Market StructureDOMMarket DepthLadder
Depth of Market (DOM)
A display of the quantity of bids and offers resting at each price level around the current market.
What Depth of Market (DOM) means
Depth of market, often shown as a price ladder, presents the volume available at successive price levels on both sides of the book. Traders use it to judge how much size can be executed before the price moves, to spot large resting orders that may act as short-term barriers, and to place limit orders where liquidity is concentrated. Platforms built for direct market access and futures trading generally offer a full ladder with click-to-trade functionality.
In forex the DOM is only as complete as the liquidity feeding the venue that produces it, since there is no consolidated book. Displayed depth can also be misleading: a large order may be replicated across several aggregated providers and counted more than once, and resting size can be cancelled in milliseconds. Depth is a useful real-time gauge of conditions, but it is not a reliable predictor of direction and should not be read as committed supply or demand.
Worked example
A ladder showing 4 million euros at 1.08498, 7 million at 1.08496 and 2 million at 1.08494 tells you roughly 13 million can be sold before the bid falls below 1.08494.
Related terms
- Order BookThe list of resting buy and sell limit orders at each price level on a trading venue.
- ECN (Electronic Communication Network)An electronic venue that anonymously matches buy and sell orders from many participants in a shared order book.
- Direct Market Access (DMA)Trading arrangement where client orders interact directly with an underlying venue's order book rather than a dealer's quote.
- LiquidityThe ease with which an instrument can be traded in size without materially moving its price.
- cTraderA trading platform by Spotware associated with ECN pricing, level II depth and automation written in C# as cBots.
Frequently asked questions
What does Depth of Market (DOM) mean in forex trading?
A display of the quantity of bids and offers resting at each price level around the current market.
How does Depth of Market (DOM) work in practice?
In forex the DOM is only as complete as the liquidity feeding the venue that produces it, since there is no consolidated book. Displayed depth can also be misleading: a large order may be replicated across several aggregated providers and counted more than once, and resting size can be cancelled in milliseconds. Depth is a useful real-time gauge of conditions, but it is not a reliable predictor of direction and should not be read as committed supply or demand.
What is an example of Depth of Market (DOM)?
A ladder showing 4 million euros at 1.08498, 7 million at 1.08496 and 2 million at 1.08494 tells you roughly 13 million can be sold before the bid falls below 1.08494.
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