Guys, welcome to week 3 of season 4 of the steemit crypto academy. Today we have the opportunity to go further in our studies of the Bid Ask spread. This week, the professor @awesononso discussed The Bid Ask Spread Part II. I will be presenting my homework post in this blog. Have fun as you read through it.

When we talk about the Order Book we are referring to the list of all open orders which is seen in any pair of an asset. This order book is arrange orderly according to prices from highest to lowest in the case of an exchange platform. Now it is important to mention here that the order book has both the buy side and the sell side which are the bid side and the ask side respectively.

From the screenshot above you will notice that the entire place is green implying that it is the bid side of the market. The entire activity of the buy order at the moment for the pair of trade is recorded here. We have three different column in this buy order namely Price(BUSD), Amount(ETH) and the Total. The total is gotten by the product of Price(BUSD) and Amount(ETH) I.e (Price * Amount = Total). From the screenshot you will notice that the price is arrange in ascending order I.e the highest bid price is seen at the top of the order book.

From the screenshot above you will notice that the entire place is red implying that it is the Ask side of the market. The entire activity of the sell order at the moment for the pair of trade is recorded here. We have three different column in this buy order namely Price(BUSD), Amount(ETH) and the Total. The total is gotten by the product of Price(BUSD) and Amount(ETH) I.e (Price * Amount = Total). From the screenshot you will notice that the price is arrange in ascending order I.e the highest Ask price is seen at the top.

Most times we may not want to buy or sell our asset at the current market price. We will want to sell it at our own terms. This is the case of those that we call today as market makers. Market Markers are those set of persons who will not want to buy or sell their asset at the current market price in an exchange, hence they will set a limit or a market price for themselves which they are willing to buy or sell their asset. These set of persons buy at their own bid price and sell at their own ask price. For these to be achieve the trader has to set a limit to his or her trade. This means the trade won't be filled until the limit requirement is met.

On the other hand, Market Takers are those who do their trade without setting a limit. They just buy or sell using the current exchange price. This means that the take the bid price of the market at that point in time and also the ask price of the market without any form of argument. The perform their transaction irrespective of the price at the moment.

When we talk about the market order, we may want to link this order to the market takers as this order does not delay in it's execution as a matter of fact it is a form of an order that execute as fast as possible following the current market price of the asset at that point in time.

Similarly, the limit orders can be link to the Market Makers, here in this type of order, a maximum or minimum price is set as it may be in the case of buying or selling of an asset. This maximum or minimum price is the price which the trader is willing or ready to sell or buy the asset at the said time.

From my explanation above, I told us that the Market makers can be linked to the limit order as those found in this category sets their own Bid or Ask price and don't work with that of the exchange at that point in time. So the exchange respects and have their order filled when the price meets the requirement of the limit order. In the same way, I did explain that market takers are similar to the market order as they just work or agree with the current price of the market at that point in time. The use the Bid and Ask price at that moment without any argument. In terms of liquidity, limit order which is associated with the market makers helps to provide much liquidity for the asset under review. Whereas in the case of the market takers, the are always responsible for taking the liquidity.

Here in this case I accepted the lowest ask. But during the transaction, the lowest ask was changed from 0.072447 after placing the order to 0.072488 resulting to delay in the execution of the transaction. The transaction was not instant, this is as a result of change in the price of the lowest ask.

Looking at the image we have below the lowest ask price is 0.074487 but I ignored it and changed it to 0.074481. Here the trade executed immediately and this is as a result of change in the price of the lowest ask. See screenshot below.

Here in this scenario I was able to use the Binance exchange to perform the transaction. Well, using the buy limit order for this transaction, the transaction was not initiated at once as I am using the limit order. After placing the order, it took a little time before the transaction was executed. This is as a result in change of the lowest ask price. The order was placed at 0.09383 at exactly 22:30:36 but executed at 0.09381 at exactly 22:32:08. The role of traders are Makers. See screenshots below.

Here in this scenario I was able to use the Binance exchange to perform the transaction. Well, using the Market order for this transaction, the transaction was initiated at once and I was unable to see it in the open order because of the fastness of the transaction. The order was placed at 0.09385 but executed at 0.09390. The change in the lowest ask was adopted and the transaction took place immediately. The role of traders are Takers. See screenshots below.

Form the order book below we have our various parameters for the Bid price and for the Ask price respectively as I have marked them in the screenshot.

In conclusion, the order book is a list containing both the buy and sell orders. In exchange we said it is arrange in such a way that it follows a certain pattern that is from highest to lowest price. The other book has three column as we have seen above which include the Price(BUSD), Amount(ETH) and the Total, in the case of trading the pair ETH/BUSD. This lecture is really quite and interesting one and I have really learnt a lot, thank you professor @awesononso, and I do hope to learn more from you shortly.