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What’s the difference between an Order Book and a Trade Book?

Staring at a trading terminal can be overwhelming, especially if you are new to trading. There's so much information continuously streaming that as a new trader, you may overlook or ignore critical data. This is where understanding tools such as an order book or a trade book can help improve your trading experience. They are useful in understanding your positions, executed orders, and allowing you to choose prices for your pending or unexecuted orders.

So, let's get to know about Order book and Trade book.

Additional read: 10 Intraday Tips for Beginners

Understanding an Order Book

An order book is a list of transactions, whether they are to buy or sell stocks, futures or options. An order book contains a record of all information such as the price, quantity, date of order, etc.

Once an order is placed, it is assigned a unique number that you can use to verify its status later on.

If you place a market order, it will get executed immediately most of the times. If you place limit orders dependent on certain conditions, the order will only get fulfilled once the requirements are met. Even if the order is not completed, it will reflect in the order book.

Orders in the order book can be sorted based on the type of security, the segment of investment or the exchange they are traded on. This makes it easy for you to track pending and completed orders. You can also sort the order book based on the order’s status – fully-executed, partially-executed, rejected, cancelled, expired, etc.

Understanding Trade Book

A trade book is a list that reflects executed or completed trades. This means that only executed orders will be appear in the trade book along with a corresponding trade number.

Market orders that get executed immediately reflect in the trade book almost instantly. However, limit orders that take time to execute, will reflect in the trade book only after their execution. Until then, they will reflect only in the order book. On the other hand, a partially executed order will only reflect that section that has been completed in the trade book.

Just as it is with the order book, the trade book can also be sorted based on the trading instrument, segment and the exchange of trading.

Additional read: Advantages of Intraday Trading

Order Book Vs Trade Book summary

  • An order book is a summary of all placed orders, irrespective of whether they have been executed or not. A trade book only reflects trades that have been executed.
  • Both the order book and the trade book summarize the trades for a single day. However, you can also check past orders and trades by selecting the appropriate period.
  • All the orders are entered in the order book the moment they are placed. Only upon partial or full execution do they make it to the trade book.
  • The same rule applies to a stop or a stop-loss order. They appear in the trade book only after the trade has been completed.
  • Comparing the order book vs. trade book can help track your orders and how they have been executed. You can monitor a pending trade in the order book, and can modify or cancel the order from there.

 

Takeaway

As a well-informed and prudent investor, use the order book and trade book as critical sources to track your trades. Conduct your audit trail and track your trading performances. It can be a good idea to continually verify your completed trades in the trade book and ensure they have gone through. If you are looking to start your trading journey, begin with ICICI Direct today.

Disclaimer – ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.

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