Orderbook Exchange

Definition ∞ An orderbook exchange is a trading platform that matches buy and sell orders for financial assets, including cryptocurrencies, by displaying a list of current bids and asks. It operates by aggregating orders from market participants into a central record, known as the order book. This mechanism facilitates price discovery and liquidity. Traders can place limit orders at specific prices or market orders for immediate execution.
Context ∞ Orderbook exchanges are fundamental to cryptocurrency trading and are frequently discussed in news regarding market liquidity, price volatility, and trading strategies. Centralized exchanges typically use order books, and their operational efficiency and security are constant topics. The emergence of decentralized orderbook exchanges in DeFi also garners attention, presenting challenges and innovations in matching mechanisms. Understanding the order book helps interpret market depth and potential price movements.