source

Good evening everyone.I am pleased to learn again in the crypto academy class.I thank professor @yousafharoonkhan for this lecture.

QUESTION ONE
ORDER BOOK
Order book in a lay man's understanding is a book that contains the future prices of goods and perhaps the past prices of the goods.It is likened to the menu chart in a restaurant that contains food and their prices.

In the Crypto market,An Order book is a price list of a pair of assets say which of be traded against each other.For example the order book for BTC/DOGE is the list of prices of BTC/DOGE pair in the market.

Order book

The order book has a BUY ORDER usually written in green and a SELL ORDER usually written in red...It also contains the price,market cap,supply and Circulation of pair.

HOW ORDER BOOK DIFFERS FROM THE LOCAL MARKET

•The Order book gives the price of a crypto/crypto pair or crypto/fiat pair price while the local market does not.

•The Order book gives information that would be used to make Technical Analysis while the local market does not.

•The Order book has a Limit Order feature that allows traders to set the price as outside the market order price so as to make more profit and minimize loss while the local market is sold at the market price.

QUESTION 2
To find the Order Book is simply.I am using my Binance Account as a case study.
Just log in to Binance and look down.You see MARKET,Click on MARKET.

Then look up and Enter the Search button to select a Trade Pair.For instance I selected BNB/ETH.Then look down you will see the Order Book.There is a BUY ORDER in green and a SELL ORDER in red.

•PAIRS
The trading pair is a pair of two currencies which are paired together.The Trading Pair could be cryto/crypto pair or Crypto/Fiat pair.In each case you can trade one Currency over the other.
For example,if I chose BNB/ETH pair(crypto/crypto) pair,it means that I can buy ETH with BNB or buy BNB with ETH.It also means that I can sell ETH for BNB or sell BNB for ETH.

The whole thing is very flexible,you can chose a fiat/crypto pair or cypto/crypto pair.

•SUPPORT AND RESISTANCE
Support and Resistance are two opposite terms in the cryto market even though nothing them can appear in one graph.

Support is a point where the falling price of a crypto asset cannot go further down.At this point,the price had fallen to a level where it cannot fall further.This time buyers and investors buy more of the coin.
In simpler term Support could be said to be the minimum price level that a coin can fall after which it takes a pause and then begin to rise.

Resistance is the opposite of Support.It is the point when the rise in price of a crypto tends to stop.It is the maximum point where the price reaches before going down.Resistance is the best time to sell to make profit.

In summary, Support is the best time to BUY(price is at its lowest point)while Resistance is the best time to SELL(price is at its highest).

•LIMIT ORDER
Limit Order is simply a type of buy or sell Order where a crypto trader wishes to buy or sell at a price that is different from the Market Order(current price).Let me use this example to drive my point home.Suppose the price market price of BNB is $20,000 and I wish to sell at a higher price,I will set a limit order at say $25,000...This means that once the market price gets to $25,000 the trade would then be executed.

Also if the price is $20,000 and I wish to buy at a cheaper rate,I will set a limit Order at say $15,000....This means that whenever the price of BNB falls to $15,000 the trade would be executed.

MARKET ORDER
Market Order is a type of Buy or Sell Order where a trader wishes to buy or sell at the current price without waiting for the price to drop or rise.For example if the current price of BNB is $20,000 and I wish to buy it,then the trade would be executed immediately.

QUESTION THREE

My Verified Binance Account

The order book has a list of Orders written in green and red.
One numbers written in green are the Buy Orders for a given pair while the numbers in red are the Sell Orders for that same pair. !!

FEATURES OF ORDER BOOK
Order book is basically a pair of buy and sell order for a given pair of assets.It could be Crypto/crypto pair or Crypto/fiat pair.The order book also shows the prices of the pair,the market capitalization,trading volume as well as the supply.
The main features we shall look at are:
•Buy Order
•Sell Order
•Limit Order

BUY ORDER:
This is of the key features of the Order book.In this Buy Order the trader buys the first asset with the next one.For example I selected a Buy Order for BNB/ETH...It means that I want to buy BNB with ETH.

Once I have selected the pair,there is a limit order which I can adjust to my satisfaction.Initially the order for BNB/ETH is 0.13391 so inputted 100 BNB which means I will buy the 100 BNB with 13.39100 ETH.

