Order Book

An order book is the electronic record of all open limit orders in a market, showing the price and quantity that buyers are willing to pay (the "bid" side) and sellers are willing to accept (the "ask" side). The difference between the best bid and best ask is called the spread, and it represents the immediate cost of executing a trade.

In prediction markets, order books function similarly to equity or cryptocurrency exchanges. A market order executes immediately at the best available price, while a limit order sits in the book until a counterparty matches it. When you place a limit order on Polymarket or Kalshi, you're adding liquidity to the book; when you execute a market order, you're taking liquidity.

The depth of the order book — how many contracts are available at prices near the midpoint — is a key indicator of market health. Shallow books with only small orders near the current price suggest thin liquidity and potential for large price moves on moderate-sized trades. Traders should review the order book before entering large positions to estimate their likely execution price and market impact.