Order Book Mechanism

Definition ∞ An order book mechanism is a core component of many trading platforms, listing all outstanding buy and sell orders for a specific asset. It displays bid and ask prices along with their corresponding quantities, facilitating price discovery and liquidity. This system allows market participants to place limit orders, which are matched when conditions are met.
Context ∞ The order book mechanism is a fundamental topic in discussions about cryptocurrency exchange functionality and market efficiency. Centralized exchanges commonly employ this model, while decentralized exchanges sometimes utilize automated market makers. News often references order book depth and liquidity when discussing market volatility or trading conditions.