buy Limit order on the Binance exchange for at least $15. Explain your steps and explain the impact of your order in the market. (Give Screenshots).
At this point I open my Binance exchange and click on Trade an place a buy TRX/USDT order which is shown below.
Looking at the screenshot above, is a buy limit order of TRXUSDT pair. In the transaction I place a buy limit order,when the market price for TRX was **$0.09085 (42.04 Naira)** and place the order as a buy limit of **$0.0906 (41.78 Naira)** before I then clicked on **Buy TRX.** After I have clicked on Buy TRX the transaction was not executed instantly it took some time before it was executed. The reason why the transaction was not executed is because if the change in price of the lower ask.
**The steps that I used in placing this transactions are given below:**
**Step 1:** I Open Binance exchange app
**Step 2:** I then clicked on Trade and search for the pairs of TRX/USDT
**Step 3:** I then place a Buy Limit Order.
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##### 7. Place a TRX/USDT Buy Market order on the Binance exchange for at least $15. Explain your steps and explain the impact of your order in the market. (Give Screenshots of the completed order).
At this point,I make use of the steps that I use in placing order in question 6, the only difference is the market order that I placed on the Binance exchange. Here the current market price at as the time I place the market order was at **0.09114**. So I then use **19 USDT** to buy **208.4 TRX** and within a seconds the Order was executed instantly even before I could take a screenshot of the transaction.
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##### 8. Take a Screenshot of the order book of ADA/USDT pair from Binance on the day you are performing this task. Take note of the highest bid and Lowest ask prices:
**a) Calculate the Bid-Ask.**
**b) Calculate the Mid-Market Price.**
The screenshot below is the order book of ADA/USDT pair from Binance exchange at as the time o was performing this homework task. Looking at the screenshot we can that the middle price is the **Mid-Market Rate.
##### a) Calculate the Bid-Ask.**
**Solution**
**Bid-Ask Spread = Ask price - Bid price**
**Where:**
The Ask Price = $2.1141
The Bid Price = $2.1133
Therefore the Bid Ask can be calculated below.
Bid-Ask Spread = $2.1141 - $2.1133
**Bid-Ask Spread = $0.0008**
##### b) Calculate the Mid-Market Price.**
Using the formula below
**Mid-Market Price = (Bid Price + Ask Price)/2**
**Where:**
The Ask Price = $2.1141
The Bid Price = $2.1133
Therefore the Mid-Market price can be calculated below:
Mid-Market Price = ($2.1141 + $2.1133)/2
= 4.2274/2
**Mid Market Price = $2.1137**
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#### Conclusion:
First and foremost, I give gratitude to my noble professor @awesononso for his powerful lesson that has sharpen my knowledge on Bid-Ask Spread and Order Book. Honestly this is a very educative homework task. The order book is not just a list of a particular assets that is currently open for buying or selling,, buy it is a books that gives vital information on the assets.
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#### Thanks for your time here my dear friend....
##### Best Regards;
**Cc:-**
@awesononso