Depth of market explanation

I am coming from the FX side. Could someone walk me through the basics of what the different functions represent on the DOM? How this it help some use chart trading along with the DOM?

Basically, what a DOM does is just tell you everything that’s happening with price in the near term. Essentially, you get a break down of the last traded price, bid, ask, and even the contracts available at the bid and ask.
The contracts available at the bid/ask is known as ‘Market Depth.’ You’ll be able to see the market depth usually on separate sides to keep from getting them confused. Typically, a DOM will also include buy/sell market buttons, limit order options for the ask/bid, as well as some kind of exit strategy function.

I’ve noticed that the DOMs are more popular in the futures markets rather than the forex market for whatever reason.

You will most likely will just use the order functionality built-in to the chart for most positions, but if you are scalping then go ahead and use the DOM. It’s a lot quicker to submit quick pending (limit or stop) orders with the DOM than it is for chart trading.

The cool thing though, is that most platforms display the orders in both locations so that you can kind of use them interchangeably. So, sometimes you will submit a few orders on the DOM and then manage them individually on each chart.

I hope this helps.


Thank you Matt.

You most welcome. Let us know if you have additional questions.