However,I decided to change the limit order from 0.13391 to 0.12399 and still inputted the same 100 BNB and I will have to buy it with 12.39900 ETH.

You can see that I am buying the same 100 BNB with a less value of 12.39900 ETH.

SELL ORDER
Sell order is also a key feature of the Order book.In this case the first cryto in the pay is sold
for the second crypto.For example,when I selected the DOGE/BUSD sell order pair.It means that I want to sell DOGE to get BUSD.

So selected the pair and inputted the amount of DOGE COIN that i wish to sell.I entered 100 DOGE which would be sold to get 33.8200 BUSD.
Just like I did in the Buy Order,I can still adjust the limit order and the prices will change.

It is important to note that in the order book the prices of each pair varies from time to time.It is not constant because prices of CRYPTOS rises and falls at intervals.

Just as 100DOGE could be sold to get 33.8200 BUSD.....Maybe after 20 minutes the 100 DOGE won't give 33.8200 BUSD:the BUSD value may increase or decrease.

QUESTION FOUR
BUYING AND SELLING IN STOP-LIMIT TRADE
Every trader wants to make more profit and minimize loss.The Stop-Limit Order is an important tool in making profit and reducing loss.How does this happen??

Stop-Limit is a combination of a stop price and a limit price.The upper price is the stop price while the lower price is the limit price.

When price gets to the Stop price,the stop limit order assumes the position of the limit order.

HOW TO PLACE BUY AND SELL ORDER IN STOP-LIMIT TRADE

•To place a Buy Order in Stop-Limit Trade

•Select your preferred pair

•Select the Stop-Limit Order

•Ready to Continue

•Enter the stop price and the limit priceI entered a stop price of 2800 and a limit price of 2790 inorder to buy ETH with BUSD.Once the price gets to the stop price,the price becomes the limit and and trade is executed.👇

•To place a Sale Order in Stop-Limit Trade
•Select the Preferred pair

•Go to Stop-Limit

•Input the Stop price and the limit price.Once the price hits the Stop order price,it becomes the limit price and the purchase of TRX with ETH will be executed.

BUYING AND SELLING IN OCO TRADE
The OCO trade order is not the same as the Stop-Limit Order Trade.In OCO trade there exist:
•Limit Order and
•Stop-Limit Order

If the price gets to the Limit order price,then the trade would be executed and the Stop-limit order would be cancelled.On the other hand ,if the price gets to to the stop price then the trade would be executed at the price of the Stop limit order and the Limit order. would be cancelled.

HOW TO PLACE BUY AND SELL ORDER IN OCO TRADE

•To place a Buy Order in OCO Trade

•Select the pair you prefer

•Click on OCO

•Enter the Limit order price,then the Stop-Limit Order price(Stop price and Limit price)
Once the Limit order(385.50) is reached the Stop-Limit Order is cancelled and the transaction is executed.Also If the price hits on the "Stop order" price,then the Limit order is cancelled and he Transaction will be executed.

•To Place a Sell Order on OCO Trade
•Select your preferred pair

•Go to OCO **

•Enter the Limit order price and then the Stop-Limit price(Stop price and Limit price).Once the price hits the Limit Order price the trade is executed and the Stop-Limit order is cancelled also if the Stop price is met,the Limit Order is cancelled.

QUESTION FIVE
HOW ORDER BOOK HELPS TRADER TO MAJE PROFIT AND MINIMIZE LOSS
From the experience that I garnered from this homework.I have be able to see how the features of an order book can help a trader to make good decisions,make profit and reduce loss.They are as follows 👇

•The Limit Order feature of the order book ways in two ways-If a trader wants to make more profit,he would increase the limit order above the market order do that whenever the price gets to that limit order price,he would make huge profit.
Secondly, a buyer can buy at a cheaper price by placing a limit order at a price below the market order so that when the price drops so low,he would buy at a cheaper price.

•With the presence of the Stop-Limit feature would barely sell at loss because once the price hits the stop order price,the transaction would automatically be executed.

•The Market Order price helps a trader to know the price of his chosen pair at the moment and so can make informed decision as to whether to buy or sell.

•Other Order book features like Market Capitalization,Price,Supply will help a trader to perform good Technical Analysis to know when to buy,hold or sell inorder to make profit and reduce loss.

CONCLUSION
The Order book is an important tool used to make more profit,minimize loss, and also to analysis the crypto market inorder to make favourable and profitable decisions.