Imagine a marketplace where people can buy and sell things like stocks or cryptocurrency. A depth chart is like a behind-the-scenes look at this marketplace. It's a visual tool that shows two things:
Who wants to buy (bids): This side shows how many people are interested in buying something, along with the different prices they're willing to pay.
Who wants to sell (asks): This side shows how many people are interested in selling something, along with the different prices they're asking for.
By looking at both sides of the chart, you can get a sense of how much supply and demand there is for a particular item. A thick line on one side usually means there's a lot of interest in buying or selling at that price.
This information can be helpful for traders because it can give them clues about where the price might be headed. For example, if there are a lot of buy orders at a certain price, it might suggest that the price is likely to go up.
