How to read a DEX chart

Candles

Each candle covers a time period and shows four values: where price opened, where it closed, and the highest and lowest points in between. The body is open to close; the wicks are the extremes.

On thin tokens, long wicks are common and often meaningless — a single trade against a shallow pool can spike the price for one block before it snaps back.

Volume

Volume is how much was traded in the period. It is the main confirmation signal for any price move: a breakout on heavy volume carries more weight than one on nothing.

Be sceptical of volume on very new tokens. Wash trading — the same entity trading with itself to manufacture activity — is common and cheap on Solana.

Liquidity

Liquidity is how much is actually sitting in the trading pool. It determines how large an order the market can absorb before the price moves significantly.

This is the number that matters most and the one people ignore. A token showing a $50m market cap with $40,000 of liquidity cannot support anyone exiting a meaningful position. The market cap is theoretical; the liquidity is real.

Market cap versus FDV

Market cap is price times circulating supply. Fully diluted valuation is price times total supply including tokens not yet released.

When FDV is far higher than market cap, a large amount of supply is still to come. Those tokens usually arrive as sell pressure. Comparing a token's market cap to another's FDV is not a like-for-like comparison, and doing it accidentally is a common way to convince yourself something is cheap.

Holder count and distribution

A high holder count looks reassuring but is trivially faked by airdropping dust to thousands of wallets. Distribution among the top holders tells you far more than the raw number.