What Is a Depth Chart?
While the name might evoke images of scuba diving equipment, a depth chart serves an entirely different purpose in cryptocurrency trading.
In most centralized crypto exchanges (CEXs), trading platforms display a depth chart alongside price graphs. This tool visualizes the supply and demand of a cryptocurrency across different price levels at any given moment.
Key Components of a Depth Chart
A depth chart represents the order book—a structured list of pending buy/sell orders for a specific cryptocurrency. Here's how to interpret its elements:
- Bid Line (Green): Shows cumulative buy orders ("bids") on the left side.
- Ask Line (Red): Displays cumulative sell orders ("asks") on the right side.
- X-Axis (Horizontal): Lists price points from low to high.
- Y-Axis (Vertical): Indicates order volume at each price level.
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How Depth Charts Work
Depth charts reveal market liquidity by illustrating:
- Buy Pressure (Green Area): High concentrations of bids may indicate strong demand.
- Sell Pressure (Red Area): Dense ask clusters suggest increased supply.
The "depth" refers to the market's ability to handle large orders without drastic price swings. Greater order volume on both sides signifies a more liquid market.
Identifying Buy/Sell Walls
Buy Walls
- Definition: A large cluster of buy orders at a specific price.
- Impact: May prevent prices from dropping further (e.g., BTC/USD buy wall at $29,000).
- Caution: Can be artificially created for market manipulation.
Sell Walls
- Definition: Heavy concentration of sell orders at a certain price.
- Impact: Often caps price rises (e.g., BTC/USD sell wall at $30,001).
- Caution: Also susceptible to manipulation.
FAQs
1. Why do traders use depth charts?
They help assess market sentiment and predict potential support/resistance levels based on order book liquidity.
2. Can depth charts predict price movements?
While they show current supply/demand imbalances, unexpected market events can override these patterns.
3. How reliable are buy/sell walls?
Large walls may indicate strong interest, but algorithmic traders sometimes fake them to influence perceptions.
4. Do all exchanges display depth charts similarly?
Layouts vary slightly, but core components (bid/ask lines, axes) remain consistent across platforms.
👉 Explore real-time depth charts on OKX
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