What is also known as ‘Depth of Market’, or DOM, is basically a measurement of the number of open sell and buy orders flowing from a currency or security, which collectively provides an estimate of the total depth or liquidity of a market.

A good example is something like the American stock exchange, which you can review in order to have a good source for future market depth layouts.

Market depth will always be displayed on an electronic list in real-time, and will provide an individual with all of the selling and buying orders which are in the queue waiting to be actioned in the stock market or a similar platform for trading.

Such a system truly helps give traders much valuable insight regarding bids and their weight, providing a moderate amount of security. The ordering of these orders will generally be ordered according to individual price level.

A Universal Service

The majority of trading platforms will provide users with some form of market depth display system, providing information for all orders awaiting execution, and not just the optimal bids or ask prices, which can be found on both sides of a market – not to mention bid sizes.

Such a service provides insight for traders to the level where the future prices of bids can be established.

Inside Prices 

The market depth system will display data regarding the prices which traders are happy to sell and buy according to the relevant trading icon at a singular point in time. As market depth will always be formed in real time, you can expect to witness plenty of changes within a single trading period.

With the most sophisticated trading instruments – such as the E-mini S&P 500 futures contract (ES) – which will enact trading at a higher volume than most other instruments, market depth will display a myriad of updates flashing different figures every second.

No matter how frequently such newfound offers and bids will enter a market, you can count on market depth to display the varied prices, as well as how many orders have been queued up at any given time to be bought or sold.

Such data is most favourably witnessed on a different Level II window, as well as upon a price ladder, all showing just how buyers will bid and how much sellers will ask. Within a market depth price ladder, you will find the price level hosted in the middle column, and the amount of buyers activating each price level found on the left side, the sellers being found on the right side of each price. This entire process is collectively known as “Climbing the market”.

Price charts are another excellent way to access a market depth in what is generally displayed on a charting depth. Such data can also be viewed on a DOM or Level II window – each instrument just has its own way of displaying data.

Whichever way you decide to view the current market depth, make sure not to skip on this essential service.


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