Top of Book
Tue, Apr 15The Top of Book refers to the highest bid and the lowest ask at a given moment. These figures are significant as they indicate the current market conditions and the bid and ask prices necessary to execute an order.
The best ask is defined as the lowest ask, while the best bid is the highest bid. If the ask price is lower than the bid price, the market is considered "crossed." This situation, known as a "crossed market," is typically resolved quickly.
Generally, the bid will be lower than the ask. The term "Top" in "top of the book" signifies a ranking based on the "best" prices, which differ for bids and asks, rather than a specific visual layout on a page or screen.
Consider the "book" as a model, representing an abstract collection of outstanding bid and ask order data. When people refer to the "top of the book," they are discussing the best bids (with higher values being preferable) and the best asks (with lower values being preferable).
The visual representation mentioned is just one way to illustrate a glimpse of the best orders in the "book." The benefit of this particular visualization is that it allows viewers to see the asks and bids converging towards the center.
The spread is evident as the difference between the two central elements, which are the lowest row in the blue "Asks" area and the highest row in the green "Bids" area.
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