An order book is the exchange's live list of every pending buy and sell order for a stock, sorted by price. It is where your limit order sits while it waits, and it is what the market depth screen on your trading app is showing you a slice of.
What does an order book contain?
For each stock, the exchange keeps two lists:
- Bids. All pending buy orders, arranged from the highest price down.
- Asks (offers). All pending sell orders, arranged from the lowest price up.
Each price level shows the total quantity waiting there and how many separate orders make it up. The best bid and best ask sit at the top of their lists, facing each other; the gap between them is the spread. See what are bid, ask, and the bid-ask spread?
The book changes every moment. New orders join, old ones are cancelled or modified, and trades remove quantity from the top. When a buy and a sell cross, the matching engine executes them. how does order matching work on a stock exchange? explains the exact rules.
How is the order book different from market depth?
They are the same thing viewed at different zoom levels. The exchange's full book holds every order at every price. What your app shows as market depth is usually the best five price levels on each side, the top ten rows of a much longer list. To see it on Rupeezy, read what is market depth and how do I view it?
Suppose the book for Sundar Textiles (a fictional company) looks like this:
| Bid qty | Bid price | Ask price | Ask qty |
|---|---|---|---|
| 500 | ₹248.50 | ₹249.00 | 300 |
| 1,200 | ₹248.00 | ₹249.50 | 900 |
| 800 | ₹247.50 | ₹250.00 | 2,000 |
The best-5 depth view would show these rows (plus two more each side). Below ₹247.50 and above ₹250.00 there may be thousands more shares queued. You just don't see them in the standard view.
What can reading the book tell me?
- Where the immediate supply and demand sit. Large quantities stacked at a price suggest many participants want to trade there.
- How thick or thin the stock is. A book with big quantities close together absorbs orders smoothly. A thin book (small quantities, wide gaps) means even a modest market order can move the price several levels.
- What your fill might look like. If you want to buy 1,500 shares of Sundar Textiles at market, the visible asks (300 + 900 + part of 2,000) tell you roughly which prices you would sweep through.
One caution: the book is a snapshot of intentions, not commitments. Orders can be cancelled in an instant, so a big quantity sitting on the bid is not a promise that it will still be there when prices get close.
Things to keep in mind
- The depth screen shows the top five levels per side; the exchange's full book behind it is much deeper.
- Quantities in the book can vanish through cancellations. Treat them as a live picture, not a guarantee.
- Some order features deliberately hide quantity from the book (see what is disclosed quantity?), so the visible depth can understate real interest.
- Between sessions the book is emptied of expired orders and rebuilt the next morning as fresh orders arrive.
Read next
What is tick size? — The smallest step prices in that book are allowed to move in.