How to view the depth chart of HTX contract? What does it mean when the spread is too large

To view the depth chart on HTX, log in, navigate to "Trade," select your pair, and click "Depth Chart." It shows bid and ask orders, helping assess liquidity and potential price movements.

May 07, 2025 at 09:56 am

Understanding the depth chart of a cryptocurrency exchange like HTX (formerly known as Huobi) is crucial for traders who want to gain insights into the market's liquidity and potential price movements. The depth chart visually represents the supply and demand for a specific trading pair at various price levels. In this article, we will explore how to view the depth chart on HTX and what it means when the spread between the bid and ask prices is too large.

Accessing the Depth Chart on HTX

To view the depth chart on HTX, follow these detailed steps:

• Log into your HTX account. If you don't have an account, you'll need to register and complete the verification process.
• Navigate to the trading section. Once logged in, click on the "Trade" tab at the top of the page.
• Select the trading pair. Choose the cryptocurrency pair you want to analyze. For example, if you're interested in the BTC/USDT pair, select it from the list.
• Locate the depth chart. On the trading interface, you'll see various tabs such as "Order Book," "Trade History," and "Depth Chart." Click on the "Depth Chart" tab to view the chart.

The depth chart will appear as a graphical representation, typically with the x-axis representing the price and the y-axis representing the volume of orders at each price level. The left side of the chart shows the bid orders (buy orders), and the right side shows the ask orders (sell orders).

Understanding the Depth Chart

The depth chart provides a visual representation of the order book, showing the cumulative volume of buy and sell orders at different price levels. Here's how to interpret the chart:

• Bid Side: The left side of the chart represents the buy orders. The further to the left the line extends, the more buy orders there are at lower prices, indicating strong demand.
• Ask Side: The right side of the chart represents the sell orders. The further to the right the line extends, the more sell orders there are at higher prices, indicating strong supply.
• Depth: The depth of the chart at any given price level shows the total volume of orders that would need to be filled to move the price to that level. A deeper chart indicates higher liquidity.

Analyzing the Spread

The spread is the difference between the highest bid price and the lowest ask price. A large spread can have several implications:

• Liquidity: A large spread often indicates lower liquidity. When there are fewer orders at various price levels, it can be more difficult to execute trades without significantly impacting the market price.
• Volatility: A larger spread can also indicate higher volatility. If the market is moving quickly, the spread may widen as traders adjust their orders to reflect the new market conditions.
• Market Sentiment: A large spread might reflect uncertainty or a lack of consensus among traders about the asset's value. This can be a sign of a less stable market environment.

What Does It Mean When the Spread is Too Large?

When the spread between the bid and ask prices is too large, it can have several implications for traders:

• Higher Trading Costs: A larger spread means that the cost of entering and exiting a position is higher. Traders need to pay more to buy and receive less when selling, which can eat into potential profits.
• Difficulty in Executing Trades: With a large spread, it can be challenging to execute trades at desired price levels. This can lead to slippage, where the actual execution price differs from the expected price.
• Market Inefficiency: A large spread can indicate an inefficient market where there is a significant difference between what buyers are willing to pay and what sellers are willing to accept. This can make it harder to find fair value for the asset.

Using the Depth Chart for Trading Decisions

Traders can use the depth chart to make informed trading decisions:

• Identifying Support and Resistance Levels: By analyzing the depth chart, traders can identify price levels with significant buy or sell orders, which can act as support or resistance levels.
• Assessing Market Liquidity: The depth chart helps traders understand the market's liquidity, which is crucial for determining the ease of entering and exiting positions.
• Predicting Price Movements: By observing changes in the depth chart over time, traders can gain insights into potential price movements. For example, if the bid side of the chart deepens significantly, it may indicate an upcoming price increase.

Practical Example of Using the Depth Chart

Let's consider a practical example of how to use the depth chart on HTX:

• Scenario: You are interested in trading the ETH/USDT pair. You want to assess the market's liquidity and potential price movements.
• Step 1: Access the depth chart for the ETH/USDT pair following the steps outlined earlier.
• Step 2: Observe the bid and ask sides of the chart. If you see a deep bid side with a significant volume of buy orders at lower prices, it may indicate strong demand and potential upward price movement.
• Step 3: Check the spread between the highest bid and the lowest ask. If the spread is relatively small, it suggests a liquid market where you can enter and exit positions more easily.
• Step 4: Monitor changes in the depth chart over time. If you notice the bid side deepening further, it could be a signal to enter a long position. Conversely, if the ask side deepens, it might be a sign to consider a short position.

Frequently Asked Questions

Q1: Can the depth chart be used to predict short-term price movements?

A1: While the depth chart can provide insights into potential price movements, it is not a definitive predictor of short-term price changes. It should be used in conjunction with other technical and fundamental analysis tools to make informed trading decisions.

Q2: How often should I check the depth chart for a specific trading pair?

A2: The frequency of checking the depth chart depends on your trading strategy and the volatility of the market. For highly volatile markets, you might want to check the depth chart more frequently, such as every few minutes. For less volatile markets, checking every few hours or even daily might be sufficient.

Q3: Is the depth chart available for all trading pairs on HTX?

A3: The depth chart is typically available for most trading pairs on HTX, especially for major cryptocurrencies like BTC, ETH, and USDT. However, for less liquid or newer trading pairs, the depth chart might not be as comprehensive or available.

Q4: Can the depth chart help me avoid slippage?

A4: The depth chart can help you assess the market's liquidity and potential for slippage. By understanding the volume of orders at different price levels, you can better anticipate how your trades might impact the market price and take steps to minimize slippage, such as using limit orders instead of market orders.