A footprint chart shows you executed orders — trades that have already happened. But what if you could see where traders are planning to buy and sell before the trades even occur?

That’s where the Depth of Market (DOM) comes in.

The DOM is like a live order book, displaying all the buy and sell orders waiting to be filled. It tells you who wants to buy, who wants to sell, and at what price.

Instead of just watching the price move up and down, the DOM gives you a behind-the-scenes look at market activity before trades happen. It helps traders spot where big orders are sitting and how much liquidity is available at different price levels.

How the DOM Works

The DOM is usually divided into three parts:

Bid Prices (Left Side) – These are buy orders placed below the current price.

Ask Prices (Right Side) – These are sell orders placed above the current price.

Last Traded Price (Middle or Bottom Section) – This shows the most recent trade. If the price moves up, buyers are in control. If it moves down, sellers have the upper hand.

The Depth of Market (DOM) window shows real-time market activity at different price levels for a security or currency pair. It is also called the order book because it records pending buy and sell orders and helps determine which trades may be executed next.

By using the DOM, traders can see where buyers and sellers are placing big orders, identify potential turning points, and gauge market strength in real time. It’s like seeing the battle between buyers and sellers before it happens.

But keep in mind that the DOM only shows orders waiting to be executed, not trades that have already happened.

How Depth of Market helps us

Depth of Market (DOM) helps us see where other traders are placing buy and sell orders. It shows how many traders want to buy or sell at different prices.

DOM shows us Liquidity

Liquidity means how easy it is to trade without causing a big price change.

If there are many buy and sell orders at different prices, the market has high liquidity, making it easier to trade.

If there are only a few orders, the market has low liquidity, making it hard to trade.

If more orders are being filled on the sell side (asks), it means aggressive buyers are stepping in, lifting the offers to get into positions quickly. This can indicate strong buying pressure and potential upward price movement.

On the other hand, if more orders are being filled on the buy side (bids), it means aggressive sellers are hitting the bids, selling into available liquidity. This suggests strong selling pressure and potential downward price movement.

DOM helps traders see this order flow in real time. If aggressive buying continues, the price is likely to climb as buyers consume liquidity at higher levels. If aggressive selling dominates, the price is likely to drop as sellers clear out buy orders.

The Problem of Real-Time Order Flow

Not every trader placing orders has the intent to buy or sell in a directional way, which creates confusion in order flow analysis.

Challenges in Reading Real-Time Order Flow:

Manipulation – Some traders place fake orders to mislead others.

Ambiguity – Just because an order is in the DOM doesn’t mean it will be filled.

Lack of Transparency – Hidden orders and algorithmic trading make it harder to interpret true supply and demand.

Depth of Market (DOM) gives us a real-time view of buy and sell orders, showing where traders are placing their bids and offers. However, just because an order is in the book doesn’t mean it will actually get filled. Some traders use tactics like spoofing to manipulate the market, while others use iceberg orders to hide their true intentions.

Order Spoofing

Fake Orders to Trick the Market

Spoofing happens when a trader places a large order in the market without the intent of getting it filled. The purpose is to create the illusion of strong buying or selling interest to influence price movement.

Here’s how it works:

A trader places a large buy or sell order in the order book, making it look like there is strong demand or supply.

As the price moves toward that level, the trader removes the order before it can be executed.

This can cause other traders to react, thinking the price will move in that direction.

A spoof order can often be spotted when a large order appears in the DOM but disappears as the price approaches, showing no real intent to trade at that level.

However, we can’t always tell if an order in the order book is spoofing or a legitimate order that was canceled for another reason. Since traders can add or remove orders at any time, it is difficult to know the true intent behind an order until it either gets filled or vanishes when the price moves toward it.

Iceberg Orders

An iceberg order is a large limit buy or sell order that is broken into smaller, visible parts to avoid attracting attention in the market. The name “iceberg” comes from the idea that only a small portion of the order is visible, while the majority remains hidden beneath the surface.

Here’s how it works:

A trader places a large limit order, but instead of showing the full amount in the order book, only a small portion is visible.

As the visible portion gets filled (executed), another portion automatically appears in its place.

This process repeats until the entire order is executed.

Who Uses Iceberg Orders and Why?

Big traders, such as banks, hedge funds, and large institutions, often use iceberg orders when they need to buy or sell large amounts without causing big price movements. If they placed a massive order all at once, other traders might notice and push the price up or down before they can complete their trade.

To stay hidden and avoid disrupting the market, they use iceberg orders.

How Does an Iceberg Order Work?

A hedge fund wants to buy 100,000 shares of Company XYZ, but the stock’s average daily trading volume is only 30,000 shares. If they place the full order at once, other traders may notice the large order, push up the price, or front-run the trade.

To avoid this, the hedge fund uses an iceberg order, breaking it into smaller orders of 2,500 shares each.

As each 2,500-share order gets filled, another 2,500 shares appear, making it look like normal trading activity.

This continues until the full 100,000 shares are purchased without drawing attention or moving the price significantly.

Instead of placing one big order, they place small orders at the same price level so that only a fraction of the full order is visible at any given time.

By using an iceberg order, the hedge fund avoids large price jumps and secures a better average entry price without alerting the market.