Module 1 — How a crypto market works
Understand where a price comes from, what the spread is, and the difference between an order book and an AMM pool.
Free course · Beginner · 20 min
Module 1 — How a crypto market works
Understand where a price comes from, what the spread is, and the difference between an order book and an AMM pool.
Lesson 1 of 2 · 10 min
OBJECTIVE
Where a price comes from
A price is the last agreed trade, not a fixed value. On an order book, buyers post bids and sellers post asks; the gap between the best bid and the best ask is the spread.
LEARNING VISUAL
Learning diagram: Where a price comes from
Concrete example
Best bid 0.98, best ask 1.02: the spread is 0.04, about 4% of the mid price 1.00. Buying and selling again immediately would lose about that spread, before fees.
Practical checklist
- Identify the venue type: order book or AMM
- Read best bid, best ask and spread
- Remember that a displayed price is not a guaranteed fill
Mini quiz
What is the spread?
Answer the mini quiz correctly to validate this lesson and continue.
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