Order Book
An order book is the list of bids and asks that shows liquidity and the bid ask spread.
Definition
The order book is the list of outstanding bids and asks. It shows the current bid ask spread and how much size is available near the top.
Why it matters
Order book depth determines execution quality. Thin books increase slippage and make prices less stable.
Common pitfalls
Looking only at top quotes: Depth beyond the top matters for larger size.
Assuming stability: Quotes can change quickly in fast news cycles.