What is a market depth chart, and how to read it?
Every cryptocurrency exchange has several tools that allow traders to make better trades. One of these tools is the market depth chart. It enables you to assess the current state of a token in terms of volatility and helps many traders to make the right strategy.
A low one indicates that there are not enough orders for one or another currency pair. A high depth demonstrates that there are enough orders. Analysis of these data helps the trader to make more profitable deals. For example, high depth allows the trader to make a deal of a larger volume without affecting its price in the future. Opening an order with a large volume at a low depth can cause a price spike.
The number of coins on the vertical is not built from the X-axis but the previous level. Thus, small walls can be formed. This indicates that there is an order (or several orders) for many coins at a given price. They can be created by a single trader or a market maker. Most traders form requests based on these walls.