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Order Book

An order book is the real-time electronic ledger that lists all outstanding buy (bid) and sell (ask) orders for an event contract, organized by price level. It is the central mechanism through which prediction market exchanges match buyers and sellers.

Updated June 25, 2026Trading & Pricing
TL;DR
The order book is the live queue of all pending buy and sell orders. It shows who wants to trade, at what price, and in what size, before any deal is struck.

Key Points

✓Bid side lists all buy orders from highest to lowest price; ask side lists all sell orders from lowest to highest price.
✓When a bid price meets or exceeds an ask price, the matching engine executes a trade and removes both orders.
✓Order book depth — the volume of orders at each price level — determines how easily large trades can be absorbed.
✓On binary prediction markets, a YES bid at price X is equivalent to a NO ask at price ($1.00 - X).
✓Traders submit limit orders to add liquidity to the book or market orders to immediately fill against existing orders.

Structure of a Prediction Market Order Book

A prediction market order book looks similar to a stock exchange book. Bids are stacked below the current Midpoint Price, each showing a price and the quantity of contracts offered at that price. Asks sit above, showing the prices sellers demand. The gap between the top bid and bottom ask is the Bid-Ask Spread. On Kalshi, the book displays Buy YES and Buy NO columns side by side. On Polymarket, a single vertical book shows asks above bids with a toggle for YES or NO view. The Matching Engine continuously scans both sides: when an incoming order crosses the spread, it fills against the best available resting order, producing a trade and updating the Last Price.

Reading Order Book Signals

The Depth of Market view extends the order book to show multiple price levels, giving traders a sense of how much Liquidity sits behind the best quote. A thick order book with large quantities at each level absorbs big trades with minimal Slippage. A thin book with only a handful of contracts at each level means even a modest order can move the price several cents. Sudden shifts in order book composition, such as a large block of new asks appearing, can signal that a sophisticated trader or market maker is repositioning based on new information. This dynamic makes the order book a live feed of market Information Aggregation in action, constantly reflecting updated beliefs about Implied Probability.

Related Terms

Bid-Ask Spread
The bid-ask spread is the gap between the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask) for an event contract. This gap represents an implicit transaction cost every trader pays when entering or exiting a position.
Depth of Market
Depth of market (DOM) is a measure of the volume of buy and sell orders available at various price levels beyond the best bid and ask in an event contract's order book. Greater depth means the market can absorb larger trades without significant price disruption.
Liquidity
Liquidity in a prediction market measures how easily a trader can buy or sell contracts at prices close to the current market quote, in meaningful size, without significantly moving the price. High liquidity means tight spreads, deep order books, and minimal slippage.
Matching Engine
A matching engine is the core software component of an exchange that receives incoming orders, compares them against resting orders in the order book, and executes trades when a buyer and seller agree on price. It determines who trades with whom, at what price, and in what sequence.
Limit Order
A limit order is an instruction to buy or sell a prediction market contract at a specific price or better, resting on the order book until a counterparty matches it or the order is cancelled. Unlike a market order, it guarantees a price but not an immediate fill.

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