Hello here,
Here is an homework post for professor @yousafharoonkhan for his s2-week7 lecture on the steemit crypto academy.

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

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An order book generally is a book that records the buy orders and sell orders of a commodity. The order book could be in form of manual or electronic. A order just put to writing what exactly happens in a market.

In a market scenery, a potential buyer walks into the market with the intention of buying a particular commodity let's assume yam, of an amount he needed. In the market. He saw piles of yam with different seller. Walking up to the first pile, he picks out the amount he needed and lay it before the seller and demands the price. The seller gives out his selling price for that amount.

This price demand from the seller is known to be the Sell Order or Ask in the market term. In return, the buyer tells how much he would pay for that amount. This price offer from the buyer is known as the Buy Order or Bid in the market term. However this interaction of buy order and sell order is written and recorded in an order book. This happens as every buyers approaches the market; where there are multiple sellers.

Cryptocurrency being a digital currency being traded electronically demands an electronic order book. This can be found on various exchanges that trade them keeping records of the buyers' buy orders as well as the sellers' ask.

Moreso, cryptocurrency order book is quite different from the local order book due to the fact that cryptocurrencies are traded in pairs. In the local market, the commodity in market is traded in exchange for a fiat but cryto markets kind of work like a barter system, such that you buy a crypto with a crypto. This is referred to as a pair.

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Explain how to find order book in any exchange through screenshot

However, I use binance for trading cryptocurrency and i will like to show you how to locate the order book using the binance mobile app.

Step 1: First you need to locate the app on your phone and then open. If you don't already have it you can download from play store and register in order to use it.

Step 2: At the bottom of the home screen you'll find the market button as shown below;
This takes you to a page that shows a market of different crypto pairs.

Step 3: Choose your market pairs;

Cryptocurrency Pair:As mentioned earlier, the crypto market works like a barter system whereby a cryptocurrency has to be exchange for another cryptocurrency. For instance, if you are buying ETH, then you must be willing to pay with another cryptocurrency, let's say BTC. Thus, ETH/BTC forms the market pair. This is an important note to take as each pair is seen as a different market and thus has its own order book.

To see the order book we need to pick our pair. In order to do this we decide what we're buying from the market and what we want to pay with or what we want to sell in exchange for what.
Here we have our pair to be ETH/BTC. Therefore you can search for it in the search bar to easily locate the pair.

Click your desired pair and scroll to the buttom of the page where you find the order book.

Support and Resistance: These are two instances determined by the buyers and sellers in the market. This is vividly seen on the trading chart as the end of a downtrend (support) or the end of an uptrend (resistance).

There is a downtrend as supply increases, then it reaches a point called support where the supply can no longer push the price down. On the other hand, an increase in demand causes price to rise (uptrend) until it reaches a point called resistance where demand can no longer push the price higher.

Support and Resistance gives a good signal of when to enter a trade, although support and Resistance can be breached.

Limit order: This is a type of order that is to be executed at your own price. In limit order, you buy or sell at your own price regardless of what price is prevalent in the market. When a limit order is made, initially it goes out as an open order until the speculated price is reached and then executed.

Market order: This is a type of order that is placed to be executed at the current market prevalent price. In market order, you buy or sell at the market price.

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Explain the important fetures of order book with the help of screenshot.

First, proof of my verified account on binance exchange;

Bid & Ask column: the order book shows two important column bilaterally. The bid column on the left and the Ask column on the right.
The Bid column (buy orders) shows the different orders that are placed by the buyers in the market. This shows the amount of ETH and the amount of BTC they intend to pay in exchange. The ETH demands are listed in black figures on the left while the Amount of BTC is listed in green figures on the right of the bid column.
These bids orders are listed from the highest bid at the top of the book to the least bid at the buttom of the book.

The Ask column (sell orders) contains the ask orders of of the various sellers in the market. The Amount of ETH in black paint on the right and their BTC demand on the left coloured red. The ask order are listed from least at the top of the book to the highest at the bottom of the book.

Consistent Update:- Another important feature of the order book is the consistent Update of the orders in about a very short period of time. New orders are written on the order book as they are placed in the market both on the bid and the ask column. This shows transparency of transactions in the market as anyone can see the demands and supply per time.

A Depth chart of both Bid and Ask Column: (as included in the order book in the screen shot below) This shows the volume of buy orders at different prices and on the other hand the volume of sell order at different prices. The chart for the buy orders has a green colour while that of sell orders has a red colour.

The depth chart gives a quick visual representation of what is happening in the market and consequently show how the market price is achieved. The depth chart has a feature associated with its shape; this is known as its Wall, Buy wall and sell well. The shape or steepness of the wall shows what decisions are being made in the market. This is a good indicator in decision making of future traders.

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How to place Buy and Sell orders in Stop-limit trade and OCO ,?

How to Place Sell Order on Stop-Limit

The Stop-Limit order is a type of order that allows you to dictate when you enter a trade and what price you want to trade. The stop-limit order consist of a stot price and a limit price. At the spot price the intended trade is triggered and placed in the market (shown on the order book).

The limit price is the price we intend to sell in the market. In order words, the trade remains on hold until the stop price is reached, then placed in the market till the limit price is reached and the executed.

Considering the current market performance, the market price is 0.3USDT and choose 0.24 as the support and 0.55 as resistance.

Thus, i choose to sell my Doge holding at 0.55 spot price and 0.6 limit price.

How to Place Buy Order on Stop-limit

Using a similar procedure as the sell order, here i wish to buy 50 Dogecoin at a price of 0.15 USDT.
Thus i placed my spot at 0.2, a price at which my order is placed in the market and my limit price at 0.15, price at which my trade would be executed. This would cost me 7.5 USDT.

How to Place Sell Order on OCO

OCO (one cancels the other)is a type of order that consists of a limit order and a stop-limit order in one. This is to sell at your desired price and at the same time stop loss if tides are going against you. Using the earlier stated market price, resistance and support, here is a sell order on OCO.

I wish to sell 50 Dogecoins at 0.6 USDT, thus, I placed 0.6 in the limit order and on the Stop-limit order, I placed 0.23 as my stop price and 0.21 as my limit price.

How to Place Buy Order on OCO

The buy order is similar to the sell order on OCO as illustrated above but here, we use the the buy pane. Here i wish to buy 50 Dogecoin at a price of 0.15 USDT. Thus, I placed my limit order at 0.15 as intended and went ahead to the Stop-limit order where i placed my stop price at 0.4 and my limit price at 0.5.

The implication of this is that if the price of Dogecoin continues to fall as speculated on reaching my limit order it will be executed and my stop limit cancelled. On the other hand, if reality goes against my speculation and price increases instead, my Stop-limit order will be executed and my limit order cancelled.

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

In my view the, the order book is an indispensable book when it comes to good trading. It gives a good view of what is happening in the market at the moment. This can be studied over time to understand the trend at which the market is going, either bullish or bearish.
The depth chart accompanying the order book helps to identify the prevalent price volume in the market either in the Bid or Ask chamber.
Using the Limit, Stop-limit and OCO orders also manage how and when you enter into the market. These are handy processes or techniques if well executed would amount to a profitable end result.

Conclusion

The limit order, Stop-limit order and OCO are techniques that helps to cope with the variability of the market price without having your eyes all on the screen every seconds. They authomatically place orders on the order book as stated. These are good ways of making a good use of the order book.