Can anyone explain DEPTH on exchanges please?

[bittraffic]

I have been trading a lot but I have only tried watching the prices and if it dips low, its time for buying and its soar up, I sell as the rule of thumbs says buy low sell high. But can anyone tell he how to understand this stuff here. I have thought of buying specific token on a dex but would like to learn about this first.




What does GREEN and red mean?

[1714824200]

1714824200

[1714824200]

1714824200

[1Referee]

The green side represents the amount of buy orders, and directly how much one needs to sell in order to reach certain lower levels.

The red side represents the amount of sell orders, and directly how much one needs to buy in order to reach higher levels.

As you can see, there is quite a gap (spread) between the green and red side, which mostly indicates that the market is extremely thin and sellers don't want to sell lower, and buyers don't want to buy higher. The depth of an orderbook doesn't always represent the reality since it's easy to manipulate by larger players, so don't pay too much attention to what's happening there.

[eminemcookie]

1Referee's explanation pretty much covers everything. As they mentioned, you should pay little attention to this in most cases because often times large orders will be placed to portray depth in one direction only to be removed as the price approaches this level. Only rely on depth as an indicator when you can be sure they are real orders and not people trying to manipulate the market.

[Tytanowy Janusz]

1Referee's explanation pretty much covers everything. As they mentioned, you should pay little attention to this in most cases because often times large orders will be placed to portray depth in one direction only to be removed as the price approaches this level. Only rely on depth as an indicator when you can be sure they are real orders and not people trying to manipulate the market.

Exacly. Fake walls completly destroy this. There are also hidden offers (throw buy offer with price 100 when price will go down to 95 set on trading bot or even exchange), stoploses ets. This execly shows nothing. Its better to take a look at order book but with knowledge that part of walls can be fake (set only to manipulate traders). And also big real walls dont say anything becouse big whales sometimes w8 for big wall to apper to even go with price few % to it to sell/buy huge amounts without pushing price further. Its hard to exit 1000btc trade from alt without destroing chart. When you are a whale and you see that big wall few % lower you will run for it with whole chart.

Thats why dont put too much attention.

If you are daytrading - try to learn using orderbooks and candle charts intead of this chart (faster and better)
if you are trading/investing - there is no possible aspect in which it is usefull.

Big spreads are very often on low volume assets.

[atrocityx]

I have been trading a lot but I have only tried watching the prices and if it dips low, its time for buying and its soar up, I sell as the rule of thumbs says buy low sell high. But can anyone tell he how to understand this stuff here. I have thought of buying specific token on a dex but would like to learn about this first.


What does GREEN and red mean?

As others have said here the buys are green side and the sells are red... but the problem is there's a form manipulation (especially on thin order books) called spoofing, in which buy and sell walls are entered with high-frequency trading bots, and emulate huge buy and sell pressure that isn't really there.  The bots will then pull the order at the last possible second and reposition higher or lower to make people jump ahead of them to buy or sell.  Depth can give you a general idea of where you're going to find resistance but really pay attention to larger 10+btc walls selling or buying that keep changing place... these are not real orders and should be ignored... more complex manipulation may involve several sell walls at key psychological resistances that will be pulled as orders get close to touching them on a bull rally.. allowing the price to skyrocket.  One other form of manipulation with spoofing is someone will disguise orders in small chunks through the sell order book and spoof a buy wall for people to jump over them thinking its safe, buying into all of their orders they want to sell.. once all is sold, they simply remove the order and cause the price to crash down. 

In short, you can use the order books for general information and seeing how many bears there are compared to bulls.. but never use this as an indicator alone, because it is often manipulated, so look for the things I explained.

[bittraffic]

The green side represents the amount of buy orders, and directly how much one needs to sell in order to reach certain lower levels.

The red side represents the amount of sell orders, and directly how much one needs to buy in order to reach higher levels.

As you can see, there is quite a gap (spread) between the green and red side, which mostly indicates that the market is extremely thin and sellers don't want to sell lower, and buyers don't want to buy higher. The depth of an orderbook doesn't always represent the reality since it's easy to manipulate by larger players, so don't pay too much attention to what's happening there.

