## INTRODUCTION
In the cryptocurrency market today, there are platforms called cryptocurrency exchanges, where crypto assets can be traded. These cryptocurrency exchanges can either be centralized or decentralized and in either case, there is a mechanism through which exchanging of crypto assets is carried out.
Decentralized exchanges have no central authority to conduct the exchanging of the crypto assets, so they use a protocol known as an AMM (Automated Market Maker).
Centralized exchanges however, have central authorities conducting the exchanging of crypto assets and this is done using a list of prices set by both buyers and sellers. This list is called an order book. This price list is the major focus of this post.
## WHAT IS AN ORDER BOOK?
In every market, there's usually a product of value with an incumbent owner (seller) and a prospective new owner (buyer). The seller is in the market to sell, while the buyer is in the market looking to buy. Normally, the seller quotes the price value for the product and the buyer either takes that price or bargains at a lesser price.
The list of both the prices quoted by the seller and the prices requested for by the buyer, forms what is called an ***order book***.
In bargaining, it is typical for the buyer to ask for a lesser price while the seller asks for a higher price. This is why the price list of the seller contains higher values than the highest value on the price list of the buyer.
**From the image above:**
The price list of the seller seems to be reducing from the initial value while that of the buyer increases from the initial value. The point at which they meet in agreement becomes the price of the product (¶) for that particular time.
So therefore, an order book is a price list containing the price quotes of the seller in descending order against the price requests of the buyer in ascending order. It shows the current price value of the product involved and this value is the price at which the quote of the seller meets the request of the buyer.
### CRYPTO EXCHANGES ORDER BOOK
***
In the cryptoverse, order books retain their purpose. They are mainly employed by centralized cryptocurrency exchanges to facilitate the exchange of coins on their platform.
### DIFFERENCES BETWEEN A CRYPTO EXCHANGE ORDER BOOK AND THE LOCAL MARKET ORDER BOOK
***
Crypto exchange order books are quite similar to our local market order books. However, there are some noticeable differences between them. These are:
#### PRODUCTS SOLD :
No one sells cryptocurrencies in our local market. They are sold on crypto exchanges. Also, no one sells groceries on crypto exchanges, only tokens and crypto assets are sold there.
#### LEGAL TENDER:
In our local market, it's usually only fiat. Though we may find vendors accepting crypto assets but it's rare. On crypto exchange order books, fiat or crypto is accepted.
#### TRADING PLATFORMS:
Order books also differ as a result of the platform they are based. For our local market, it's usually the market stalls or shops, not an online platform. For crypto exchange order books, it is mostly based on online platforms. However, some crypto exchanges offer OTC (Over The Counter) services.
#### RECORD KEEPING:
I don't know of a local market that keeps record of each price at which a particular commodity was sold. On crypto exchanges, this is common. There is a history of prices represented on charts, which can be a very useful tool for analysis.
#### ACCESSIBILITY:
In our local market, trading closes at a particular time of the day, this means the order book is closed at that period. On crypto exchanges, prices are quoted and requested round the clock. This means that the order book is always open.
#### GEOGRAPHICAL COVERAGE:
Buyers and sellers in our local market are located in the same geographical location. The order book is only accessible by people in that location. On crypto exchanges, only restrictions or government regulations can deny a particular region from accessing the order book. Crypto exchanges order books are usually worldwide.
#### ADVANCED FEATURES
Crypto exchanges order books have advanced features like OCO orders, limit orders, market orders, stop-limit orders, etc, which local market order books don't have.
## HOW TO LOCATE AN ORDER BOOK ON BINANCE MOBILE APP?
Locating an order book on a crypto exchange is not difficult. Here are the steps to take if you're using binance mobile app.
#### STEP 1
Open the app on your mobile device
#### STEP 2
Click on markets as shown in the image below
>*The purpose of clicking on markets is to select a coin pair. If the coin pair you're interested is listed on the homepage (eg BTC/BUSD), you can click on it and skip* ***step 2 and step 3***
#### STEP 3
Search for the coin pair you're interested in. I'll use BTC/USDT.
