Importance of Order Book for Trading Cryptocurrencies
.png)
Background Image Source- Canva.com/Location
Assalam-o-Alaikum Steemians !
I'm @moneyster, a professional level Cryptocurrency investor and an analyser. As usual, today I thought to share another Crypto-related experience with you. I hope this article will be considerably beneficial for all the Steemians in this community
.gif)
 |
|---|
When we Trade Cryptocurrencies, we have the ability to see a limited version of an Order Book consisting of Bid and Ask prices. So, if we are able to check this Order Book before taking an entry, we have a higher possibility to take the right entries at a certain level. But, we should keep in mind that these order books are considerably limited editions.
At the same time, some centralized exchange platforms have created programmed algorithms to create automated buy and sell orders to keep the liquidity of the Market. It means that there can be some prompt buy or sell orders initiated by a programmed algorithm. These programs are very fast as compared to human performance. That's, why we have experienced some instant orders that have disappeared suddenly after placing a bid to the exact point. Because these programmed Bot applications try to keep the liquidity of the Market.
When we discuss about Exchange Order books, we can't forget the market depth for the relevant Market. With the help of this market depth, we have the ability to measure the volume of limit orders like a real real-time facility. We need to focus on this Market depth before placing a large Market Order. So, we can easily get an idea of this Market depth by analysing the given Order Book's "Bid" and "Ask" prices carefully. If we can see a considerably Big Order as a Bid Price, we have the ability to create a big order for that Bid price through an Ask Price order.
If we can't see quite Big Orders for both Bid and Ask prices, larger Traders can manipulate the relevant Market as per their desire. Because, when they Create larger Market Orders, all the Bid or Ask prices will be triggered suddenly. Then the Market will be moved according to that huge Market Order.
As I described above, Order Book can be used as a Trading Strategy to Trade any Cryptocurrency carefully. Because we have the ability to Measure the Depth of the Market through this Order Book provided by each Exchange. At the same time, we can identify the Volatility of the Market and that can be used as a protection to prevent by Market Manipulations. If we are carrying Scalp entries, we can check the present Market depth and we can follow that considerably large Bid or Ask price to place our scalp entry.
Interestingly, we have the ability to identify the exact strong side of the Market by looking at the total of large Bid or Ask orders. In this way, we can predict the momentum of the present Market at a certain level using these techniques.
This is a very Basic Strategy that I'm still following to trade Cryptocurrencies with the help of other relevant indicators. However, don't use this strategy alone without using any other support indicators. Because we should always try to minimize our risk by using more than one factor to take an entry.
First of all, we should select a relevant Trading Pair using our Exchange application. Here I have used the Binance application to demonstrate this strategy and you are totally free to use any exchange as almost all the exchanges are providing an order book.
Then we can go a bit down the Window to find the Order book according to the selected trading pair.
 |
|---|
According to the above-attached screenshot, we have the ability to change the Order sizes at a certain level. Then, we can skip very small orders for minimizing the noise. After that, we can get a basic idea of the present Market with the help of this Order Book.
 |
|---|
According to the above screenshot, you can see the basic overview of the order book. Here we can especially see the strength of the Top order. So, according to this condition, there is a bit of high buying pressure. Because about 22k Dollars worth of orders have been placed as the Top Ask price and only 10k Dollars worth of orders have been placed as the Top Bid price
However, we should keep in mind that this is only a basic idea of the Market and there are further details that we should focus on regarding an Order book.
I have studied the below-sourced articles to further study these topics and I have explained all the above facts in my own words and experience.
10% benificiary set for @tron-fan-club
Brother this is a great article regarding order book. Thanks for sharing
You are most welcome brother. It's really a pleasure to see your comment on my article.
good strategy to trade in Spot market but I also seem to have to try that too
Thank you very much for your positive comment on my article. Yeah, try to do it. But don't forget to combine it with your other strategies too.
This is a very interesting article. I really appreciate your effort.
Thank you so much
You are most welcome brother. Your valuable comment really motivates me to do more valuable article.
Twitter Shared
https://twitter.com/moneyster12/status/1521531794008518656?s=20&t=9ripscvbxxQMql7L6otqXQ
Yeah, it's true what you said the process of the program that was made was very fast than real human work.
Indeed. We have to be careful when trading with those Programs. Specially we have to wait for taking the exact entry for the Market.
Note: You must enter the tag #fintech among the first 4 tags for your post to be reviewed.
Wow, this is a great article regarding order book, a job well done. Thanks for sharing
Thank you very much for your valuable response to my article. Yeah I always try to deliver some valuable content for Crypto Traders.
The order book is where newly placed orders go to and they get filled when the order is executed. Thanks for sharing with us. Happy Eid Mubarak 🎊
Thank you very much for sharing your idea in my article. Yeah of course. You have also explained it in a clear way.
order Book is very essential in trading, it shows the ask and bid, helping traders to determine the best time to buy or sell
Thank you very much for your valuable comment. Yeah you are 100%. I can see you have taken good knowledge through my article.
The Steemit platform is a learning site, we are here to learn
Of course. There are a lot of things to learn. It will never end. In fact, this is an unlimited process.
Learning Order block is a great important part of crypto trading, as some user tends to miss the market due to close limit.
Nice content delivery, it was superb to read.
Thanks a lot for your valuable feedback on my article. Yes, you are 100% correct. Many Traders tend to miss the market due to close limits. However, we should to follow proper risk management tricks by keeping proper stop loss in every positions.