Depth of market, the essence of ladder trading
Depth of market is never evident from the price screen. The price screen is normally a price / volume screen. It shows the volumes that are being executed in the market and how the shifts in volumes are bringing about a shift in the stock price. But there is one step before the volumes and that is the depth of the market. When you execute any buy or sell order, you can always click on the tradable instrument and check out the five best buy and best sell prices in the market. This shows the number of orders and the number of shares that are available for buying / selling on the stock at different tick levels.
The above image captures the gist of what DOM trading or price ladder trading is all about. The entire trading screen is divided into 3 key parts. The first part is the price level of the stock or index and this is a constantly dynamic variable. That is provided at the center of the screen. On the two sides are the depth of buying and the depth of selling in terms of the number of shares at each price level. In short this is the price screen and the order depth screen combined together in an elegant manner.