Market depth refers to the market liquidity for a security based on the number of standing orders to buy (bids) and sell (offers) at various price levels. The greater the market depth, the less likely that large trades will greatly impact a security's price.Market depthMarket depthDepth of market (DOM) is a measure of the supply and demand for liquid, tradeable assets. 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.https://www.investopedia.com › terms › depth-of-marketDepth of Market (DOM) Definition - Investopedia refers to the market liquidity for a security based on the number of standing orders to buy (bids) and sell (offers) at various price levels. The greater the market depth, the less likely that large trades will greatly impact a security's price.
How do you calculate market depth?
The calculation for market depth is simply the cumulative volume of the base asset at various percentages from the mid price. For example, the “Bid Volume 10%” for BTC/USD on Coinbase would represent the volume of all bids for BTC falling within 10% of the mid price at which the order book snapshot was taken.
What is depth on a stock chart?
A depth chart illustrates both sides of supply and demand to show how much of an asset you can sell at a particular price point. A depth chart is split in the middle, which is the price of the asset during the last trade. It is also organized across the bottom by price.