If you closely monitor the order book on Binance or another cryptocurrency exchange, you will surely notice an interesting feature: buy and sell orders often come in groups or 'blocks'. Why does this happen? Is it a coincidence or a pattern? Let's figure it out!
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🚀 What is an order book?
The order book is a table with current buy and sell orders for an asset.
🔴 Red block: sell orders (ask).
🟢 Green block: buy orders (bid).
Traders place orders at specific prices and volumes. When the buyer's and seller's prices match, the trade is executed.
But why are orders grouped? 🤔
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🤖 1. Algorithmic trading and trading bots
Today, more than 70% of trading volumes on exchanges come from trading bots and algorithmic strategies.
How does it work?
Bots automatically place buy and sell orders based on set parameters.
For example, if the asset price reaches a certain level, the bot will send a series of orders with small steps (e.g., 0.01 USDT) at once.
🔍 Example:
If the bot buys UNI/USDT, it can place 10 orders at prices from 16.030 to 16.040 USDT, creating a 'block' effect.
Why is this profitable?
📈 Bots can reduce risks and smooth out trade execution.
⚡ They trade quickly and efficiently, unlike manual trading.
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🐋 2. Large players and order slicing
Large investors or 'whales' cannot simply buy or sell huge volumes of cryptocurrency at once. If they try:
The price will jump sharply up or down. 📉
They will lose favorable trading conditions.
💡 Solution?
They break large orders into several small ones, placing them consecutively in the order book:
For example, instead of one purchase of 1000 UNI at 16.050 USDT, they will place 10 orders of 100 UNI each.
This approach reduces market impact and appears as a series of 'blocks'.
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⚡ 3. High-frequency trading (HFT)
High-frequency traders (HFT) use powerful algorithms and technology to send orders instantly. Their goal:
Catch even the smallest price movements (in milliseconds).
Get a fraction of a cent in profit on each trade.
How does this create blocks?
HFT systems can send hundreds of orders per second, which visually appears as a 'packet' of orders in the order book.
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💧 4. Market makers and liquidity provision
Market makers are market participants who provide liquidity by constantly placing buy and sell orders.
They create 'density' in the order book by placing orders with small price steps.
Thanks to them, the market remains stable and active.
🔹 Why blocks?
Market makers use automated systems that send orders in batches to maintain balance between buying and selling.
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📡 5. API and automation
Many traders trade via API — a special interface for automated trading.
Users can send a batch of orders at once via API.
For example, based on the 'grid' strategy, where orders are placed at fixed levels.
Thus, a series of orders with similar prices and small volumes appear in the order book.
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🎯 Why is this needed?
Groups of orders or 'blocks' help:
1. ⚖️ Reduce market impact: Large trades do not affect the price.
2. ⏱️ Trade faster and more accurately: Bots and HFT reduce the time to place orders.
3. 🔍 Maintain anonymity: Traders hide their intentions by breaking large orders.
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🏆 Conclusion
Orders coming in blocks in the Binance order book are not a coincidence. They are the result of algorithmic trading, actions of large players, and the work of market makers. These processes make the market more liquid, stable, and efficient.
📊 Watch the blocks of orders — this can hint at market sentiment and the actions of large players.
Successful trading! 🚀📈
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