In the graph it does somehow show that there are lots of people wanting to acquire such token. I was thinking of buying but I want the cheaper price too. Seeing this indicate there are lesser sellers, I guess its safe to pick a sell order.  I know I'm reminded, it doesn't always represent the reality of what really is happening but thanks a lot for the view.

[Tytanowy Janusz]

The green side represents the amount of buy orders, and directly how much one needs to sell in order to reach certain lower levels.

The red side represents the amount of sell orders, and directly how much one needs to buy in order to reach higher levels.

As you can see, there is quite a gap (spread) between the green and red side, which mostly indicates that the market is extremely thin and sellers don't want to sell lower, and buyers don't want to buy higher. The depth of an orderbook doesn't always represent the reality since it's easy to manipulate by larger players, so don't pay too much attention to what's happening there.

In the graph it does somehow show that there are lots of people wanting to acquire such token. I was thinking of buying but I want the cheaper price too. Seeing this indicate there are lesser sellers, I guess its safe to pick a sell order.  I know I'm reminded, it doesn't always represent the reality of what really is happening but thanks a lot for the view.

This chart dasnt show how many buyers and sellers in on market. It shows how many offers are close to current price (with set spread). If price just came down this chart have to look like this. Why?

buy amounts
1
1
1
1
1
1
1

sell amounts
1
1
1
1
1
1
1

For this simple example this chars will looks the same at both sites with set spread of 4$ (lets say that price chance 1$ each offer) showing total of 4 coins on buy and sell. When now someone will buy 2 coin and push price 2 $ up offers will look like that

buy amounts
1
1
1
1
1

sell amounts
1 sold
1 sold price here
1  
1
1
1

now lets check how many coins are on buy and sell with set spread of 4$. 3 on buy nad still 4 on sell. And chart looks like on your picture. If you dont get it i can try to explain otherwise (when i read, what i wrote it looks hard to get it ;p )
But the most important think is that you cant trust it. Fake walls etc etc. Everythink was written beafore.

[eminemcookie]

In addition to the explanation above it's also important to remember that depth doesn't indicate the number of buyers or sellers, it indicates the quantity of a coin being bought or sold. This could be 1 person with many orders or one large order, or it could be multiple persons with many small orders, there's no way of knowing this with certainty.

[bittraffic]

The green side represents the amount of buy orders, and directly how much one needs to sell in order to reach certain lower levels.

The red side represents the amount of sell orders, and directly how much one needs to buy in order to reach higher levels.

As you can see, there is quite a gap (spread) between the green and red side, which mostly indicates that the market is extremely thin and sellers don't want to sell lower, and buyers don't want to buy higher. The depth of an orderbook doesn't always represent the reality since it's easy to manipulate by larger players, so don't pay too much attention to what's happening there.

In the graph it does somehow show that there are lots of people wanting to acquire such token. I was thinking of buying but I want the cheaper price too. Seeing this indicate there are lesser sellers, I guess its safe to pick a sell order.  I know I'm reminded, it doesn't always represent the reality of what really is happening but thanks a lot for the view.

This chart dasnt show how many buyers and sellers in on market. It shows how many offers are close to current price (with set spread). If price just came down this chart have to look like this. Why?

buy amounts
1
1
1
1
1
1
1

sell amounts
1
1
1
1
1
1
1

For this simple example this chars will looks the same at both sites with set spread of 4$ (lets say that price chance 1$ each offer) showing total of 4 coins on buy and sell. When now someone will buy 2 coin and push price 2 $ up offers will look like that

buy amounts
1
1
1
1
1

sell amounts
1 sold
1 sold price here
1 
1
1
1

now lets check how many coins are on buy and sell with set spread of 4$. 3 on buy nad still 4 on sell. And chart looks like on your picture. If you dont get it i can try to explain otherwise (when i read, what i wrote it looks hard to get it ;p )
But the most important think is that you cant trust it. Fake walls etc etc. Everythink was written beafore.

