How to read the market depth charts?

[mishrahsigni]

Can anyone please either explain, or send a link to an explanation, of how to read the market depth charts on, for example, http://bitcoinity.org/markets  ?

I do not understand them at all

There are green bars and red bars, sometime on top of each other.. .and the red bars seem to have a sub-bar in side them at times.  for example...   if the current price is 94.50, there may be a green bar that goes from 5000 to 12000 (omj the left side Y axis).  what does that mean?

And on the lines themselves it says at points something like "At least 2231 BTC needed for 90"... I assume this means nneded to be sold/boight... but how can the price be known based on volume? I mean, the price is determined by the buyers sellers, not volume... 

And then there are these vertical lines... and it says at the bottom of the line "7000 needed for 80.52" and at the top, "10000 needed for 80.53"  !? how can the volume of 3000 make just a difference of 1 cent when at other places on theline a volume of 100 makes a difference of  a dollar.

What are the number on the right y axis.  A range of 20,000 seems large, but 20,000 WHAT?
 
Thanks for any info...

[phillyj]

in the upper right corner of the page, under "Last change", you see the link 'WTF?'. Click and it will give an explanation. Have you read that yet? If it doesn't make sense, ask again.

[melon]

basically I think you're referring to the candlestick charts which are called stochastics...its a form of math using wave analysis to predict future wave patterns for buying and selling...answer to second question is BTCulk pricing...since time is always a value factor of money(see time theory of money)than quick bulk prices are sometimes more prudent to get cash flowing quickly and turning bulk profits (at lower margin). imagine if you only want one btc then general prices will be higher,but if you buy ten at once ,the price can be lower to turn quick bulk profits over a shorter timeframe rather than selling 10 coins at higher margins(profits) individually over a longer timeframe...still confused?..ask up i'm ready to talk economics even in the newb threads since most newbs need this info the most ,to stay on a competitive level !

[mishrahsigni]

in the upper right corner of the page, under "Last change", you see the link 'WTF?'. Click and it will give an explanation. Have you read that yet? If it doesn't make sense, ask again.

Ah, nice. thanks..  However, I am still left qith questions...

Right now the bid/ask/last is 99.85/99.89/101.10  (not really sure how the last is 101.10 when the highest bid is 99.85)

The chart lines show a convergence at 93.10...  and up the red line if I go to where the actual last price is say "at least 4935 BTC need for 102"... but the volume charts shows less than 10% of that for the last 10 minutes... WTF!? indeed.  it would be nice to have some kind of marker, like a vertical line, at the actual bid/ask/last prices, rather than having to search for them on the x axis as they constantly change.  And is this same chart at http://mtgoxlive.com/orders totally bonkers!? 

So, my first questions is, what is this lower chart actually used for? How would I use it?

The WTF!? says "Bars on the left of the current price..."... by current price I assume they mean the actual price not the point where the bid/ask meet, correct?

ok, the above/green is new bids... got it...  when I look at the chart I see lots of red bars (withdrawn bids) below (to the left of) the $101.10 current price, and a bunch of green to the right.  That makes sense. But then why am I seeing seeing orders (red/above) at 93?

[mishrahsigni]

basically I think you're referring to the candlestick charts which are called stochastics...its a form of math using wave analysis to predict future wave patterns for buying and selling...answer to second question is BTCulk pricing...since time is always a value factor of money(see time theory of money)than quick bulk prices are sometimes more prudent to get cash flowing quickly and turning bulk profits (at lower margin). imagine if you only want one btc then general prices will be higher,but if you buy ten at once ,the price can be lower to turn quick bulk profits over a shorter timeframe rather than selling 10 coins at higher margins(profits) individually over a longer timeframe...still confused?..ask up i'm ready to talk economics even in the newb threads since most newbs need this info the most ,to stay on a competitive level !

Hahah... you have no idea how dense I am regarding this stuff... but here I go anyway...

So, the stochastic squiggly lines are some sort of prediction algorithm that, for some reasons, has determined that at one point 100 orders will change the price by a penny, but at another 100 orders will change by 1 dollar?  hmmmm...

But what actually disturbs me (rather that just confuses me) is that this algorithm’s premise is contrary to bitcoin.
 
Quoting Wiki "The time value of money is the value of money figuring in a given amount of interest earned or inflation accrued over a given amount of time. The ultimate principle suggests that a certain amount of money today has different buying power than the same amount of money in the future. This notion exists both because there is an opportunity to earn interest on the money and because inflation will drive prices up, thus changing the "value" of the money. The time value of money is the central concept in finance theory."

If bitcoins is both deflationary AND interest free, how does this stochastic algorithm apply?  Isn't this chart giving me information that not only does not apply (so much) but will drive me to make decision that are not coincident with the actual bitcoin economy?

Also, as we are talking about money, rather than artichokes or tires, how does the concept of 'bulk' apply?  I am not going to 'sell' my dollars for less because I have more.  So why would any such discount apply to bitcoins when trading en mass?  But even if this is the case, it still seems contrary to bitcoins to use modal designed to 'turn a profit' rather than 'store value'... aren't they different models?