> *Observe that I had to select fiat, then USDT, before scrolling down to BTC/USDT*
#### STEP 4
Click on the coin pair you are interested in to open the trading page of the coin pair. Then click on either 'BUY' or 'SELL' to open the order page.
#### STEP 5
At the right side of the screen, you can find the order book
### SOME IMPORTANT TERMS IN PLACING ORDERS
***
So far, we've seen what an order book is, what a crypto exchange order book looks like, it's features, and how to open one on binance.
Now, let's consider some important terms in placing orders on centralized crypto exchanges. I'll be using @huobi-pro to explain these features because of the STEEM/USDT pair. They are:
#### Pairs:
These are the coins/fiat assets involved in an exchange transaction. Usually, the buyer holds the base coin (the coin the traded coin is priced in), while the seller holds the traded coin (the coin the buyer is interested in).
The base coin + the traded coin make up a **Pair**
Every exchange transaction on crypto exchanges involves a pair. The coin held by the buyer (base coin) and the coin held by the seller (traded coin).
#### Support:
Support is a technical indicator on the trading chart. The trading chart is a representation of the history of prices at which transactions have been made on a particular pair.
Support is the point at which the price begins to rise immediately after a price drop on the candlestick chart. It is easily explained as the point where a red candle comes just before a green candle (using green and red candles).
What happens at the support point is that, the sellers consider the prices requested for by the buyers as too low and refuse to sell. The buyers have no choice than to accept the sellers' quotation.
At the support point, the sellers are in control of the market and so they push the price up. Support is a good indication to buy as the price will be going upwards
#### Resistance:
Resistance is the opposite of support. It is the point at which the price begins to drop immediately after a price rise on the candlestick chart. It is easily explained as the point where a green candle comes just before a red candle (using green and red candles).
What happens at the resistance point is that, the buyers consider the prices quoted by the sellers as too high and refuse to buy. The sellers have no choice than to accept the buyers' requests.
At resistance, the buyers are in control of the market and so they push the price down. Resistance is a good indication to sell as the price will go down afterward.
#### Limit Order:
This is an order feature which a trader can use to buy or sell their crypto assets at a price different from the current market price. When it is used for selling, it is called a **Sell-Limit Order** but when it is used for buying, it is called a **Buy-Limit Order**.
Eg. The market price for STEEM is around $0.55 but a steemian wants to sell 100 STEEM when the price reaches $1.1. The steemian will need to set a sell-limit order of 100 STEEM for $1.1
#### Market Order:
This is an order feature where the trader simply goes with the current market price. The trader can't set their prices, they can only set how much they want to sell or spend on buying the crypto asset. The trade will be automatically executed at the current market price.
## IMPORTANT FEATURES OF ORDER BOOK ON BINANCE MOBILE APP
Before I continue, here's a screenshot of my verified profile on binance
Let's see a typical example from binance mobile app
The image above is one of the order books on binance. Here are some important features we can find on this order book:
#### Coin Pair:
This can be found at the top-left corner of the image. Our example is a STEEM/USDT pair. This implies that the buyer has USDT and wants to buy STEEM from the seller, hence the seller's STEEM is priced in the buyer's USDT.
> *From the coin pair feature, we learn that cryptocurrencies are traded in pairs on centralized exchanges. Eg. The buyer gives USDT in exchange for STEEM.*
#### Buy Orders:
This is usually the 'green' part of the order book. It contains a list of all the price requests of buyers. This requests are arranged in descending order with the highest price at the top. The top price orders are most likely to be fulfilled.
> *From the buy order feature we learn the price to request as buyers if we want our order fulfilled quickly. Our price should be above the highest price requested if we seek immediate fulfillment.*
#### HOW TO PLACE A BUY ORDER
This tutorial is on placing a buy limit order.
