Every trader needs to become acquainted with the tools that will help them gauge the market and inform their decision-making. Once a trader understands the general concepts of crypto trading strategies and technical and fundamental analysis, he or she needs to get comfortable reading order books.
An order book is a tool that visualizes the outstanding orders in place for a particular asset.
On the left-hand side you see the bids for people buying BTC and on the right-hand side you see the asks for people selling it. A bid is how much a buyer wants to pay for a certain amount of an asset, and an ask is how much a seller wants in return for a certain amount of an asset. The amount column lets you know how much of the asset is being bought or sold.
Order books are important because they are updated in real time and indicate the market health of a cryptocurrency. If a currency has a lively order book it means that it has a high liquidity, which in turn means that the currency can be bought and sold quickly without it causing price fluctuations. A lively order book also indicates that a cryptocurrency is less susceptible to pump and dump schemes.