Market depth is an electronic list of buy and sell orders, organized by price level and updated to reflect real-time market activity. Most of today’s trading platforms offer some type of market depth display that allows traders to see the buy and sell orders waiting to be executed—not just the best bid and ask prices, but the bids and asks on either side of the market—as well as the size of all the bids and offers.

All of this information can be useful to traders because it shows not only where price is now, but where it is likely to be in the near future. Here, we look at market depth, from the basics to how you can add market depth to your trading toolbox.