Hello crypto World,

Special thanks to Prof @yousafharoonkhan for his special lecture. Below is the answer to my homework.

Question1: What is meant by order book and how crypto order book differs from our local market. explain with examples (answer must be written in own words, copy paste or from other source copy will be not accepted)

Let's break down an order book into two simple words to better understand what it is:

• Order
• Book

An Order in trading is simply an instruction to buy or sell an item.
A book is basically a document that is used in keeping records.

By combining these ideas, we can simply say that an "order book is a record of all buy and sell instructions for a specific asset/pair."

When it comes to cryptocurrency, an order book can simply be defined as a document containing all open orders (buy and sell) for a specific trading pair.
In simple terms, the order book shows us the price at which traders are willing to buy and sell a particular asset.

Consider the following scenario: You're running low on supplies, so you made a shopping list to help you stay within your budget, and then you went to the store to shop for items such as eggs, beef, and fruits at a local market; when you arrive at market, one thing is certain: the traders have already set their prices, so you'll have to either find a trader willing to sell at your price or bid a price based on your budget.
Here are the key points:

• The seller have a record of how much each good will go for
• The buyer had made a market list of how much he will like to buy
• These records – that of the seller and the buyer – are basically what we call an order book.

In general, an order book is a manual or electronic record of requests made by people who want to sell or buy an asset or a product; it contains the following information:

• Prices that purchasers are prepared or ready to pay for an asset.
• Prices that sellers have set or attached to what they want to sell.
• It's possible that the identities of both buyers and sellers are included.

An order book, in the context of cryptocurrency, is a document available on cryptocurrency exchanges that shows current selling and buying prices proposed by sellers. Because peer-to-peer transactions are still at the heart of cryptocurrency trading, an order book is essential. For example, we can use the order book to determine the best price for a particular currency pair; we can also use the order book to determine the best price to sell our crypto assets, such as bitcoin. I can place an open order to buy Bitcoin for $1300USD, and if a buyer is willing to buy at that price, the transaction will be completed automatically. The market depth, or the total amount of a currency pair being bought or sold at a specific price, is identified through an order book.

Crypto Order Book Vs. Other Order Books

While the fundamental principles of an order book remain the same, the other book used in crypto exchanges differs in several ways from order books:

• To protect user privacy, buyers and sellers' personal information is usually kept anonymous.
• There are no manual order books; all order books are electronic.
• Crypto order books are updated in real time as the market changes.
• Pairs are used in the crypto order book. Pairs are important because they allow traders to compare the value of cryptocurrency to the value of other assets or fiat. For example, if I have Steem to sell and require Tron or simply fiat, I will search the exchange for this pair (i.e. STEEM/TRX; or STEEM/USD) and set my price accordingly.
• Crypto order books have smart features that traditional order books may not have to help traders avoid mistakes and maximize profits.

Question 2: Explain how to find order book in any exchange through screenshot and also describe every step with text and also explain the words that are given below. (Answer must be written in own words)

• Pairs
• Support and Resistance
• Limit Order
• market order

How to find order book on Binance

Binance was my preferred exchange as it is one of most popular and most reliable in my country here – Nigeria. To find the order book on Binance, a trader should go through the following steps:

• First, the quickest route to accessing the order book on Binance is to use their website on PC as a log in is not required.
• Begin by visiting Binance.com
• Next, hover to the trade tab on the top navigation bar

• Next, select “Advanced (Full access to all trading tools)” and you will find the order book in the trading tab that loads next.

• Displayed below is the order book for STEEM/BTC

For individuals using Binance on mobile, the following steps should be followed:

• First, you must have to log in with your email/phone and password. Then, authentic your account login with the One-time password (OTP) that will be sent to your phone to gain access to the app.
• Binance mobile may first bring you to the Binance Lite page that do not support advance trading features. Here is what Binance Lite will look like:

• Next, click on the user icon at the top left.

• On the next page, disable Binance lite by toggling the lite switch off. This will load for a few seconds and bring you into the Binance Pro page below:

• Here, simply click on “Trades” (1) on the down navigation bar to visit the trading area and have a peek on the order book (2).

