Introduction

This week professor @yousafharoonkhan has delivered his lecture on exchange order book and its use and also how to place different orders.
After going through his lecture I will now complete his homework task.

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

When we hear the word book, the first thing that comes into our mind is something that we can write a piece of information on.

So exchange order book in simple terms is a book in which information about an order in the market is input or recorded.
This information can be a buy order or a sell order.

When I say information, I mean information about the market value of the product or what we are purchasing or selling.

To explain further let me use this example.

For instance, when we visit the mechanic and asks him to fix our car, different services comes with different prices.

So the mechanic charges us according to the service he provided.
This is a typical example of order book.

This is similar to order book in cryptocurrency world but the difference here is that trades are made in pairs.

Before a trader sells or purchases a cryptocurrency asset he has to use a pair.eg: BTC/USDT this is an example of pairs in the cryptocurrency market.

If a trader wants to purchase bitcoin with the BTC/USDT pair, that trader has to have USDT in his possession before the trade can be completed.

So in simple terms order book in the world of cryptocurrency Is a digital book that has information about trades (buy and sell with particular pairs in the market.

The order book has similar features to the local market but they are also different in other ways.

Firstly, traders sometimes are the ones who determine the price of cryptocurrency in the order book but in the local market
prices are set according to certain period and also depending of certain factors.

Secondly, the prices of cryptocurrency order book can change from anytime in a day because of volatility in the market but the price in the local market does not change so easily.

To continue, cryptocurrency can be bought or sold with different range of pairs eg BTC/USDT but in the local market goods are mostly exchangerble only with fiat.

Again, Volatility in the cryptocurrency order book can cause the price of an asset to go up very quickly within a second and it can also cause the price of an asset to go down very quickly but in the local market since the goods are seen and prices have been predetermined the price of the goods cannot go up in a second or go down in a second.eg, recently the price of sbd was at 8.9 dollars and within some minutes the price went up to 10 dollars simply because people were demanding for it more.

Lastly,in the cryptocurrency order book before you are able to trade with a particular pair you are supposed to pay a certain commission fees but in the local market you are not required to pay commission fees.

More example of this pairs are BTC/USD, ETH/USD, BTC/ETH,ETH/USDT, BNB/ETH.
And so many other examples.

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

Finding the order book can take different ways but I will be using the one taught by the professor.
I will be using my binance exchange In the steps below.

a) After logging into my binance account here

b) I will then click on market as shown by the red shape.
This takes me to a different window.

c) As shown from the screenshot , you can see different coins with thier market capitalization and also coin price

d) Since I want to view the order book of btc I will click on trade.
You can equally use the search area to find the coin you are looking for easily.

e)As seen from the screenshot I have opened the order book of btc.

Here you can see the buy order book in green and the sell order book in red.

Pairs
Pairs in simple terms is when two items are put together to form one item.

So to out this term in the cryptocurrency world.
Pairs are either coins or cryptocurrency assets than are exchangeable.
When I say exchangeable, I mean you can trade btc for eth.
This forms a pair of btc/eth making these two pairs tradable.
Example of this pairs are:

ETH/BTC
BTC/USDT
STEEM/BTC.
STEEM/ETH.

Support and resistance

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Support

Support in simple terms can be described as when the price of an asset is falling and then after a while the price of the asset stops falling and then starts to rise again.
The point at which the price of that asset stops falling is what we call the support level.

When this happens it is expected that many traders will start demanding that asset in anticipation of the rise in price of that particular asset.

For instance, when the price of btc fell below 40k most traders took that as the support level and most bought btc in anticipation of it breaking its support.

Rssistance

When the price of an asset is rising and then suddenly stops and then starts to fall again this is what we call resistance.

The point at which the price of that asset start to fall is what we call the resistance level.
In this period it means the price of that assest had reached a high price and then stops and begins to fall again; ending a bull cycle.

When a asset breaks it resistance level its means the price of that asset is supposed to go much higher.

For instance; only last month alone btc broke its resistance level for more than 2 times before it began to fall again.

Limit order

Let's say I want to buy btc when it reaches 40k but currently its price is at 38k.
Limit order is what I will use to place my order which will be recorded in buy order book for when btc reaches the rate of 40k then the amount of btc I have ordered for will be bought.
If incase the price if btc does not reach 40k my btc will not be bought and I can equally cancel my order.

In the sell order too it is similar to this.
In the sell order my btc will only be sold when the target price is reached, if incase the price does not reach the btc will not be sold and the order can be cancelled at anytime.

Market order.
The market order is used when a trader want to buy a cryptocurrency at the current price in the market.

Let's say I want to buy or sell btc at the current rate at which it is; I will place my order into the buy or sell order book and since I am buying or selling at the current market price, my order will be approved and my btc will be bought or sold instantly provided another trader wants to buy my amount of btc or the trader Is willing to sell the amount of btc am looking for.

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)

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This is a screenshot of my verified account

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In the order book there all the features there are considered to be important features but some hold much importance than others.
I will explain some of the important features below.

