This article has been translated from English to Gen Z Slang.
What's a depth chart, fam? 🤔
Sounds like what a scuba diver uses, amirite? 😂
Nah, that ain't it. 🚫
On most trading platforms from centralized crypto exchanges (aka CEX), you'll spot a price chart chillin’ next to something called a “depth chart”.
A depth chart is like your BFF for deconstructing the supply and demand for crypto at a set vibe for a bunch of prices. 📉
It's a sick graphic of an order book, which is basically a listicle of peeps wanting to buy or sell a particular crypto at diff prices. 💰
If you’re trading crypto, you gotta get the 411 on what a depth chart is and how to peep it. 🔍
How to Decode a Depth Chart
A depth chart is like a meme for buy orders (“bids”) and sell orders (“asks”) of the order book. 😂
It’s the sauce for showing volume (or order size) of all those pending buy and sell orders compared across price levels. 📊
Here’s a vibe check on how a depth chart looks:
Depth charts be lookin’ different on every crypto exchange, but they got these main components:
- Bid line – 💚 Green gang
- Ask line – ❤️ Red vibes
- Horizontal “X” axis - Price tags
- Vertical “Y” axis - Order sizes
What's the Bid Line?
The bid line's got your back on showing the sum of buy orders (“bids”) at each price point. You’ll see it flexin’ with a green line on the left side of the chart.
What's the Ask Line?
The ask line spills the tea on sell orders (“asks”) at each price point. It’s reppin’ with a red line on the right side.
What's the Horizontal “X” Axis?
The horizontal pound sign shows all the price tags where buy and sell orders are happening. 💲
Left side gang (in green): All the buy (bid) orders peeps have listed. It's the order book's bid squad. 💚
Right side gang (in red): All the sell (ask) orders. Reppin' the order book's ask squad. ❤️
Here’s a quick memory hack:
- Left side (green) = Bid (buy orders) 💸
- Right side (red) = Ask (sell orders) 💰
What's the Vertical “Y” Axis?
The vertical vibe hits you with the amount of orders at each price for your fave crypto. 📊
Most crypto exchanges let you hover like a boss over any spot on the bid or ask line to see how much bag people are carrying at each price tag. 💼
How Does a Depth Chart Work?
A depth chart's all about flexin’ the supply and demand dynamics. 🏄♂️
The “depth” hints at how much a market for a specific crypto can handle mega buys or sells without shaking in its boots. 💸
The more orders pending on the order book’s main stage, the thicker the “depth”.The more orders piling up, the fresher the “depth”. 💪
If the green side towers over the red side, there’s heaps more buying vibes (below the current price) than selling vibes (above the current price). Flip it, and the story changes. 🔄
Buy and Sell Walls
So what's with these buy and sell walls? 👀
Buy and sell walls are like brick walls of massive buy or sell orders at a specific price. 🚧
When you put these walls up against the price levels, you get a whole colored “wall” situation. 🎨
These buy and sell walls are like spyglasses into how other traders are betting on prices. 📈👇
What is a Buy Wall?
A “buy wall” pops up when a squad of buy orders (“bids”) huddles at a certain price level. 🛒
More buy orders stacked? Higher the wall. ⬆️
In this scene, there's a buy wall for BTC/USD at 29,000. 💸
Buy walls can be the squad's orders at the same rate, or one mega order from a “whale“. 🐋
A thicc buy wall can mean traders reckon the price ain't sinking below this level due to all the buy orders. 🛑
The volume of these laws could hype the price up if trades go through. 🚀
Even before these walls even get touched, prices might rise 'cause the lower supply gonna shake things up. 🔄
But hold up, buy walls can be totally fake. ‘Cause orders change fast, buy walls can simply be a powerplay and might not mean people really wanna buy at that price. 👀
What is a Sell Wall?
A sell wall’s just the flip side of a buy wall. 😉
A “sell wall” hits when sell orders (“asks”) gather around a single price spot. 🚨
More sell orders accumulating mean a higher wall. 🔝
In the lit scene below, there's a sell wall for BTC/USD at 30,001. 🔥
Sell walls can be a party with multiple orders at the same stage or one phantom order from a “whale”. 🐳
A chunky sell wall stalls price hikes by setting loads of sell orders at a specific rate.⬇️Enough orders like this can crash prices if trades take place. 🌊
Sneaky sell walls can make prices dip even sans execution, 'cause traders think supply is about to flood the ‘mand, pushing prices south. 🌧️
To dodge getting caught selling for less, they’ll yeet now. 💨
A massive sell wall hints at disbelief in prices rising above a set point. 🤔
Just like buy walls, sell walls can be shady, manipulated shenanigans. 🤫