On the order page of the selected pair, set the price you would like to buy at.
Then enter the quantity of the asset you want to buy on this trade.
The amount to be spent will be displayed.
Click on 'Buy BTC' when you're done.
The order placed will then be added to the list of buy orders, waiting for fulfillment.
#### Sell Orders:
This is usually the 'red' part of the order book. It contains a list of all the price quotations of sellers. This quotations are arranged in ascending order with the lowest price at the top. The top price orders are most likely to be fulfilled.
> *From the sell order feature we learn the price to quote as sellers if we want our order fulfilled quickly. Our price should be below the lowest price quoted if we seek immediate fulfillment.*
#### HOW TO PLACE A SELL ORDER
This tutorial is on how to place a sell limit order.
On the order page, select 'sell' and set the price you would like to sell at.
Then enter the quantity of the asset you want to sell on this trade.
The amount to be realized will be displayed.
Click on 'Sell BTC' when you're done.
The order placed will then be added to the list of sell orders, waiting for fulfillment.
#### Asset Price:
This is the price at which the asset is being traded. It is the latest price quoted by a seller and accepted by a buyer.
On the order page, you can see the asset price between the buy and sell orders. It's red when it's reducing and green when it's increasing.
#### Percentage Change Indicator :
Still on the second order book page (trading page) which is more elaborate, we can find the percentage by which the asset price has increased or decreased in the last 24hrs on the percentage change indicator. This is useful when buyers are trying to ascertain the performance of the coin they're interested in.
The percentage change indicator feature is located at the top of the order page just beside the coin pair
## STOP-LIMIT AND OCO ORDERS
If you've heard so much about crypto trading, you might have heard of stoploss far more than once. If you haven't, well... let me explain.
### STOP-LIMIT
This is a type of order that sets a limit order automatically once the price gets to a preset amount. When it is used to buy, it is a Stop-limit Buy Order but when it is used to sell, it is a Stop-limit Sell Order or Stoploss.
Eg.
Mr A. wishes to sell his 0.5 BTC @ $42,000.
The price of BTC is currently @ $36,500 but should the price of BTC go above 40,000, he's hopeful his wishes might come true.
Now, should BTC go above $40,000 and peaks at $42,130.50 and drops to $38,000, at a time when Mr A. is offline, he will miss his chance, so, it is wise for him to set a Stop-limit Sell Order.
#### HOW TO SET STOP-LIMIT SELL ORDERS ON BINANCE MOBILE APP
For Mr A to set a Stop-limit Sell Order, he will need to provide the following information:
* Trigger price: The price that will trigger the creation of the limit order (ie. $40,000)
* Sell price: The selling price to be set in the limit order that will be created (ie. $42,000)
* Sell amount: The amount to be sold in the limit order that will be created (ie. 0.5 BTC)
To set this Stop-limit Buy Order on binance mobile app, navigate to the coin pair and click on the 'Sell' button.
Next, select Stop-limit order from the order types as in the image below
Then set the trigger price, sell price and sell amount like in the image below
Click on 'Sell BTC' when you're done.
Now, let's assume Mr A. finally sold his 0.5 BTC @ $42,000 and is now so fascinated with Stop-limit orders, then...
Shortly after, he joins steemit and decides to participate in the SPUD4STEEM JUNE edition.
He plans to buy 0.1 BTC worth of STEEM but the current price of 0.00001682 BTC is too high for him. He wants it to be as low as 0.0000113 BTC.
He knows this is somewhat unlikely but again, maybe if STEEM gets to 0.00001255 BTC, it may go further down to his choice price.
He understands that STEEM could slump down to 0.0000113 BTC and rise again while he was offline, and so in order not to miss that opportunity, he decides to use a Stop-limit Buy Order.
