How do I read the limit order book?

Modified on Tue, 4 Jun at 11:15 AM

This is an example of a limit order book. As explained, there are bids and offers with volumes at specific prices.

In this specific image - the bids in the market range from the highest (R10) to the lowest (R8.79). The offers in the market range from the lowest (R10.50) to the highest (R10.99). The difference between the highest bid and lowest offer is called the bid-offer spread.

The top prices can be interpreted as R10 is the highest price a market participant is willing to buy shares, and R10.50 is the lowest price that a market participant is willing to sell shares.

How many shares are the participants willing to buy at the highest bid? 10,000 shares.

How many shares are the participants willing to sell at the lowest offer? 5,000 shares.

The same understanding can be applied to the remaining prices in the limit order book.