# Bid & Ask Ratio
## Background
An order book contains a list of buy and sell orders for a particular asset, such as a BTCUSDT. Each order specifies the price at which a trader is willing to buy or sell a certain quantity of the asset.
When you select a range of 0-1% in the order book, you are asking to see only the bids or asks that are within 0-1% of the current market price.
For example, if the current market price for a BTCUSDT is $100, then bids within the 0-1% range would be between $99 and $100 ($100 minus 1%). Asks within the 0-1% range would also be between $100 and $101 ($100 plus 1%)
By looking at bids and asks within a specific percentage range, you can get a better idea of the supply and demand for the asset at different price levels, which can help inform your trading decisions.
## What is it?
The bid/ask ratio is a measure of the relationship between the number of buy orders (bids) and sell orders (asks) in an order book for a particular asset.
To calculate the bid/ask ratio, you take the difference in total bids and total asks and divide the result by the total number of bids and asks.
$$bidAskRatio = (bids - asks) / (bids + asks)$$
The resulting ratio ranges between -1 and 1, with 0 indicating an equal number of buy and sell orders in the order book.
* A bid/ask ratio that is greater than 0 indicates that there are more buy orders than sell orders in the order book, which could suggest that there is greater demand for the asset at the current price level.
* Conversely, a ratio less than 0 indicates that there are more sell orders than buy orders, which could suggest that there is greater supply of the asset at the current price level.
## Where can I find it?
To start using the "Bid & Ask Ratio" on the Hyblock platform, follow these simple steps:
1. Go to "Charts."
2. Select "Indicators."
3. Navigate to the "Orderbook" section.
4. Locate and select the "Bid & Ask Ratio" from the list of available indicators.
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## Use Cases for the Bid/Ask Ratio
The "Bid-Ask Ratio" offers valuable insights and can be applied to various trading scenarios. Below, we highlight some use cases that demonstrate the potential of this metric for enhancing your strategies.
### Use Case 1: Filtering Spot Data for Accurate Supply/Demand Analysis
Focusing on spot data can provide a more accurate representation of supply and demand.
1. In spot data, limit buys always represent longs entering, while limit sells represent longs exiting. In perpetual or futures data, shorts can also play a role, and therefore, a limit buy can be a long entry **or** a short exit, adding another layer of complexity to the supply/demand.
2. Additionally, spot order books tend to be less susceptible to manipulation via spoofing, as large leverage cannot be used to open positions.
### Use Case 2: Setting Thresholds Based on Historical Data for Long and Short Bias
By filtering spot data within a certain range, such as 0-5% of the order book, we can set thresholds for long and short bias based on historical data. For example, a threshold greater than 0 may indicate a long bias, while a threshold less than or equal to -0.25 could signal a short bias. Thresholds do not have to be symmetrical (e.g., 0.25, -0.25).
In a bullish trend, more supply may be needed for the price to drop. Therefore, rather than using a threshold of less than 0 for short bias, we can set it further away at -0.25. On the other hand, only a small amount of demand may be required to maintain bullish momentum, so a positive threshold (more bids than asks within the range) could be enough to form a long bias.
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