Market Depth - what is it?

Market Depth is an indicator that is used in comprehensive market analysis to select the best trading strategy.

Effective work in the cryptocurrency market with an increase in starting capital through competent trading of various assets is always based on certain principles and strategies. One factor that is considered when choosing assets and a trading strategy is Market Depth, or market depth.

Technically, this indicator determines the number of applications, pending orders for purchasing and selling various assets. Thanks to this parameter, it is possible to quickly assess market sentiment based on supply and demand data. This concept applies not only to cryptocurrency, but here it is of great importance, since the correction of the value of cryptocurrency assets is carried out precisely based on commercial regulatory principles.

Where is it appropriate to use the Market Depth indicator?

This parameter is applicable in different strategies:

  • scalping;
  • shorts;
  • longs;
  • intraday trading.

Information is usually displayed in chart format, convenient for perception and quick assessment of trading conditions.

Set of parameters for Market Depth

A comprehensive assessment is based on the analysis of the following data:

  • bids are pending orders to buy different cryptocurrencies;
  • asks are sell orders.

The point of intersection of the lines determines the market price indicator. In addition, through Market Depth it is possible to estimate the total trading volumes that are currently relevant.


Market Depth is an important tool for a comprehensive analysis of the market situation, the use of which provides traders with the following advantages:

  • correct understanding of the market situation;
  • choosing the best method for executing a transaction;
  • competent planning and optimization of entry and exit points for transactions.

Those traders using market depth charts clearly have a competitive advantage over those who miss this indicator. They have better prospects for achieving their financial goals.


Any instrument available on the financial market must be learned to be used correctly to eliminate potential shortcomings' negative impact. Regarding Market Depth they are as follows:

  • complexity - the charts are quite cumbersome and often have a difficult-to-understand architecture; to evaluate them correctly, it is necessary to have a full understanding of the dynamics of market development in a wider time interval;
  • short-term volatility - Market Depth displays data in real time, however, given the commercial regulation of the value of cryptocurrency assets, this data can be adjusted very quickly, which creates certain difficulties for the trader in determining the optimal entry and exit point.

Market Depth is not a fundamental analysis, but the current state of the market. This tool is often used to manipulate a particular asset's value and change market sentiment in the desired direction.

Thus, Market Depth is an analysis factor that must be considered to comprehensively reflect the market situation. However, it should not be used as the only tool to determine the best trading strategy.