Difference Between Order Book and Trade Book

Difference Between Order Book and Trade Book

When you enter the busy world of financial markets, you'll discover many languages and notions that may confound even the most seasoned investors. The order book and the trade book are two key components at the core of any market. These key tools give critical insights into stock market dynamics and affect traders' and investors' strategies.

Consider yourself in the middle of a crowded marketplace, where buyers and sellers collide in the hopes of making successful agreements. The order book and trade book are the complicated mechanisms that power this dynamic ecosystem, exposing the depth of demand and supply, allowing transactions, and recording the market's pulse.

In trading and investment, the order book and trade book are two essential market instruments that play distinct roles. Understanding the difference between Order Book and Trade Book  these two tools is crucial for traders and investors. Let's delve into their contrasting features and explore their critical responsibilities.

Like an order book, a trade book is used in stock and F&O trading.

An order book lists buy/sell orders for securities or financial instruments. This list can be manual or electronic, but it is an e-list in online commerce. Every time an order is placed, the order book is updated with all order data, including price and quantity. Each order is also given a unique number so that it may be referred to in the future. The order book is updated in real-time. An order's status can be requested,' 'queued,' 'ordered,' 'executed,' 'part executed,' 'expired,' 'canceled, '' or rejected.

When an order is filled, it is recorded in the trade book. A trade number is allocated, and the execution status is also mentioned in the trade book. Like the order book, the trade book is also utilized in equities and F&O trading.

The major difference between order book and trade book is that the order book reflects all orders made, whereas the trade book reflects trades that have been performed.

Here's all you need to know about the order book.

Immediate Reflection: When a trader places an order in the equity or F&O market, the order details, such as quantity, price, and a unique order number, are promptly reflected in the trading account's order book.

Market Orders vs. Limit Orders: If there is enough market volume, market orders will be executed immediately and will show up in the order book as executed orders. Limit orders, on the other hand, will only be executed if the specified price conditions are met. Therefore, any unexecuted portions of limit orders will be displayed as open positions and will not be reflected in the trade book.

Order Modification: Traders can modify their orders until they are executed. They can change the order, cancel it, convert between market and limit orders, or adjust the quantity and price for execution.

Sorting Options: Traders can use the order book to organize their orders according to different criteria. They can filter their orders by exchange (NSE, BSE), segment, or asset class (equities, futures, options). They can also filter for specific order types such as smart order routing (SOR) orders.

Order Status Sorting: Traders can sort their order book based on the current status of the orders. This includes fully executed, partially executed, rejected, modified, canceled, and other statuses. In addition, sorting based on specific order types, such as Immediate or Cancel (IOC) or expired orders, is possible.

Here are Some key points to understand about the Trade Book:

Instant Reflection: One key difference between order Book and trade Book is once an order meets the specified conditions and is executed on the exchange, the Trade Book promptly displays the execution status and a unique trade number. This process applies to equity trading, futures trading, and options trading.

Market and Limit Orders: When a market order is placed in the order book, it is executed immediately and its execution is shown in the trade Book right away. However, limit orders may still need to be fully executed and can appear unexecuted or partially executed in the Trade Book. Unexecuted orders are not displayed, while partially executed orders only show the extent to which they have been executed.

Sorting Options: The trade Book, like the order Book, allows sorting by exchange, trading segment, and sometimes even the instrument traded. However, it only displays information for the current trading day and will be empty the following day unless new orders are executed.

Call to Action: The trade Book logs your daily trades and offers suggestions for the next steps. For example, if you purchased a stock and its value increased, the trade Book might recommend closing the trade, increasing your position, or adding it to a systematic investment plan (SIP).

Conclusion

Understanding the difference between order book and trade book is crucial for measuring performance and maintaining accurate online trading and investment records. Regularly cross-checking these data with contract notes promotes transparency and instills confidence in traders. In addition, the order and trade book data serve as a valuable resource for traders, offering insights for improving trading strategies and optimizing tactics. 

For a seamless trading experience with comprehensive order book and trade book functionality, consider exploring the blinkX trading platform. With its real-time data, efficient order execution, user-friendly interface, and extensive tools, blinkX empowers traders to stay ahead in the dynamic financial markets.