You definitely took time to elaborate such but also took me a day to absorb such explanation lol. 

In addition to the explanation above it's also important to remember that depth doesn't indicate the number of buyers or sellers, it indicates the quantity of a coin being bought or sold. This could be 1 person with many orders or one large order, or it could be multiple persons with many small orders, there's no way of knowing this with certainty.

I realize that but he would be paying a lot for the trading fees if he is the only doing many orders is small quantities. I'm confuse what he's up to when the trading fees alone can be worth more than $5 each. Will he even profit after the manipulation?

[Pursuer]

In addition to the explanation above it's also important to remember that depth doesn't indicate the number of buyers or sellers, it indicates the quantity of a coin being bought or sold. This could be 1 person with many orders or one large order, or it could be multiple persons with many small orders, there's no way of knowing this with certainty.

I realize that but he would be paying a lot for the trading fees if he is the only doing many orders is small quantities. I'm confuse what he's up to when the trading fees alone can be worth more than $5 each. Will he even profit after the manipulation?

there are a lot of traders in the market and they are doing a lot of different things. there are many different strategies and bots they are using, as a result you see these types of orders sometimes. without seeing these orders myself I can't be sure but my guess is that this is one of those ping pong-ers who are placing a lot of orders above and below a certain level and hope they get filled. for example they buy $5 worth of something at $1 price and set a sell order of what they bought at $1.1 and they have a lot of these orders like 50 of them at a time!
sometimes the steps they use are too small too. for example I have seen orders placed with 1 satoshi steps in LTC market!

why are they doing it? I have no clue. maybe they think they can beat the market like this and make profit
are they making profit? most probably not because they are going to get busted when a big dump comes and wipes all their orders in one go and price doesn't go back up again.

[eminemcookie]

In addition to the explanation above it's also important to remember that depth doesn't indicate the number of buyers or sellers, it indicates the quantity of a coin being bought or sold. This could be 1 person with many orders or one large order, or it could be multiple persons with many small orders, there's no way of knowing this with certainty.

I realize that but he would be paying a lot for the trading fees if he is the only doing many orders is small quantities. I'm confuse what he's up to when the trading fees alone can be worth more than $5 each. Will he even profit after the manipulation?

there are a lot of traders in the market and they are doing a lot of different things. there are many different strategies and bots they are using, as a result you see these types of orders sometimes. without seeing these orders myself I can't be sure but my guess is that this is one of those ping pong-ers who are placing a lot of orders above and below a certain level and hope they get filled. for example they buy $5 worth of something at $1 price and set a sell order of what they bought at $1.1 and they have a lot of these orders like 50 of them at a time!
sometimes the steps they use are too small too. for example I have seen orders placed with 1 satoshi steps in LTC market!

why are they doing it? I have no clue. maybe they think they can beat the market like this and make profit
are they making profit? most probably not because they are going to get busted when a big dump comes and wipes all their orders in one go and price doesn't go back up again.

Exactly, it's impossible to know how many people there are and how many orders of whatever size they have. Those people that manipulate the market with large orders are normally working with others or which such large amounts of funds that they know with near certainty that there offers won't get filled.

Also, it does not matter if they place 50 offers of $10 each or 1 offer of $500, they will still pay the same in fees if it is filled because it's based on a % rather than being a flat fee.

Exchanges that use a flat fee reduce this manipulation in some ways as well as those that charge for placing an order instead of for having an order completed, but I do not know of many if any that do this.

[ahoenk]

Depth on exchange is the information how much volume could probably done if we selling our token / coin and the information telling us how many inveator interesting on it and how many token could probably dump. Depth indicator can be usefull to calculate how much money need to make the movement of the coin up or down.

[StarKay]

I will suggest that you should check if the token is listed on Coinmarketcap as it gives a better indicator of the token trading volume across different exchanges and it also shows the price history of the token.

[micle222]

Charts like that show that you buy more than sales.
You can say that like that, the price of the coin will rise.

But depending on the market, the market cannot be predicted, it could be that the purchase order at that time (as in the picture is canceled) then the one who sells will be bigger than the one who buys.