Depth Chart

A depth chart is a graphical tool used to visualize the order book for a specific asset on a trading exchange. It displays the buy and sell orders at various price levels, allowing traders to gauge the liquidity and supply-demand dynamics in the market. The x-axis typically represents price, while the y-axis shows the cumulative volume of orders. By examining a depth chart, traders can identify potential resistance and support levels, helping them make more informed decisions on when to enter or exit trades.

A depth chart is particularly useful for spotting large orders or "walls" of liquidity, where significant buy or sell orders may prevent prices from moving beyond certain thresholds. This can provide insight into market sentiment and the behavior of large traders. Itis an essential tool for active traders who need to understand market depth and liquidity before placing orders.