Good Evening Steemers,
Hope you're all well.
I said I'd like to learn a little more about market depth, and that is what I've just gone an done - after completing a stage of drawing.
Quickly I found a website - http://www.futuresmag.com/2014/04/30/trading-market-depth - that said this:
"Market depth is an electronic list of buy and sell orders, organized by price level and updated to reflect real-time market activity. Most of today’s trading platforms offer some type of market depth display that allows traders to see the buy and sell orders waiting to be executed—not just the best bid and ask prices, but the bids and asks on either side of the market—as well as the size of all the bids and offers."
So what this tells me is looking at the Y-axis we have quantity and on the X-axis we have price. The values on the market depth chart directly relate to the order book prices, which are stop/limit orders people have placed.
Right now when I look at the STEEM price I'm mostly interested at the price I can buy STEEM or SBD. If you look at the right side of the market depth chart( for this post MDC ) above you will see everyones orders to sell STEEM and obivously it is to the right because people are looking to sell the currency at more than they bought it. If you made an order for anything less than the middle I imagine the order would be instantly filled because someone already has an order to buy it at the price.
On the hitBTC MDC above you can see that there are roughly 3500 order people have placed to sell STEEM ( that doesn't mean number of people but total quantity of STEEM ). If you then look at the order book, second row, you can see there are 377~ STEEM to sell at 0.00082~BTC. On the MDC that sell order is the very first step before you see the huge jump of over 1000 STEEM to sell at roughly 0.001BTC.
On the flip side the buy orders go off the top of the MDC, the price the orders are placed at on the far left are 0.00003BTC(£0.05). The current selling price is 0.0008~ which is roughly £1.40 that seem mental to me why are there so many order waiting at the price, do a whole load of people want to see STEEM drop that badly or are they 6 month old orders that never got filled? The order book doesn't answer that question and to scroll back in time on the transaction is damn stupid, honestly!
A serious question, do all these stupid orders actually have an effect on the current trading value?
Lets take a look at a MDC on another exchange, what I've heard is the most popular and active - Poloniex.
I thought the MDC on hitBTC was a bit crazy with over 3000 sell orders and over 6000 buy orders but as you can see on poloniex them numbers are not only dwarfed they are made to look insignificant with a total of over 100,000 buy orders and the same for sell orders. The lowest purchase order is crazy low, much lower than on HitBTC and the highest sell order at about the same maybe a little lower. That clearly tells me poloniex is a much more active exchange, and raises the question, do the price link and effect each other?
Any comparison is a bit open ended if there isn't a thrid to compare the other two too, so here is the MDC on Birtrex.
When watching Bittrex live this chart is constantly shifting, seems really active but the quantity of orders is nothing in comparison to either hitBTC and Poloniex. The lowest buy order and the highest sell order price range is much much narrower than on both the other exchanges as well and I'm not quiet sure what to make of that. There are just over 70 sell orders and mid 50 buy orders. The order book is a little harder to understand so I'm not going to bring that in to the equation.
Now then.
If I had enough BTC to buy 60 STEEM from what I understand now ( and I maybe very wrong ) is that on hitBTC is will buy 60 STEEM at 0.00082 BTC. If I go over to Poloniex and buy 60 STEEM I'll get them at roughly the same price. However, if I take my money to bittrex and buy 60 STEEM I'll get 20 STEEM for less than 0.00085 BTC another 20 at 0.00085 - 0.00087 BTC and the final 20 of my order at somewhere between 0.00087 - 0.001 BTC. The price on hitBTC will barely move, the same goes for poloniex but then on Bittrex the price will go up from 0.00082 to 0.00099 BTC roughly. That by the way is a huge assumption based off of how I saw the market react to my purchases of STEEM earlier today. That also isn't true depending on some types of orders - I think a limit order would stop the purchase if the price went above what I was willing to pay.
maybe I have some extreme gaps in my knowledge or maybe the information is miss understood but I feel as though I can use Market Depth Charts when making purchases in future. Annoyingly on HitBTC my exchange of choice there are 377~ STEEM to sell at 0.00082 and until they are bought the price wont go up ( or at least thats how I think it'll go ).
IF anyone can tell me if my understanding is right or wrong that would be awesome, and also possibly patch up my understand where I seem to have got it wrong that would be greatly appreciated.
Until next time,
Stay well.