#### HOW TO SET STOP-LIMIT BUY ORDERS ON BINANCE MOBILE APP
To set a Stop-limit Buy Order, Mr A. will need to specify the trigger price, buy price and buy amount.
* Trigger price: The price that will trigger the creation of the limit order (ie. 0.00001255 BTC)
* Buy price: The buying price to be set in the limit order that will be created (ie. 0.0000113 BTC)
* Buy amount: The amount to be bought in the limit order that will be created (ie. ~ 8849 STEEM)
To set this Stop-limit Buy Order on binance mobile app, navigate to the coin pair and click on the 'Buy' button.
Next, select Stop-limit order from the order types as in the image below
Then set the trigger price, buy price and buy amount like in the image below
Click on 'Buy STEEM' when you're done.
### OCO ORDERS
OCO is an acronym for 'One Cancels the Other'. This kind of order is to me, the most sophisticated. It is a combination of limit and stop-limit orders. If one of them gets fulfilled either partially or fully, the other is automatically cancelled.
An OCO order is a pair of orders that can cancel each other. If an OCO order is cancelled, both the limit and the stop-limit orders are cancelled.
With an OCO order, Mr A. in our previous example can set two options in each of his trade.
#### BUY OCO ORDERS
Mr A. can decide to add a limit order to his Stop-limit Buy Order.
So, in addition to creating a Stop-limit Buy Order to set a limit order to buy 0.1 BTC worth of STEEM @ 0.0000113 BTC when STEEM sells for 0.00001255, Mr A. sets a limit order to buy steem once the price rises to 0.000013 BTC
He does this to ensure that whatever happens to the price of STEEM, he would have bought STEEM automatically. Of course, STEEM is not a stable coin.
#### HOW TO PLACE OCO BUY ORDERS
To place an OCO by order, Mr A. will need to provide the following information:
* Limit order price: This is the price which if the market price gets to, the STEEM will be bought.
* Trigger price: The price that will trigger the creation of another limit order (ie. 0.00001255 BTC)
* Buy price: The buying price to be set in the limit order that will be created (ie. 0.0000113 BTC)
* Buy amount: The amount to be bought in the OCO order (ie. ~ 8849 STEEM). Whether it's the limit order or the Stop-limit order, this is the amount that will be bought.
This is how to place an OCO buy order on binance
On the trading page of the selected pair, click on 'buy'
Next, select OCO from the order type like in the image below
Then, enter the limit order price, the trigger price, the buy price, and the buy amount like in the image below
Click on 'Buy STEEM' when you're done.
#### SELL OCO ORDERS
One last trade for Mr A. This time, a sell OCO order. He actually wants to sell 1.5 ETH for BNB as he plans to invest in binance smart chain.
Now, he wants to sell his ETH if it gets below $2,500 or if it goes above $2,900. If it gets below $2,500, he wants to sell for $2,450.
He does this to ensure that whatever happens to the price of ETH, he would have sold it automatically. Of course, ETH is also not a stable coin.
#### HOW TO PLACE OCO SELL ORDERS
To place an OCO by order, Mr A. will need to provide the following information:
* Limit order price: This is the price which if the market price gets to, the ETH will be sold (ie. $2900)
* Trigger price: The price that will trigger the creation of another limit order (ie. $2500)
* Sell price: The selling price to be set in the limit order that will be created (ie. $2,450)
* Sell amount: The amount to be sold in the OCO order (ie. 1.5 ETH). Whether it's the limit order or the Stop-limit order, this is the amount that will be sold.
This is how to place an OCO sell order on binance
On the trading page of the selected pair, click on 'sell'
Next, select OCO from the order type like in the image below
Then, enter the limit order price, the trigger price, the sell price, and the sell amount like in the image below
Click on 'Sell ETH' when you're done.
