Market Depth

A market depth chart (also called a depth of market or DOM display) shows the cumulative volume of buy and sell orders at each price level:

The bid side (left/green): Shows all open buy orders stacked by price. The highest bid is at the top — that is the best price anyone is currently willing to pay. Below it, progressively lower bids represent buyers willing to pay less.

The ask side (right/red): Shows all open sell orders. The lowest ask is at the top — the cheapest price anyone is willing to sell at. Above it, progressively higher asks represent sellers who want more.

The spread: The gap between the best bid and best ask. Tight spreads (1 cent on liquid stocks) indicate deep markets. Wide spreads (5-50 cents on illiquid stocks) indicate shallow depth and higher trading costs.

Depth visualization: Most platforms display depth as a stepped chart where each step represents a price level and the width represents the volume at that level. A wall of buy orders at $49.50 (large green bar) suggests strong support at that level. A wall of sell orders at $51.00 (large red bar) suggests resistance.

Important caveat: Displayed depth can be misleading. Large visible orders are sometimes spoofed (placed and quickly cancelled to influence other traders). Hidden (iceberg) orders do not appear in the depth chart at all. The depth chart shows intent, not commitment — only executed trades (visible in the time and sales) represent real liquidity.

Market depth provides actionable information for timing entries and exits:

Estimating slippage: Before placing an order, check the depth at your target price. If you want to buy 1,000 shares and only 200 are offered at the ask, your order will walk up the book and fill at progressively higher prices. Depth tells you how much your order will move the market.

Identifying support and resistance: Large clusters of buy orders create visible support in the depth chart. If 50,000 shares are bid at $100.00, that price is unlikely to break easily. Similarly, large sell walls create resistance. When a large wall is suddenly pulled (cancelled), it often signals an imminent move in that direction.

Detecting absorption: When a large sell wall at a specific price does not move the price lower — buyers keep filling orders at that level without exhausting — the wall is being absorbed. Absorption at resistance often precedes breakouts because it means a large buyer is systematically taking the other side.

Thin book detection: Areas of the order book with very few orders represent potential acceleration zones. If price breaks through a support level and there are only 500 shares bid at the next five levels down, the price can drop rapidly through the thin zone before finding the next substantial support.

For day traders: Check depth before every entry. A stock with deep bids below your entry price gives you a safety net. A stock with thin bids below means your stop-loss may fill significantly below your target exit price (gap through stop).