Depth of Market, aka the Order Book, is a window that shows how many open buy and sell orders there are at different prices for a security. Let’s say the current price is $1, the DOM will show how many orders there are at $0.90, $1.05, etc. It shows where the supply and demand levels are.
DOM comprises of Limit Orders which are consumed by Market OrdersBasis of ORDERFLOW ANALYSIS
DOM comprises of Limit Orders which are consumed by Market Orders
It is based on the number of open buy and sell orders for a given asset such as a stock or futures contract. The greater the quantity of those orders, the deeper or more liquid, the market is considered to be.
Depth of market data is also known as the order book since it consists of a list of pending orders for a security or currency
To activate the DOM, click on the DOM tab in the left side panel
By measuring real-time supply and demand, market depth is used by traders to assess the likely direction of an asset's price. It is also used to gauge the number of shares of the asset that can be bought without causing its price to appreciate.
If a stock is extremely liquid, it has a large number of both buyers and sellers. A buyer can purchase a large block of shares without causing a substantial stock price movement.
However, if a stock is not particularly liquid, it doesn't trade as constantly. Purchasing a block of shares may have a noticeable impact on the stock's price.
Depth of market is typically displayed as an electronic list of outstanding buy and sell orders, organized by price level and updated in real-time to reflect current activity. A matching engine pairs up compatible trades for completion.
Let us see these concepts in action
GoCharting provides a research and chart platform to different markets including multiple crypto exchanges and NSE for India