• Pairs: Pairs refer to assets or currencies that can be exchanged for one another; thus, when a trader trades in pairs, he or she is essentially exchanging one cryptocurrency for another, i.e., he or she is either selling one coin (or other asset) for another or buying one coin with another coin from the same pair. STEEM/BTC, ETH/BTC, BTC/USD, BTC/NGN pairs are examples. In this situation, pair trading will come in handy: Trader A has some Bitcoins and wants to add LTC to his portfolio, he could easily trade some BTC for LTC in the LTC/BTC trading pair..
• Support and Resistance: When traders sell their assets, the price of cryptocurrencies drops significantly until it reaches a point where it stops falling, usually due to opportunistic traders buying and investing – this point is known as the support level, where the downward movement of an asset value stops.
The resistance level, on the other hand, is the point at which buyers stop buying assets and instead judge the value of assets to be profitable, leading them to sell them for a profit. Resistance is the polar opposite of support and can be thought of as an asset's maximum price, whereas support is the lowest price to which it can fall.

• Limit Order: A limit order is an instruction executed from the order area of an order book to buy or sell an asset at a specific limit price. The trader sets the limit price, which can be high or low. This function is used to automate trading so that transactions can be completed without the involvement of a trader. A trader could set a limit to sell when STEEM is around 2 USD and to buy Ripple (XRP) when it is around 0.003 USD.

• Market Order: A market order is a function of the order book that allows a trader to execute trades at the current market price. The trader could use the market order function to execute live trades in sync with the market trend. Market orders are placed without the need to enter them into an order book.

Question 3:Explain the important future of order book with the help of screenshot. In the meantime, a screenshot of your exchange account verified profile should appear (Answer must be written in own words)

An order book has many features that can assist a trader in navigating the market and making profitable trades. These features are numbered and shown in the screenshot below.

The first (1) feature is the green "buy/bid" list, which displays the prices people are willing to buy or bid for.
The second (2) feature is the red-colored "sell/ask" list, which displays the prices at which people are willing to obtain/purchase assets.
The order book customization feature is the third (3) feature, which allows users to choose whether they only want to see sell/ask orders or buy/bid others.
Finally, we have the order management section (4), which allows users to place orders.

Question 4: How to place Buy and Sell orders in Stop-limit trade and OCO? explain through screenshots with verified exchange account. you can use any verified exchange account. (Answer must be written in own words)

• Buying and Selling Orders in Stop-Limit Trade
  One of the types of orders that can be executed from an order book's order management area is a stop limit. Based on the trader's preferences, a limit and stop price are set. On Binance, here's how to place a buy order in Stop-limit:

• Visit the trading area and located the order management area just beside the order book:

To place a (buy or sell) order using a stop-limit, the trader must first go to the “place order” tab beside the order book, as shown in the screenshots above. Then he had to choose whether he wanted to buy or sell. Normally, the limit option should be selected, and the trader should enable the stop limit feature by clicking on the “Stop-limit” option. The stop price, or the price at which the order limit should be triggered is chosen next, followed by the limit price. To minimize losses when buying, set the stop price higher than the limit price; to maximize profits when selling, set the limit price higher than the stop price. Finally, the trading amount must be entered in both cases; for buy, this is the amount the trader intends to pay for the asset; for sell, this is the amount the trader intends to pay for the asset.

• Buying and Selling Using OCO (One Cancel the Other)

This order function combines the limit and stop-limit orders to assist a trader in maximizing profits and minimizing losses. To use the OCO function, move your mouse over the drop-down arrow in the stop-limit area and select OCO:

Next, select whether you intend to buy and sell from the top tab while ensuring that the OCO function is still selected.

A trader can use the OCO function to start two automated trading instructions. To buy using the OCO function, the trader must first specify an order price, which is the amount of an asset he wants to buy, then specify a stop price and limit price based on the market price, and input trading amount before buying. By doing this, the trader is instructing that trade should be place at:

1. When the price of the asset is below the stop price
2. When the price of the asset is at the limit price
   Thus, if the price drops, the first option is activated and the second is deactivated; however, if the price rises, the second option is activated and the first is deactivated.
   This is the same as the sell instruction, except that when selling, the order instructions are such that profits can be increased while risk of loss is reduced or eliminated.

Answer to Question 5: How order book help in trading to gain profit and protect from loss? Share technical view point, that help to explore the answer (answer should be written in own words that show your experience and understanding)

The orderbook helps to maximize profit and reduce losses to the lowest minimum. Here are some ways:

1. The order book assists the trader in determining the supply and demand for a specific asset. He can then determine how much people are willing to pay to buy and sell a particular asset, and use that information to determine the best trading price and a viable trading strategy.
2. The order book's order functions, if used correctly by the trader, can assist him in navigating the market safely and profitably. Stop-limit, Limit, OCO, and Market orders are some examples of these functions.
3. A trader could easily identify market resistance and support levels using the order book, allowing him to place profitable orders at the right time.