## HOW ORDER BOOK HELPS IN SECURING PROFIT AND REDUCING LOSS
If there's anything a trader needs, it's a sophisticated order book. The order book helps the trader in the following ways:
#### IDENTIFYING MARKET TREND
The trader can see the different prices being quoted and requested in the market via the order book. This will help the trader in making better decisions in setting their orders. Eg. if the market trend is bullish, the trader sees the possibility of selling at higher price.
#### TECHNICAL ANALYSIS
A good trader has to follow sound technical analysis together with fundamental analysis to make their move. This technical analysis is available on the trading page, where we also have the order book.
With technical analysis using technical indicators like MA, RSI, support, resistance, MACD, stochastic RSI, Elliott's wave, etc. The trader will hardly make a wrong market call. This will helpnin reducing losses and makingore profits.
#### REDUCING LOSSES WITH STOPLOSS
Reducing losses is made possible by stoploss. This is a Stop-limit Sell Order, one of the order types on the order page.
When one buys a coin, they should set a stoploss, according to what they can afford to lose. This will ensure that they don't lose beyond the set amount if the trade goes bad.
#### SECURING PROFITS WITH STOP-LIMIT ORDERS
A trader can secure their profits with Stop-limit Sell Orders.
Take for instance, Trader A buys an asset @ $100, shortly after, the asset becomes bullish and rises to $300 and RSI is indicating 71.11 (overbought).
Here, there's a tendency of a market reversal and also the bullish trend could continue.
To secure his profits, Trader A can set a Stop-limit Sell Order to trigger at $295 and sell at $280.
This way, if the market continues bullish, more profit, if it goes bearish, his asset automatically sells at $280, securing his profits at at least $180 (180%)
#### SECURING PROFITS AND REDUCING LOSSES USING OCO ORDERS
The trader, with the help of OCO orders, can reduce losses and secure profits using a OCO order.
Eg. Trader B, with the guidance of sound technical analysis, bought an asset for $1000 and it is now worth $1056. He sets and OCO sell order:
* a limit order to sell at $1010 and
* a Stop-limit Sell Order to trigger at $1100 and sell al the asset at $1150.
Whatever happens, the trader is not making any loss, instead, he can even make more profit thanks to OCO orders.
### MY PERSONAL EXPERIENCE
I have some STEEM to sell, now I use a combination of the technical indicators carefully.
Currently, the price is low and RSI(14) says 56.9332.
I'm not impressed to sell as I think the price will still rise for two reasons
* Fundamental analysis of cryptocurrency in general: Coins are rallying back to their previous normal prices including BTC. STEEM will most likely reach $1 in 2 weeks time.
* RSI indicates bullish at 56 but not overbought (which is > 70) and resistance has indicated 3 successive higher high.
I'm a bit relaxed since I didn't buy the STEEM with my funds, I earned them from the generous steemit platform.
If I had bought the STEEM, then I would have set a stoploss to avoid losses.
I had another experience where I lost some profits on @huobi-pro when I traded HT (Huobi Tokens). I bought ~8.5 HT @~$12.6/HT in February. HT rose to $26 but I didn't sell, hoping it would rise again.
I finally sold when it fell to $15.25 in March.
Unfortunately, @huobi-pro doesn't offer OCO, else, it could have been used to secure my profits.
#### Here's a quick proof of my acount on @huobi-pro
I logged in to the web version
I got a notification that my account was also logged into the app version, which is true because I'm also using the app. That's where I get my @huobi-pro screenshots from
Here is a screenshot of my profile on the web version
For further proof of my account on @huobi-pro, check out the transaction I did on [this post](
https://steemit.com/hive-108451/@jehoshua-shey/crypto-academy-week-11-homework-post-for-yousafharoonkhan)
## CONCLUSION
Order books are instruments used by centralized exchanges to carry out exchanging in crypto trading. It provides very useful advanced features for trading which helps the trader to secure profit and reduce losses. These advanced features are the major differences between crypto exchanges order book and the local market order book.
Thanks for reading.
Cc:
@yousafharoonkhan