Sometimes you hear about it on Tv, on books or when you do technical analysis but we all really know what trading book is?
Trading book is an electronic list that you see on the trading platform, is updated in real time and individually shows sales and purchase proposals, it has the function of collecting orders from investors who want to buy or sell stocks (Ask/Bid). The trading book is useful to see other orders present waiting to be traded if the price at which they were placed will be reached (either in purchase or sale).
Trading book allows traders to have a broader market view because in addition to the classic technical analysis tools it allows you to measure sentiment in real time.
Trading books on trading platforms are visible at 5/10/15/20 levels, specifically you will find on your page columns of Ask/Bid along with contract numbers’s column present at that time, the levels with the prices’s quantity and the price expressed in the currency ( dollar,euro,yen). Purchase prices are displayed in descending order while sales prices in ascending order, this provision allows you to compare the best proposal in purchase and the best proposal for sale.
All this information provided by the book are important for investors who trade intraday, (less for long-term investors) to identify the type of bull market/bear market but above all, to manage the entry time and understand if the orders placed on the market come from large investors such as funds or institutional investors.
I always recommend analyzing the trading book but beware of dark pooling and high frequency trading, I know it’s very difficult.