How to analyze an order book with Order Book tool
Nowadays the order book is one of the few instruments that provide a trader with truly useful information, which greatly facilitates making trading decisions.
In contrast to various indicators, which are generally meaningless, the order book displays absolutely valid data on trading positions and open orders of traders.
Order Book tool
OrderBook is a remade from scratch version of DOM snapshots tool. It provides us with more detailed data about market sentiment.
You can use the OrderBook tool for more accurate analysis of basic patterns, which you can find just below.
Here are some examples of analysis made by the Order Book.
You can compare volumes on each side of the order book:
Or you can compare the current order book snapshot and the one made 2 days before it:
It’s hard to explain all the available types of analysis, which you can make with the Order Book, so you should try to interpret it by yourself.
Order book’s patterns cheat sheet
These are the order book’s basic patterns for a buy signal:
These are the order book’s patterns for a sell signal:
Each of these patterns can generate signals separately. However, the more patterns are formed at the same time, the more effective is trading.