An order book is a list of all open buy orders and sell orders for an asset, sorted by price. On one side are the bids, the buy orders. On the other are the asks, the sell orders. A trade happens when a buyer and a seller agree on a price.
How does an order book work?
Most exchanges use a central limit order book. You can place an order at a set price and wait for someone to take it, which is a limit order. Or you can buy or sell immediately at the best price available, which is a market order.
The system matches orders by price and then by time. The highest bid and the lowest ask come first, and if two orders have the same price, the one placed first goes first. The gap between the highest bid and the lowest ask is the SpreadSpreadThe difference between the buying and selling price of the same asset at the same time, often used to charge for crypto trades..
Nasdaq Iceland, the Icelandic stock exchange, matches orders this way, and so do most centralised crypto exchangesCentralised exchange (CEX)A crypto exchange run by a company that carries out the trades and holds the crypto on behalf of its customers.. Some decentralised exchangesDecentralised exchange (DEX)An exchange run by smart contracts, where people swap crypto straight from their own wallets with no company in the middle., such as Hyperliquid, keep the order book on their own blockchain.
Order book or automated market maker
Most decentralised exchanges don't use an order book but an automated market makerAutomated market maker (AMM)A smart contract that prices tokens on a decentralised exchange with a fixed formula, based on how much of each token sits in the pool. (AMM). There you trade against a pool of crypto, and a formula sets the price from the ratio of coins in the pool. In an order book, buyers and sellers set the price themselves through their orders.
The depth of the order book matters. If there are many orders close to the current price, LiquidityLiquidityHow easily an asset can be bought or sold quickly at a fair price, without the trade moving the price much. is good and large trades barely move the price.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.