Buying your first crypto
If you still need training on how to buy your first cryptocurrencies, you can find many great tutorials and videos online using the Google and YouTube search engines .
once you have acquired some bitcoin, ethereum or coin of choice from an exchange like Coinbase, you can hold it for trading on their primary web site or jump over to their Coinbase PRO trade platform .
Read our Coinbase review
Coinbase depth chart
Coinbase Pro features more professional level charts, including the club book/history of orders, candlestick charts, and depth charts.
You besides have the choice to withdraw your crypto holdings from Coinbase to another exchange or secured cryptocurrency wallet address .
When you learn how to read depth charts of crypto, you can well visualize the supply and demand. That is why this kind of graph is then useful for your crypto trade analysis .
By the prison term you finish this article, you will have a strong understand of how using this kind of crypto chart can advise your trade decisions .
Depth charts are not precisely alone to the crypto market. This kind of graph has been available to banal and commodity traders for quite some clock time in this advanced age of digital trade and analysis .
today we will focus on the crypto-trading side by looking at the depth chart available on Coinbase Pro .
Since you have made it this far, you probably already understand the relationship between supply and requirement. But for the readers who need a short help on this topic, I ’ ll give a brief and basic breakdown concerning the crypto markets .
Supply and Demand
supply is the act of tokens available to be purchased by the available requirement liquid, normally in Bitcoin or USD .
This Bitcoin or USD is set up in ‘ bids ’ in the exchange ‘ order bible ’ to purchase at prices lower than the issue is presently asking on the ‘ sell-side ’ of the arrange book .
A astuteness chart provides a potent ocular of the current and normally fluctuating word picture of supply and requirement within a wide range of different prices .
A depth chart is a ocular representation of the ‘ bid ’ [ buying ] and ‘ ask ’ [ sellng ] sides of the order book .
The holy order koran ’ s bid side is represented by the graph ’ sulfur left side, which has a green line plotting across it. And the ‘ ask ’ side of the order book is represented on the right side of the chart, which has a red credit line .
This color coordination is very like to a distinctive candlestick chart. Where green candles represent executed bid orders, and red candles represent completed ask/sell orders .
Dots form the lines on these charts plotted to show how much of the currentness can be bought or sold at each available price level .
Bitcoin depth chart
For our example, we are looking at a depth graph for Bitcoin trade against the USD, otherwise known as BTC/USD. In this detail marketplace, bids/buy orders are placed in US Dollars .
For example, you may select that you want to buy 10 BTC at $ 10,000 each. even though the entire size of your offer order would total $ 100,000, your buy price per Bitcoin is $ 10k .
conversely, when you are ready to place your ask/sell orders in this market, it will be placed using Bitcoin. basically you are selling your Bitcoin for USD .
For example, you may set a sell order for 5 of the Bitcoins you just bought in the last model [ $ 10,000/per BTC ] for $ 15,000 per coin. That would net you a 50 % profit from your original buy monetary value minus trading fees .
Each side of the depth chart is a ocular representation of all the kinds of bid and ask orders that people have set up in advance. And the charts are accumulative in how they display and plot the note on each side.
Example of a crypto depth chart
For model, if Trader A places a bid for one Bitcoin at $ 10,000 USD and then Trader B bids for two Bitcoins at $ 10,000 USD, the number of bids at $ 10,000 USD adds up to $ 30,000 USD available to buy Bitcoin at that price item .
then the green line, which represents the bids, plots a scatter at each increase along the horizontal axis of the chart [ the bottom ], representing each price detail through the price range of available bids [ ex-wife. $ 10,000, $ 10,100, $ 10,200, etc. ]
At each price point, you can add up all the bids and plot the total along the vertical axis [ left of the chart ], representing the sum number of bids at that price flat .
When you roll your cursor over the astuteness chart on Coinbase Pro, you can see precisely how many bids or asks are placed at the demand price .
Crypto order book
When looking at the $ 16,200 bid price, there are presently 275 offer orders of this size stacked on top of each other. That adds up to a sum of 4.455 million dollars available to buy Bitcoin at the price of $ 16,200 per coin .
The ask/sell-side of the depth chart is the same concept, just flipped. The vertical bloc shows the sum accumulated prize of the total of Bitcoins being sold at each price increase along the horizontal axis .
What makes the depth chart useful is that it gives you a nice ocular of the grocery store ’ s confirm and resistance .
The astuteness chart makes it easy to see how the number of Bitcoins for sale ramp up at specific prices, which cause what we call ‘ resistance ’ for the price to go up. There is significant betray press at these price levels .
And of course, the depth chart besides makes it easy to see how the measure of USD ramps up at certain price levels, which we would call accompaniment levels, that help keep the price from going far gloomy. basically there is significant ‘ bribe demand ’ at these levels of corroborate .
And these are the fundamentals of how a depth chart works. If you were wondering if a depth chart is adequate to base your deal decisions on, the short and straightforward answer to that is : no .
For a successful crypto trader, the depth chart will be merely one of the multiple aspects that will be considered when looking to enter a trade position or sell in profit .
trade off the depth graph alone would be a strictly psychological play and more of a ‘ guess game ’ .
For case, different supply or necessitate curves that happen may be interpreted differently by traders. But basically, as the lines grow or shrink, it may help provide you with a bias as to the short circuit term commission of the market .
That ’ south basic and does not provide you with an edge deoxyadenosine monophosphate much as a ‘ feeling ’ about things. And feelings can only take you sol far in the grim crypto market .
From all my years of experience, I have seen that these depth chart curves ’ movements seem to take on certain characteristics when markets are trending up or down .
Or evening alternatively, when trends meet points of underground or support. But in my experience, the depth chart would always be one of the last things I would look at after gauging the graph ’ mho candlestick patterns and my prefer technical indicators .
If you want to learn how to be successful with trade and investing in the cryptocurrency markets, you need to invest in yourself and learn how to do it right .
We besides suggest using tools like charting platforms to help you become more skilled with technical analysis.
once you know how to analyze this market and execute a winning trade scheme, the sky will be the limit for you. A creature like TradingView allows you to analyze multiple charts, get access to a big library of indicators, and gives you real-time data so you can maximize the information you have available to make the best trade decisions .
See our TradingView review for more details .
Don ’ t let your crypto education travel stop consonant here with depth charts, and keep pursuing your electric potential. Check out our favorite crypto education run if you want to master charts plus learn technical and fundamental analysis so you can successfully trade on your own fourth dimension.