Market Depth (DOM) is a real-time display that provides insight into market liquidity by showing active buy and sell orders, as well as the overall supply and demand for a financial asset.
A deeper market, meaning a higher number of buy and sell orders, typically indicates greater liquidity, making it easier for traders to execute large transactions with minimal price impact.
How does Market Depth work?
The Depth of Market window consists of a price list divided into two sections:
Upper Section (Red) – ASK Prices:
🔹Represents sell orders placed by traders.
🔹The lowest Ask price is the best available selling price.
Lower Section (Blue) – BID Prices:
🔹Represents buy orders placed by traders.
🔹The highest Bid price is the best available buying price.
The difference between the highest Bid and the lowest Ask is known as the spread, which is a crucial cost factor for traders.
Why is Market Depth important?
🔹Determines Liquidity – Higher market depth means smoother trade execution.
🔹Reduces Slippage – A deeper market minimizes price fluctuations when placing large orders.
🔹Identifies Support & Resistance – Large buy and sell orders can indicate key price levels.
🔹Helps in Scalping & Day Trading – Traders can analyze the market structure for short-term opportunities.
At Eurotrader, we provide access to real-time Market Depth data, helping traders make informed trading decisions.
For more details, check our guide on Depth of Market Trading Strategies!
