The order book
An order book organizes resting buy and sell orders by price. Orders at different price levels contribute to the visible depth of the market. That depth can change as orders are placed, filled or cancelled.
The bid–ask spread
The highest displayed buy price is the best bid; the lowest displayed sell price is the best ask. The difference between them is the spread. It is one part of market quality, alongside depth and other execution conditions.
Market depth
Depth describes the quantity available at different prices. A market with several layers of orders can behave differently from one with the same best bid and ask but little quantity behind them.
The role of market making
A market-making strategy can quote both sides of the order book according to configured rules. It needs to account for market changes, inventory and the venue’s requirements. It does not remove trading risk.
Questions for your project
Identify the venues and pairs that matter, the stage of the listing and the objectives you want to discuss. These details are more useful for planning than an isolated chart or a single spread observation.
An illustrative spread calculation
If the best bid is $0.99 and the best ask is $1.01, the spread is $0.02. Relative to the $1.00 midpoint, that is 2%, or 200 basis points. This fictional example describes only the top of the book: it says nothing about how much can be traded there or the price of a larger order.