Order Book
A real-time list of all open buy orders (bids) and sell orders (asks) for a trading pair on an exchange, organized by price level. The order book shows market depth and the spread between the highest bid and lowest ask. Centralized exchanges and some DEXs use order books to match buyers with sellers.
“Looking at the BTC/USDT order book on Binance, you might see buy orders stacking up at $59,800 and sell orders at $60,000, with the $200 gap being the bid-ask spread.”
Limit Order
An order to buy or sell a cryptocurrency at a specific price or better. A buy limit order executes at the limit price or lower, while a sell limit order executes at the limit price or higher. Limit orders provide price control but may not execute if the market never reaches the specified price.
Market Order
An order to buy or sell a cryptocurrency immediately at the best available current price. Market orders guarantee execution but not a specific price. In low-liquidity markets, large market orders can cause significant slippage as they consume multiple price levels in the order book.
CEX (Centralized Exchange)
A cryptocurrency exchange operated by a centralized company that acts as an intermediary between buyers and sellers. CEXs hold custody of user funds, maintain off-chain order books, and typically require identity verification (KYC). They offer high liquidity and ease of use but introduce counterparty risk.
Market Maker
An entity or algorithm that provides liquidity to markets by continuously placing buy and sell orders on both sides of the order book, profiting from the bid-ask spread. In crypto, professional market makers ensure healthy trading volumes, reduce price volatility, and minimize slippage for tokens listed on exchanges.