The CEX.IO Bitcoin crypto exchange platform has a lot of features available for the trader. We want your experience with us to be a great one, so it is important you understand the data you are looking at, particularly charts and market depth data.

Charts

Our Crypto exchange uses candlestick charting to represent the market price activity. Below is a typical chart where every relevant detail of the market being viewed is presented. The text in red highlights what the data is presenting for you. This chart is a daily chart and each candlestick equates to the trading activity contained within a 15 minute period.

Chart1

What is a Candlestick

Candlesticks are probably the most popular methodology for representing market price activity.  Each candle represents 4 specific price points for each time period covered; Open, Close, High, Low. A red candle means price in that period closed lower than it opened (bearish). A blue candle that price closed higher than it opened (bullish). Also the taller the candle is the more range in price has occurred (range being the difference between the high and low).  As you will see in the charts candles form many different shapes and once you understand the data they capture they can help your analysis of what the market is doing.

Candlestick-Basics

Simple Chart Analysis

There is a saying that ‘A Picture is Worth a Thousand Words’ and that is exactly true of charting. There is a lot of information and data presented in a visual format that enables analysis and conclusions to be drawn about what ‘could’ happen next. That analysis is exactly what traders do with charts to determine when to enter and exit a trade. To provide a simple example the below weekly chart shows how price fell through ‘Support’ A on high volume (caused by more sellers than buyers), a new support level forms and holds B (buyers start to equate to sellers) and price then recovers, but stops again when it hits a resistance level C (being the same price area of the earlier support A). A typical trader in this example would watch as price falls, then look to buy once the price establishes the new support level (B) setting a profit exit when price recovery starts to falter at resistance (C) and a stop loss just below the new support(B).

Chart2

Market Depth

The market depth data presented on CEX.IO shows in detail the price levels and quantity currently being offered to buy or sell for the particular market. This information can be important to know as you can immediately see in real-time the balance between sellers and buyers. A transaction occurs when selling and buying price match at the top price level. Remember the price depth only shows orders already in the market depth (limit orders), it does not show orders that are placed and executed at the best current price (market orders).

Spreadsheet

Conclusion

Understanding the data you are viewing in charting and market depth is a key part of being able to trade successfully. There is a lot of information presented in a chart that at first glance might not be evident.  Our platform provides some great tools to help you, but the subject of charting, analysis and trading is extremely wide and varied. In the context of our blog, we will continue to provide on-going insight to help your trading outcomes. So watch out for more articles to come.

Finally we encourage interaction and your input, perhaps you would like a certain topic covered or you might have a view on one of the topics discussed. Whatever it may be please feel free to add your comments.

Michael Whitehorn for CEX.IO