Hello steemit friends, I am delighted to be participating in this week's homework given by

Professor - @yousafharoonkhan

What is meant by order book and how crypto order book differs from local market order book

p

Order book refers to a list which contains the currently happening buy and sell orders in a particular Cryptocurrency exchange, In a perticular pair and at a given time. Buy this I mean that if you observe your exchange at the trading moment, the list which is displayed that shows what price at which different buyers and sellers are willing to buy and sell their crypto assets is what is known as order book.

In the order book,details in it include the concerned pair, price which the different persons wish to buy or sell, and the quantity of coins he wishes to buy.

In our local /offline market, the log book is also used. Take for instance that I went to an offline market to buy building wood for my house. In the market, there are different market men who sell at different prices.
On the other hand, I and other fellow buyers will also want to acquire what I want at different rates according to my pocket and convinience. If the prices which the sellers are offering are put down on a paper along side the prices which we the buyers are willing to buy and the quantity as well, then we can call that book or list an order book.

Similarly, in a crypto exchange, that list that shows the different purchase prices and how much the the trader is willing to buy and at what quantity is called the order book.

The striking difference between the two order books is that in Cryptocurrency market, the order book is given by the exchange and it is usually digital/ online.
But in the local market setting, the order book is not given. It can only be acquired by means of information gathering.

Explain How to find order book in any exchange through screenshot and also describe step with text

• First of all I login to my Binance account.
Next, I click on market as can be seen on the screenshot below

• I click on zones and here I can see space to input the coin I want to buy or sell in the search box

• Next, I click on Trade button as shown in the picture above.
• On the page which opens next, I click the order book to view the order book of my desired pair.

Explanation of some words

Pair:

For a trade on any exchange to be successful, it must be in pair. Pair simply refers to the both coins which are involved in your trade. For instance,if I have a trade pair such as TRX/USDT, this means that I am interested in trading my TRX for USDT or I am interested in trading my USDT for TRX at a particular rate.
Note that pair could also occur between fiat and crypto.

Support and Resistance:

Support is that moment when the price of a crypto stops to reduce in value and starts to gain value again.
Resistance occurs when the price of a given crypto coin stops to rise. It the changes it's value and begins to incure a price drop.

p

Resistance and support level of a crypto coin

Limit Order:

In the limit Order option, the trader sets out specific price limit for which he wishes to trade a coin. In this option of trading the trader has a choice and price goal or target and if he makes such an order in trade, then at that particular price limit/range, his coin would be exchanged automatically.

Market order:

This is the price which an exchange offers a particular coin in a given pair at a time. The market order price is usually not stable as it is the current price which the exchange offers for the purchase or sale of a coin and it is constantly updated every second.

Explain the important feature of order book with the help of screenshot. In the meantime,a screenshot of your verified profile should appear

In the order book, there are two main features that can be spotted on it. They are the buy order and the sell order.

The buy order:

Just like the name implies, the buy order are those request made by traders to acquire or purchase a particular quantity of coin at a particular price. It doesn't really matter if the price they want to buy at is the market current price. By knowledge of the order book, traders could buy at certain prices and wait for the price of the coin to get to the price which they are offering to buy the coin. When the coin price reaches their buy price, the coin will automatically be bought and added to their wallet. The buy order for a coin made buy traders is usually identified by a green color on the order book.

The sell order

Also as the name implies, sell order are those request made buy traders to sell a particular quantity of coin at a particular price. The sell order on the order book could easily be identified by the red part on the order book. With knowledge of the order book, traders could know when to sell their coin and at what price they could sell and make profit.

Below is a screenshot of my Binance account.

How to place buy and sell order in stop limit trade and OCO

When stop limit order is being discussed, what it simply means is that you have to set two limits(prices) in your buy order or sell order. One of the prices will define the price which you want to buy or sell while the other price will define the price which if the coin you want to buy goes contrary to your desired buy or sell price, the exchange will automatically sell or buy for you according to your price limit.
Note that in anyway the trade goes, your buy or sell order must be carried out whenever the coin price reaches the price in your stop or the price you set on your limit.

For instance on my account, I want to buy TRX with BNB using the stop limit order.
When I click on stop limit, I have more options to fill as can be seen in the screenshot.
I decided to neglect the market price and acquire more Trons with the same amount of BNB by reducing the market order to suit my own order.

I then set my stop; the price that if the market conversion rate should go higher, it should automatically acquire the Trons for me to avoid losing out much. My stop was set at 0.00022 BNB
I also set my limit; the price I wish to buy the coin. My limit was set at 0.0001092 BNB to give me a total of 188 TRX.
Next, I click on buy button below to confirm my buy order of 188 TRX with 0.020596 BNB.

How order book help in Trading to gain profit and protect from loss?

Greater Control:

One of the best things about order book is that it opens up the chance to the trader to gain more control towards there buy and sell options. With the aid of the order book a trader can now strike their own price. That is, the trader has the free will of making market order that is far from the market price range thereby stating the price at which they can be able to buy or sell.

Weight of Money:

The Order book can provide clear signal on who controls the market that is the buyers or the sellers. Assuming that there are more orders to buy than selling orders of a particular Cryptocurrency, there is a chance that the Cryptocurrency price will increase due to much buy orders. With this powerful information, a trader could emply the weight of money as an indicator tool to forecast what the price of the crypto coin would be in no distant time and thereby take necessary buy and sell adjustment to maximize profit from trade.

Validation:

Let us consider an event where a crypto coin has very little or no buy and sell order on its order book, this could scare potential investors as they would fear that the coin is not popular which is what investors need to look out for before a coin purchase. So in other words, order box helps investors to know which coin to buy or sell as order book could help show in some way the popularity of the coin amongst traders.

Market Making

In the case that a cryptocoin has not got much buy or sell order in it's order book, it could result in a very reasonable difference when the current best bid and current ask price are being compared. With this in mind, traders could take advantage of this opportunity to trade on either of the market sides. This could be done by a trader to gain more from the bid spread.

Conclusion

To Understand the way the order book operates is a very crucial feature in ascertaining the quantity of interest that can be gotten from any given pair trade. Observing an order book will place in your mind a wide view of the depth of the market. Complete understanding of the features of the order book and how they can be used to maximize gain and minimize loss is important for successful trading on an exchange.