How to Read a Depth Chart Trading

The Marketplace Depth Chart in NinjaTrader is one of the simpler interfaces for viewing society book data. While not often used in futures trading, cryptocurrency traders consider the depth nautical chart a mainstay in determining marketplace sentiment. The Depth Chart is bachelor for monitoring both cryptocurrency and futures instruments. Every bit Micro Bitcoin Futures proceeds popularity, futures and cryptocurrency traders can both benefit from this tool.

What is a Market Depth Chart

In trading, Marketplace Depth refers to a marketplace's power to sustain big orders without significantly affecting price. Market depth is typically evaluated by looking at the order book of a security. Order books are a list of pending orders to purchase or sell at diverse price levels.

Market Depth Charts brandish bid (buy) and ask (sell) data for a particular asset at dissimilar prices. This visualization of supply and demand turns club book data into a chart that'south both like shooting fish in a barrel and fast to read.

While traditional order book interfaces, such as the T&S Window, and the SuperDOM accept their own unique characteristics, the Depth Chart is a fresh take on the age-old question, "What volition the markets do side by side?".

Though non often used in futures trading, cryptocurrency traders consider the depth chart a mainstay in determining market sentiment.

Use the + and – buttons to zoom in and out on the price scale. Hover over cost levels for more details about the book volume and value.

• Green Side = everyman buy order price
• Cherry-red Side = highest sell order price

Anatomy of the Depth Chart

The interface has iii main sections: Quotes, Graph, and Tooltip.

• Quotes: The Quotes section displays various market data items at the top of the window. Hither you'll find dynamic values such equally bid, enquire, and terminal prices, likewise as the session open, high, low, and volume values. Optionally, the Quotes section tin can be disabled by right-clicking on the Depth Chart and deselecting "Bear witness Quotes".
• Graph: The Graph is the master display of the Depth Nautical chart. It displays the cumulative buy and sell orders through the full available book, so the vertical value at any point is the result of summing all agile orders in the order book to the price value on the horizontal centrality. You tin use the + and – buttons at the meridian of the nautical chart to set the zoom level, narrowing in on more firsthand prices, or zoom out to await at the big picture.
• Tooltip: The Tooltip displays the price level under the cursor, forth with the associated cumulative order volume value and the currency cost of that cumulative volume. This can be actually handy for understanding merely how much market participation is occurring in the markets you're watching. Take a look at the greenbacks value of but the first few levels of market depth in the E-Mini S&P 500 (ES) during market hours to see for yourself!

Utilise the + and – buttons to zoom in and out on the price scale. Hover over price levels for more than details nearly the volume volume and value.

How to Read a Market place Depth Chart

So far, everything we've covered could likely exist achieved from using another interface. And then, the burning question remains: Why employ the Depth Chart? Merely as with historical data charts, similar the candlestick chart, viewing order book data in a more visual manner can help traders identify patterns and plan accordingly.

The Wall

I of the hallmarks of the Depth Chart is the "wall". Walls tin form on the buy or sell sides of the chart, and point price levels in which the cumulative bid or inquire value increases dramatically. You can't see this data on a standard price chart, just taking a wait at the Depth Chart, you can get a sense of how other market participants are reacting to always-changing weather. Walls formed throughout the trading session may later class support or resistance on the price chart.

Here are some examples of different markets on the Depth Chart. At that place are several walls formed in each chart.

Buy Walls

Buy walls represent big numbers of buy orders, typically placed below the current price indicate. A college purchase wall means more awaiting buy orders exist at a sure price. High buy walls can also signal that traders believe an asset will not autumn below a certain price.

Sell Walls

Conversely, sell walls represent a large number of sell orders set in a higher place the current price. Loftier sell walls may point that traders do not believe an nugget volition surpass a certain cost, while low sell walls point the opposite.

Putting information technology Together: Market Sentiment & Tendency Burnout

As you likely noticed from the previous instance the Depth Nautical chart may look lopsided to either the buy or sell side. This can exist an indication of more bullish market sentiment if the buy-side is larger, or more bearish sentiment if the sell-side is college. Sometimes a price chart and a depth chart may be out of agreement. For example, the price chart might wait bullish, but there is a large accumulation of book data on the sell side of the Depth Chart. This could mean the bullish trend is coming to an finish.

Add together a Depth Chart to Your Workspace

You tin can access NinjaTrader's Depth Chart window from the "New" menu at the pinnacle of the control centre. Select "Depth Chart" then add your favorite cryptocurrency and futures instruments to monitor!

Once a new window is open, in that location are multiple ways to select an instrument in the Depth Nautical chart window. Either right-clicking on the Depth Chart window and select "Instruments", or simply brainstorm typing the instrument symbol directly on the keyboard.

Using the Depth Chart alongside candlestick charts and other tools in NinjaTrader tin can assistance you learn to identify patterns in the markets you trade and help inform and confirm trading decisions. Check out the Depth Chart today, and get a quick view of the guild volume!

Get Started with NinjaTrader

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Source: https://ninjatrader.com/blog/depth-chart-the-ultimate-visual-order-book/

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