Depth of Market
Hi, today let's take a look at what Depth of Market is and take a look at its structure, as well as introduce some concepts into our usage.
Depth of Market is a list of orders to buy and sell a traded instrument, available at the moment on the exchange.
All orders are presented in the form of a table, where we see sellers on the top, usually marked in red and signed as ASK (sellers, offer, ask, offer - it's all the same), and buyers on the bottom, usually in green and signed as BID (buyers, demand, bid).
The best offer price is labeled Best Ask and the best bid price is labeled Best Bid.
The price difference between the best ask and the best bid is Spread, the smaller the spread and the faster the price gap levels out after the price level is parsed, the more liquid the instrument is considered to be.
The difference between consecutive price levels is called the minimum price step (tik).
Depth of Market is also an important parameter.
The depth of the stack is the number of price levels available for display. Broker or stock exchange often limits the depth of the stack on purpose, firstly, to reduce the load on the terminal, and secondly, to hide most of the information from us. It all depends on the traded instrument, broker, exchange, sometimes for an additional fee you can get a display of greater depth of Depth of Market.
Depth of Market is a list of orders to buy and sell a traded instrument, available at the moment on the exchange.
All orders are presented in the form of a table, where we see sellers on the top, usually marked in red and signed as ASK (sellers, offer, ask, offer - it's all the same), and buyers on the bottom, usually in green and signed as BID (buyers, demand, bid).
The best offer price is labeled Best Ask and the best bid price is labeled Best Bid.
The price difference between the best ask and the best bid is Spread, the smaller the spread and the faster the price gap levels out after the price level is parsed, the more liquid the instrument is considered to be.
The difference between consecutive price levels is called the minimum price step (tik).
Depth of Market is also an important parameter.
The depth of the stack is the number of price levels available for display. Broker or stock exchange often limits the depth of the stack on purpose, firstly, to reduce the load on the terminal, and secondly, to hide most of the information from us. It all depends on the traded instrument, broker, exchange, sometimes for an additional fee you can get a display of greater depth of Depth of Market.
So, why do we need to look at this stock exchange stack at all?
Its main purpose is the possibility to place or remove our pending order from the price level we are interested in, as well as to observe what other market participants are doing at this moment.
And remember that the stock exchange stack shows only the intention to buy or sell a market participant at the price he is interested in.
For example, you can watch what volume and at what price bids appear in the stack, how quickly the price moves on the price level and use the information obtained in your analysis.
Well, what exactly to pay attention to, I will tell you later, everything in order.
Further we will consider why the price goes up or down, and running ahead, not because demand exceeds supply, or vice versa, as many people think, having read obscure books....
Its main purpose is the possibility to place or remove our pending order from the price level we are interested in, as well as to observe what other market participants are doing at this moment.
And remember that the stock exchange stack shows only the intention to buy or sell a market participant at the price he is interested in.
For example, you can watch what volume and at what price bids appear in the stack, how quickly the price moves on the price level and use the information obtained in your analysis.
Well, what exactly to pay attention to, I will tell you later, everything in order.
Further we will consider why the price goes up or down, and running ahead, not because demand exceeds supply, or vice versa, as many people think, having read obscure books....
Our friends
