How to read the transaction depth chart in the currency circle

The transaction depth chart is a trading chart that displays the number of buy and sell orders at different price levels. It is useful when assessing liquidity, identifying support and resistance levels, predicting price trends, and setting stop losses and take profits. Please note that only Displays unexecuted orders, which may change rapidly and need to be analyzed in conjunction with other indicators.

Detailed explanation of transaction depth chart

What is the transaction depth chart?

Depth Chart is a trading chart that shows the volume and total value of buy and sell orders at different price levels.

How to understand the transaction depth chart?

The deal depth chart consists of two curves:

• Buy curve: shows the cumulative quantity of all outstanding buy orders at different price levels.
• Sell Curve: Shows the cumulative number of all outstanding sell orders at different price levels. The area between the

curves is called the Liquidity Pool and it represents the number of orders that can be executed immediately at a specific price level. The larger the liquidity pool, the better the liquidity at that price level.

Uses of Deal Depth Chart

Depth Chart can be used to:

• Assess Liquidity: By observing the depth of the liquidity pool, traders can judge the level of liquidity at a specific price level. More liquid price levels make it easier to execute trades.
• Identify Support and Resistance Levels: Traders can use the Depth of Trade chart to identify price levels in order clusters that may act as support (long buy orders) or resistance (long sell orders).
• Predict Price Movement: If the liquidity pool shifts in a certain direction, this may indicate price movement in the opposite direction. For example, if a liquidity pool increases sell orders at a particular price level, the price may fall.
• Stop Loss and Take Profit Settings: Traders can use the trade depth chart to select appropriate stop loss and take profit levels. Ideally, Stop Loss and Take Profit should be set in shallower liquidity pools to ensure fast execution.

Things to note

• The transaction depth chart only shows unexecuted orders. This means it does not necessarily accurately reflect actual trading volume.
• The depth chart can change quickly, especially when the market is volatile.
• Traders should combine other technical indicators and analysis methods to make informed trading decisions.

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