Chapter 3: Exchanges and Order Books

An exchange is market infrastructure

An exchange is a place where buyers and sellers meet through rules, accounts and matching systems. In crypto, this can mean a centralized platform with user accounts or a decentralized protocol connected to wallets and smart contracts.

The order book shows intent

On many centralized exchanges, the order book lists current buy and sell orders. Bids show where people want to buy. Asks show where people want to sell. The middle area between them is where the next trade may happen.

Market orders take what is available

A market order wants execution now. It consumes available orders from the book or liquidity from a pool. This is fast, but not always cheap. If depth is thin, the order may walk through worse prices.

Limit orders wait for a price

A limit order says: buy or sell only at this price or better. It gives control over price but does not guarantee execution. Limit orders help build the visible structure of an order book.

Different exchanges can show different prices

Crypto trades across many venues. Binance, Bybit, Kraken, Uniswap and other markets can show slightly different prices because their users, liquidity and timing differ. Arbitrage traders try to reduce those gaps, but fees, transfer time and execution risk make perfect alignment difficult.

Fees matter before profit exists

Every venue has fees. Some also have withdrawal costs, gas costs or spread costs. A trade that looks profitable before fees can be negative after costs. For small movements, fees can decide the whole result.

The useful habit

When comparing exchanges, do not only compare the headline price. Compare spread, volume, fee level, available balance, withdrawal rules and whether you can actually execute both sides quickly enough.