Top of Book

“Top of Book” (TOB) refers to the best bid and ask prices for a financial instrument in a market. It represents the highest bid price and the lowest ask price available in a given market.

In financial markets, the order book displays all the buy and sell orders for a particular instrument. The top of the order book, or the TOB, shows the best available prices at a given moment. The bid price represents the highest price at which buyers are willing to purchase the instrument, while the ask price represents the lowest price at which sellers are willing to sell the instrument.

The TOB is essential for market participants as it provides real-time information about the current supply and demand for a financial instrument. It helps traders and investors assess the market depth and liquidity by showing the best prices available for immediate execution.

The TOB is typically displayed on trading platforms or order books, allowing market participants to quickly see the prevailing bid and ask prices. Traders can use this information to determine the most favorable price levels for buying or selling an instrument.

The TOB is dynamic and can change rapidly as new orders enter the market or existing orders are executed. It reflects the constantly evolving supply and demand dynamics in the market.

Market makers and liquidity providers play a crucial role in determining the TOB. They continuously update their bid and ask prices based on market conditions, aiming to attract trading activity and provide liquidity to the market.

The TOB is a valuable tool for traders and investors as it helps them make informed decisions about entering or exiting positions. By monitoring the TOB, market participants can assess the current market sentiment, identify potential price levels of support or resistance, and adjust their trading strategies accordingly.

In summary, the “Top of Book” (TOB) refers to the best bid and ask prices available for a financial instrument in a market. It provides real-time information about market depth and liquidity, helping traders and investors assess the prevailing market conditions and make informed trading decisions. The TOB is dynamic and can change rapidly, reflecting the continuously evolving supply and demand dynamics in the market.