[melon]

I added a second post at about the same time you did and it didn't post for some reason so rather than retype i'll just answer a few questions to verify:

1.) yes the stochastic charts are prediction algo's-  but its not the program that's input those changes it's individual owners setting their own bulk prices....the algo just helps show the general herd movement based  on human input numbers helping you predict what your bulk pricing scheme should be
2.) you are exactly correct....btc should've been a stable value currency but inherently got tied to global currencies bcz bit miners used extremely large amounts of electricity which could only be paid in fiat currencies so the need to exchange 'mined' btc to cash was needed... the exchange was best option but each was willing to accept a differ value based on how 'quick'( there's time value again) they could sell them to make payments on time,,,if time is no big deal they could ultimately wait until they fetched a higher price from another trader who wants in now...if time was Important than market forces push the going rate which might not be as lucrative as being able to wait around for a better asking price.

3.) the bottom chart tells whether you will have your order fulfilled sooner or later based on where prices converge and whewther you should close out orders bcz they wont get bought or set n forget until the price drops in the future

4)lol...artichokes n tires.... whether its tires or currencies you buy in bulk to get a better rate and sell at your own time preference...since time is money selling one at a time does not always suit the need so can you can turnaround money and keep repurchasing and selling in bulkat slightly lower margins to capture more bulk per unit of time making much higher cash... yes it shouldn't be inherent to btc but it is and always will be as long as profits need to pay utility companies or they start accepting bitcoin or the miners set up solar arrays...l l( solar powered bit'miners' !@#)...better yet; wind-powered bit mining rigs...hahaha

[mishrahsigni]

I added a second post at about the same time you did and it didn't post for some reason so rather than retype i'll just answer a few questions to verify:

1.) yes the stochastic charts are prediction algo's-  but its not the program that's input those changes it's individual owners setting their own bulk prices....the algo just helps show the general herd movement based  on human input numbers helping you predict what your bulk pricing scheme should be
2.) you are exactly correct....btc should've been a stable value currency but inherently got tied to global currencies bcz bit miners used extremely large amounts of electricity which could only be paid in fiat currencies so the need to exchange 'mined' btc to cash was needed... the exchange was best option but each was willing to accept a differ value based on how 'quick'( there's time value again) they could sell them to make payments on time,,,if time is no big deal they could ultimately wait until they fetched a higher price from another trader who wants in now...if time was Important than market forces push the going rate which might not be as lucrative as being able to wait around for a better asking price.

3.) the bottom chart tells whether you will have your order fulfilled sooner or later based on where prices converge and whewther you should close out orders bcz they wont get bought or set n forget until the price drops in the future

4)lol...artichokes n tires.... whether its tires or currencies you buy in bulk to get a better rate and sell at your own time preference...since time is money selling one at a time does not always suit the need so can you can turnaround money and keep repurchasing and selling in bulkat slightly lower margins to capture more bulk per unit of time making much higher cash... yes it shouldn't be inherent to btc but it is and always will be as long as profits need to pay utility companies or they start accepting bitcoin or the miners set up solar arrays...l l( solar powered bit'miners' !@#)...better yet; wind-powered bit mining rigs...hahaha

1)  got it... when there is a sharp vertical line it is there because someone has placed a large bid/ask at that price... and flat because there is no activity in that price range

2) so, it is not interest that represents time here, it is electricity bills.  That makes sense, but I would not have thought that binding would be too strong (unless miners are getting bills much larger than I imagine, which could well be the case)

4) so when you refer to bulk, you mean, for example, if the price goes up $1, I will sell 1000 BTC instead of 1 BTC so I can make $1000 instead of $1... right?  i.e. it has nothing to do with actual bulk discounting, but rather taking advantages of changes with bulk buy/sells? is that correct?


So, why is the ask/bid/last price way off from where the ask/bid lines converge?  Shouldn't that always be coincident?

Thanks

[melon]

1. yep
2 its both...plain old interest( actually capital appreciation since interest is based on loaning)  and the fact that miners need to get at a portion of btc back to cash to pay utility bills and leaving the rest to use in btc form
3 you skipped 3 -lol
4 no - I actually did mean bulk discounting to entice people to buy close to the price needed... according to your individual pricing scheme

if best ask/best bid/last price don't converge your're probably looking at the last 30 minutes rather than the  min or 5 min. chart ...depending on time of day orders volume  on the right  bar might be low and far apart( the spread) and nothing moving.. move prices lower only if they buy bulk coins not on individual coins to turn cash faster ...notice the red/green bars overlap at lots of prices on the 30 minute but not much on the minute bcz orders are not converging at the moment.... also use the tag mahal analogy- the bars and columns above the midline horizon are  current real orders just like towers in tag mahal complex  and everything below horizon is reflection pool showing cancelled orders- a reflection of past orders cancelled from a few moments ago (easier to focus on only one half at a time usually upper horizon to determine market and occasionally reflecting downward to see what is happening to cancels- the left is total volume including people who stopped daytrading at current price and just set a very low bid and very high ask in case a movement happens while asleep or away from computer