An order book is a tool that can be very valuable in predicting the direction in which the market will go. It can highly improve the search for best entry points and identification of spoof orders.

Order flow
Reading the demand for buying and selling in the book is called order flow or reading the tape. It is a very old technique, but very powerful. Many day traders or ‘scalpers’ who open multiple short-term positions are using it. It is possible to combine it with technical analysis to determine when to enter the market and what type of orders to use.

Order flow is very common in liquid markets such as the US stocks and futures. The traders often use only the order book and skip reading the charts. It may be considered very arbitrary by individual traders as the attempts to automate trading rules in the code request high programming proficiency. Yet, institutional and high-frequency traders are more interested in supply and demand than in various indicators and graphic software.

Reading the order book on Binance
Looking at the order book you can get the information about the supply and demand in the market – DOM (the depth of the market). It shows inside Offer and inside Bid that is the lowest price demanded by a seller and the highest price a buyer is ready to pay.

Moreover, you can spot support and resistance levels. Check the volume profiles which are in the shaded green and red colours.



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