Limit Order Books

A limit order book is a real-time electronic record of buy and sell orders for a specific stock or asset. It shows the prices and quantities traders are willing to buy or sell at, organized by price level. Buy orders (bids) are listed with the highest prices first, while sell orders (asks) are listed with the lowest prices first. The book helps reveal market supply and demand, aiding traders in decision-making. When a trade occurs, the most compatible buy and sell orders match and execute instantly, updating the book continuously.