How to Read a Polymarket Order Book

An order book is the central data structure behind every trade on Polymarket. It is a real-time ledger of all outstanding buy and sell orders for a given market, organized by price level. Each entry shows a price and the total number of shares available at that price. The buy side (bids) lists what traders are willing to pay for shares, while the sell side (asks) lists the prices at which holders are willing to sell. Together, they form a complete picture of supply and demand at any given moment.

Polymarket uses a central limit order book (CLOB) model rather than an automated market maker (AMM). This means prices are set by real traders posting real orders, not by a mathematical formula. The CLOB approach gives you far more transparency into market microstructure — you can see exactly how much liquidity exists at each price level, identify where large orders are sitting, and gauge how much your trade will move the market before you execute it.

Understanding the order book is foundational to every other skill in prediction market trading. Whether you are placing a simple directional bet or running a sophisticated market-making strategy, the order book tells you the true cost of entering and exiting a position. Traders who ignore it are flying blind — those who read it well consistently get better prices and avoid costly mistakes.

The bid side of the order book represents demand — traders who want to buy shares and the prices they are willing to pay. Bids are sorted from highest to lowest, with the highest bid (the best price for sellers) sitting at the top. If the highest bid is $0.64, it means someone is willing to pay $0.64 per share right now. Below that, you might see bids at $0.63, $0.62, and so on, each representing additional demand at progressively lower prices.

The ask side represents supply — traders who hold shares and the prices at which they are willing to sell. Asks are sorted from lowest to highest, with the lowest ask (the best price for buyers) at the top. If the lowest ask is $0.66, that is the cheapest price at which you can buy shares immediately. The asks above — $0.67, $0.68, and beyond — represent additional supply at higher prices that will only fill if demand pushes through the lower levels first.

The gap between the highest bid and the lowest ask is called the spread. In the example above, the spread is $0.02 ($0.66 minus $0.64). This spread is the implicit cost of trading — if you buy at the ask and immediately sell at the bid, you lose $0.02 per share. Tight spreads indicate a competitive, liquid market where many participants are actively quoting prices. Wide spreads suggest thin liquidity and higher trading costs. Before entering any position, check the spread to understand what you are paying to get in.

The depth chart is a visual representation of the order book that shows cumulative liquidity at each price level. On the left side (usually green), it shows the total value of all bids from the current best bid down to lower prices. On the right side (usually red), it shows the total value of all asks from the current best ask up to higher prices. The height of each side at any price point tells you how much capital would be needed to move the market to that price.

Reading a depth chart reveals information that raw order book numbers can obscure. A steep wall on the bid side at a specific price suggests strong support — many buyers are waiting there, and the price is unlikely to fall below it without significant selling pressure. Conversely, a large ask wall represents resistance — the price will struggle to rise past that level until enough buying power absorbs those sell orders. These walls can shift quickly, so treat them as snapshots rather than permanent features.

Pay attention to the symmetry of the depth chart. In a healthy, balanced market, the bid and ask sides have roughly similar depth. If one side is significantly deeper than the other, it signals directional imbalance. A much deeper bid side suggests more traders want to buy than sell, which can foreshadow upward price movement. A deeper ask side suggests selling pressure. Depth chart analysis is most useful in liquid markets where the data represents genuine trading interest rather than a handful of large orders from a single participant.

The spread is the single most important number to check before placing any trade. It directly determines your round-trip cost — the amount you lose by buying and immediately selling at current prices. A $0.01 spread means excellent liquidity and minimal friction. A $0.05 spread means you are paying 5 cents per share just to participate, which requires a larger edge to overcome. In general, markets with daily trading volume above $100K tend to have tight spreads, while niche markets below $10K in volume often have spreads of $0.03 to $0.10.

Spread also serves as a signal of market quality and information flow. When a market is actively debated and many participants have strong opinions, market makers compete to offer the tightest spreads to attract order flow. During quiet periods or in markets where the outcome is highly uncertain, spreads tend to widen as market makers increase their compensation for the risk of being on the wrong side. If you notice the spread suddenly widening in a previously tight market, it often means new information is entering the market and participants are becoming less confident in the current price.

