Difference Between Order Book and Trade Book

If you have just started trading in F&O and equities or are planning to take up online trading, you would have heard of terms such as order book and trade book. So, what do these terms mean and what’s the difference between order book and trade book?

Read on to know more about order book vs trade book in online trading.

Order book vs trade booklike an order book, used in equity and F&O trading.

Order book is the term used to describe a list of buy/sell orders for any security or financial instrument. This list is either manual or electronic, but in the world of online trading it is an e-list. Every time an order is placed, all order details, including price and quantity, are recorded in the order book. Each order is also assigned a specific number so as to refer to it in the future. The order book gets real-time updates. The status of an order can be ‘requested’, ‘queued’, ‘ordered’, ‘executed’, ‘part executed’, ‘expired’, ‘canceled’ or ‘rejected’.

When an order gets executed, it enters the trade book. There is a trade number assigned and the status of the execution is also listed in the trade book. The trade book is also, like an order book, used in equity and F&O trading.

The primary difference between order book and trade book is that the order book is a reflection of all the orders that have been placed while the trade book is a reflection of the trades that have actually been executed.

Here are some more facts pertaining to order book vs trade book in online trading: 

  • – While an order book can show the status of an order, ie, modification/cancellation/pending or even executed orders, the trade books shows a trader only details of an executed order. Pending or cancelled orders don’t find a place in a trade book.
  • – A market order is a buy/sell order which is executed in real-time and at the current market price. It is among the simplest orders, and is used when executing it is of greater importance than the price. So, when such an order is placed, it gets recorded in the order book but also gets recorded in quick time in the trade book.
  • – Limit orders are those wherein the trader is interested in buying or selling an asset at a specific price. So, limit orders generally don’t see immediate execution. If there is a partial execution then the trade book registers the extent of execution. Partial execution is called a partial fill, wherein some of the trade order is filled at the specific/wished-for price.  Otherwise, a limit order is not reflected in the trade book, ie, when it is unexecuted. That’s another order book vs trade book
  • – A stop or stop loss order is an order wherein you buy or sell only when a preset price is achieved. Upon reaching that specific price, the stop order is effectively a market order. Till that time a specific price is reached, a stop order may not be reflected in the trade book.
  • – The trade book also has links so you can carry out cash/securities settlements for each order that has been executed. Not only does the trade book have a record of every one of your executed orders for a day, it also gives you the option of adding more or closing a trade from the book.
  • – An understanding of orders and how they can be used in trading can be gained by looking at order book vs trade book A beginner may find market orders easier as they see immediate execution, and get reflected in the trade book. A more serious online trader may find value in limit orders, and these don’t get reflected in the trade book in a hurry.

Summing it up

In conclusion, the difference between order book and trade book is essential understanding for anyone who wants to take online trading more seriously. Learning more about trading orders can look daunting at first simply because there are so many types of them. You could open a demat trading account with Angel One and get a better understanding about order book vs trade book in online trading, and what each of them contains. You will also be able to trade seamless across platforms and gain access to research.