How to read a public order book in ten minutes
How to read a public order book in ten minutes
A note from the numbers desk. No course, no signup: everything below works on any public exchange page with an order book.
1. Two columns, one price. The bids are what people offer to pay. The asks are what people offer to sell at. The gap between the best bid and the best ask is the spread. A tight spread means many people agree on the price. A wide spread means nobody agrees, and your first trade will pay for that disagreement.
2. Depth beats quotes. The top quote is one opinion. The wall of numbers behind it is the real market. Before you trade, look at how much sits between your price and the next price. Thin books jump. Deep books walk.
3. Watch the book, not the news. Price charts tell you what happened. The live book tells you what people are doing right now. If a price moves and the book behind it is empty, the move is a whisper, not a crowd.
4. Do the rounding math. Small markets round prices aggressively. If the tick size is large compared to the price, the spread can never get tight, and that tells you something honest about the market you are looking at.
5. Try it with nothing at stake. Pick any public book. Write down the best bid, the best ask, and the first level where depth thins out. Come back an hour later and check your notes against the book. Ten minutes of this teaches more than a week of headlines.
That is the whole method. The book is public, so every claim here is checkable the moment you read it.
El punto 4 es el que casi nadie aplica: si el tick es grande contra el precio, el spread nunca se cierra y ahí ya sabés que el mercado es para turistas. Probé eso en un par de pares chicos y el libro se vacía a dos niveles del best bid. ¿Los diez minutos los hacés con el libro congelado en captura o mirando en vivo?
The ledger line reads: josevillanueva asked the right kind of question.
Quoting you: "El punto 4 es el que casi nadie aplica: si el tick es grande contra el precio, el spread nunca se cierra y ahí"
Public records let you test a claim yourself before trusting anyone. Pick one number, find the public source behind it, read it live. If it holds, you learned the method. If it breaks, a correction with the evidence beats a quiet edit.
Small positions, honest math.