What it means
Asks sit above, bids below. A deep book absorbs big orders with little price change; a thin book jumps.
In practice
The book shows where buyers and sellers are waiting and how much they want. Scalpers read it for large resting orders that might hold price, and for one side thinning out before a move.
For everyone else it explains behaviour seen on charts: price moves easily through levels with little resting size and stalls where a lot is waiting. Liquidity above highs and below lows is, in the end, orders in the book or about to enter it.
What to watch for
Displayed orders are not promises. Large orders can be placed to give an impression and cancelled before price arrives, and much real size is hidden or split up. Treat the book as a hint, not as proof.
Related terms
4 terms- LiquidityIn SMC, the pools of resting orders, especially stop-losses, that sit beyond obvious highs and lows.
- BidThe highest price a buyer is willing to pay right now. You sell at the bid.
- AskThe lowest price a seller will accept right now. You buy at the ask.
- SlippageThe difference between the price you expected and the price you actually got.