Reading the order book like a market maker

The price tells you what the market thinks. The order book tells you how sure it is. Learning to read depth is the fastest upgrade an event trader can make.

Start with the spread. A 1¢ spread means the market is confident and liquid; a 10¢ spread means uncertainty — or opportunity for anyone with real information.

Next, look at imbalance. When bids stack up three times deeper than asks, buyers are impatient, and prices tend to drift up even before trades print.

Finally, watch how the book reacts to news. Markets that snap tight seconds after a headline are being made by algorithms; books that stay wide are where human edge still lives.