When looking at the order book of any exchange, you’ll notice that there are two prices for each cryptocurrency listed. The bid price is the highest price someone is willing to pay for the coin, while the ask price is the Lowest price someone is willing to sell it at.
The difference between these two prices is known as the spread.
The order book can be thought of as a table with two columns, one for bids and one for asks. Each row in the table represents an order that has been placed by a trader.
The bid and ask prices are like the left and right sides of a seesaw – when one goes up, the other goes down.
The total amount of bitcoin that someone is willing to buy or sell at a certain price is known as the order size. The sum of all bid sizes or ask sizes at a particular price is known as the depth.
The depth chart visualises the distribution of orders at different prices and helps traders see where there is more liquidity (i.e. where there are more orders).
It also shows how much bitcoin would need to be bought or sold in order to move the market price up or down by a certain amount.
The depth chart is an important tool for traders because it helps them see where there is more liquidity in the market and where they are more likely to get their orders filled. It also shows how much bitcoin would need to be bought or sold in order to move the market price up or down by a certain amount, which can be helpful in planning trades.