How depth of market works
Depth of market, or DOM, shows the queue of buy and sell orders waiting at each price level beyond the best bid and offer. Where the order book top shows the current best prices, depth shows how much volume sits behind them. It is the map of available liquidity, telling you how far your order would have to walk through the book to fill.
Worked example
The best offer is 100 units at $50.00, but depth shows only 100 there, then 200 at $50.02, then 500 at $50.05. A market buy of 700 units would clear the first three levels and fill at an average well above $50.00, the gap being slippage. A thin DOM warns you that your order is large relative to resting liquidity, before you send it.
Reading depth on Volity
On Volity, MT5 shows depth of market on major instruments, so you can judge whether to send a market order or work it with limits. Deep books on liquid forex majors and large-cap stocks absorb size with little impact; thin books on minor instruments move on small orders. Reading depth before sizing is how you avoid moving the price against yourself.
Why it matters
Depth of market shows the liquidity behind the headline price, so it is the difference between an order that fills cleanly and one that slips badly. Check it before sending size into anything but the most liquid instruments. Related: order book and liquidity provider.
Learn more in our forex trading guide.
