advanced · TRADING LEARNING GUIDE
Chapter 5 — DOM (Depth of Market) & Order Book
Buy aggression → lifts offers · Sell aggression → hits bids
What is this concept?
A DOM displays resting bid and ask quantities by price. Market-by-price aggregates orders; it is not a list of named traders. Additions, fills and cancellations all change the ladder.
Daily learning workflow
1. Identify the instrument, venue and observation interval. 2. Read the chapter definition and reproduce its worked calculation. 3. Watch the supporting workshop and compare its platform conventions with your data. 4. Compare a ladder before and after a change with the trade tape. 5. Record what happened, what you inferred and what would invalidate your interpretation.
Evidence and interpretation
Keep three separate notes: observed transactions or book changes; your explanation of those observations; and a paper rule with a defined failure condition. Compare at least one counterexample. Do not turn an illustration into a live claim.
Worked example
Hypothetical worked example: A 500-unit bid wall can disappear because of cancellation rather than 500 executed sells.
Common mistakes and limits
Do not treat this observation as a guaranteed signal. Check the venue, data classification, session boundaries and costs. A candle or aggregated order book does not reveal the identity or total holdings of traders.
Practice
Compare a ladder before and after a change with the trade tape. Use recorded or paper data. Log the observation before revealing the outcome.
Resources and further reading
These sources explain definitions and underlying mechanics. Worked examples are original illustrations; a source does not establish the profitability of a custom pattern.
Public creator-hosted education. Embedding does not mean open-source licensing or endorsement.
Primary reference for footprint display and bid/ask volume conventions. Platform-specific settings must be checked.