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The trades:
In the trades section, a trader is able to see the price at which other traders are buying the asset he wants to sell or buy.
The trader is a able to have a look at the amount a trader is either biding for an asset or the asking price the trader want for his cryptocurrency.
One good thing about the trade feature is that you can see the time at which that order was made.
The prices marked in green are the buy orders and the ones marked in red are the sell orders.

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In the screenshot, you can see that I have marked open order, order history, trade history and also funds.
This feature shows to a trader the order he has placed and if it is still there it recorded in the open orders area.
The order history shows the trader the orders he has either opened or closed.
This feature shows the trader the history of all his orders.
The trade history also shows the trader the history of all the trades he has made.
The funds feature shows the trader the cryptocurrency he is holding.
The trader has the option of hiding low balance assets in this feature.

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In the screenshot, you can see that I have marked some place with a red shape.
This is the sell order, normally referred to as the seller's side.
Here a trader is able to see the bids placed, the current market price of the asset and also total.

You can also see that I have marked a place in green shape.
This is the buy order, normally referred to as the buyer's side.
Here a trader is able to see the price at which traders want to buy a cryptocurrency asset.

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In the screenshot you will see that I have marked some places with different colour shapes.

At the place where I have marked with red shape, a trader can change the language into his preferred language if he does not want the language that has been set.

At the place where I have marked with blue you can see the USD option.
In this place you can change the currency at which the asset is set.
For example: you can change it from USD to EUR or CNY.
In here too you can also change the language and region.

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At the place where I marked green the trader has the option of changing the screen to either dark screen or light screen mode.
You have the option of also making a lot of changes like how you can view the order book and also how you view a lot of features.

You also have the option of deciding if you want to view the order book, the market, chart.

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)

Before a trader use the stop limit order he has to combine the stop price and the limit price.
Using the support and resistance level in the stop limit order is essential to the trader.
Before the setting the trader actually sets the buying price or selling price.
When the limit order is reached the order book then records the stop price that was initially placed.
It is advisable to set your your stop limit trade to be higher that the limit price a bit in the sell orders.
It is also advisable to set your stop price to be lower than the limit price in buy orders.

How to place the stop limit buy order.

a) After successfully logging into your exchange account.
In my case I am using binance.

b) Click the coin you want to buy.
In my case I am using the the steem.
So I will click the trade button attached to the steem.

c) After opening the window, It automatically opens the pair for steem/ btc pair.
You can also change the pair from steem/ btc pair to the btc/eth pair only since binance only lists the btc and eth pair for steem.

d) Enter the price, the stop limit price, limit price.

f) Click on the buy steem option and then confirm the transaction.

How to place the stop limit sell order

a) After logging into your binance account.

b) Click the coin you want to sell
In my case I am using the the steem.
So I will click the trade button attached to the steem.

c) After opening the window, It automatically opens the pair for steem/ btc pair

d) Enter the price, the stop limit price, limit price.

e)Cilck on the sell steem section.
Here you dont need to confirm any transaction as the trade is place instantly.
You can also check the order at the open orders section.

How to place OCO sell and buy order.

OCO is the short term for One-Cancels-the-other.
It is a pair of order which work together or at once.
This happens when one of the orders placed is executed the other order is automatically cancelled out.

This type of order involves the use of both the stop limit and also limit orders.
When the limit order price is reached the stop limit order price is cancelled and vice versa.

How to place OCO buy order.

a) After logging into the binance account.

b) Click the the coin you want to buy.
In my case I am using the the steem.
So I will click the trade button attached to the steem.

c) After opening the window, It automatically opens the pair for steem/ btc pair

d) click on OCO option

e) Enter the price, the stop limit price, limit price.

f) Click on buy steem and confirm transaction.

###How to place OCO sell order

a) After logging into the binance account.

b) Click the the coin you want to sell
In my case I am using the the steem.
So I will click the trade button attached to the steem.

c) After opening the window, It automatically opens the pair for steem/ btc pair

d) click on OCO option

e) Enter the price, the stop limit price, limit price.

f) Click on sell steem.

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 order book helps traders to avoid significant losses and make profits.

The OCO helps traders to trade very securely and carefully.
This helps traders to maximize profit because when the market goes the way the trader expects it to go he make profit but when the market goes the way the trader does not expect the loss the trader makes is very small.

The stop loss feature helps a lot of trades too.
When a trader is suddenly making losses, before further damage is done and huge losses are made the stop loss helps the trader from making huge losses even though a small loss will be inquired by the trader.

Even though the stop loss feature is a great feature it should be used when we have a hard time predicting the shape of the market .

The open trades, trade history and also order history feature helps a trader know the trade he has open and also helps the trader know the trades he has involves in and it also helps the trader know the orders he has placed before and if they were successful or not.

The support and resistance feature helps traders to avoid huge losses too.
This technical methods helps trader to analyse the market and make the best out of the market.
The resistance level is known when there has been a significant number of sell orders.
The support level is also known when there has been a significant number of buy orders.

Conclusion

The professor has touched on a very important topic and this topic takes us into the practical aspect of binance.
We are able to have a feel of things and know how things work in real time on the binance platform.
We have also learnt new ways of placing orders in the market.