Order book trading is the practice of analyzing real-time lists of buy and sell limit orders, known as the order book, to make informed decisions.

Order book trading is the practice of analyzing real-time lists of buy and sell limit orders, known as the order book, to make informed decisions. The order book displays price levels, order sizes, and liquidity on both the bid and the ask, often called Level 2 or Depth of Market (DOM). By reading shifts in depth, imbalances, and order flow (who is adding or removing liquidity), traders try to anticipate short-term price moves, spot support and resistance, and time entries and exits. Unlike simple price charts, the order book shows intent: where participants want to trade and how aggressively. Common tactics include tracking large resting orders, watching for absorption, icebergs, and pulls, and confirming moves with volume and the tape (time and sales). Order book trading is used in stocks, futures, and crypto, but it requires fast data, discipline, and risk controls. Start with a demo feed, focus on one market, and combine order book context with a clear plan, position sizing, and stop-loss rules.

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