Limit Order Book
Order Flow Analysis glossary · Order Book & Depth of Market
Definition
The collection of all resting bids and offers across every visible price level, visualised as a price ladder with resting bid quantity on the left side of each price and resting offer quantity on the right. Only the area around the current market price is typically displayed (Level II data shows roughly five to ten levels deep on each side). Book depth is dynamic — orders are added, cancelled, and modified hundreds of times per second — so the LOB reveals current resting interest, not committed intent.
Limit Order Book in plain English
Imagine a public list showing every price someone is willing to buy at and every price someone is willing to sell at, stacked like rungs on a ladder — that's the limit order book. On each rung you can see how many shares or contracts are waiting to buy (bids, on the left) and waiting to sell (offers, on the right), so you get a live picture of where interest is piling up near the current price. Traders usually only see the closest 5-10 rungs on each side. The catch: these are just parked intentions, not promises — people add and yank their orders hundreds of times a second, so the book shows what people are willing to do this moment, not what they've committed to.
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