For practical trading, always use limit orders in markets with wide spreads. If the spread is $0.04 with a bid at $0.63 and an ask at $0.67, placing a limit buy at $0.64 or $0.65 can save you $0.02 to $0.03 per share compared to a market order. In a 1,000-share position, that is $20 to $30 saved — real money that compounds over hundreds of trades. Patience with limit orders is one of the simplest edges available to retail prediction market traders.

Market makers are the backbone of order book liquidity. They continuously post bids and asks on both sides of the book, earning the spread as compensation for providing immediacy to other traders. A typical market maker on Polymarket might post bids at $0.64 and asks at $0.66 in a market, updating their quotes every few seconds based on new information, order flow, and inventory. Their goal is to buy low on the bid side, sell high on the ask side, and manage their net position to avoid excessive directional exposure.

Professional market makers use sophisticated algorithms to manage their order book presence. They adjust their quotes based on the depth of the book at each level, the size of incoming orders, and correlations with other markets. When they detect a large informed order — a big buyer who seems to know something — they widen their spreads or pull their quotes entirely to avoid being adversely selected. This is why you sometimes see liquidity evaporate just before a major price move: market makers are protecting themselves from trading against superior information.

Understanding market maker behavior helps you as a retail trader. When you see thin liquidity on one side of the book, it often means market makers have pulled their orders — a sign that informed flow is expected. When you see a market maker consistently refreshing deep orders at a tight spread, it suggests a stable market where your fills will be reliable. You can also use market maker patterns to time your entries: placing orders during periods of deep liquidity typically results in better fills than trying to trade during thin, volatile moments.

Before placing any trade, spend 30 seconds studying the order book. Check the spread, assess the depth on both sides, and look for any large resting orders that might act as support or resistance. This simple habit will save you money on nearly every trade. On 0xInsider, you can monitor how top-ranked traders time their entries relative to order book conditions — many of the highest-rated traders consistently enter positions when the book is deepest and spreads are tightest.

Size your orders relative to the available liquidity. If the order book shows 2,000 shares available at the best ask, and you want to buy 5,000 shares, you will eat through multiple price levels and experience significant slippage. In this case, break your order into smaller pieces — buy 1,000 shares now and place limit orders for the remaining 4,000 at prices you are comfortable with. This approach — sometimes called order slicing or working an order — is standard practice among professional traders and is one of the simplest ways to improve your average execution price.

Watch for order book patterns around known events. Before a scheduled data release (like an economic report or election result), order books tend to thin out as market makers reduce their exposure to uncertain outcomes. After the event, liquidity floods back and spreads tighten. If you are trading around events, consider placing your orders before the book thins out or waiting until after the event when liquidity returns. The worst time to trade is during the thin period immediately before or during a major event, when spreads are widest and slippage is highest.

The stacked wall pattern occurs when a large number of shares accumulate at a single price level, creating a visible wall on the depth chart. A bid wall at $0.60 with 50,000 shares signals that a large buyer or group of buyers considers that price level to be strong value. The price is unlikely to fall below $0.60 unless that wall is absorbed or withdrawn. However, walls can be spoofed — placed to create the illusion of support and then pulled before execution. Cross-reference wall sizes with the market's average trading volume to assess whether they are credible.

The iceberg pattern is the opposite of a visible wall. Some traders use iceberg orders that only show a small portion of the total order, automatically refilling as each visible portion is executed. You can detect icebergs by watching for repeated fills at the same price level — the order keeps getting filled but never disappears from the book. Iceberg orders are a sign of large, informed traders who do not want to reveal the full size of their position. When you spot one, it is worth investigating what that trader might know.

The vacuum pattern appears when one side of the book suddenly empties. If all the ask orders above $0.70 disappear, it creates a vacuum where even a small buy order can push the price significantly higher. Vacuums often precede rapid price moves and can be exploited by traders who recognize them early. On the flip side, entering a trade during a vacuum is risky because the lack of liquidity means you may not be able to exit at a reasonable price. The best practice is to observe vacuums from the sidelines unless you have strong conviction about the direction of the move.

Studying these patterns alongside whale trade data on 0xinsider.com/terminal helps you build a complete picture of market dynamics. Order book structure tells you the mechanical state of a market, while whale trade data tells you who is driving the action and with what conviction.