DOM (depth of market)

The formula

The order book displayed vertically: resting orders at each price level.

How to read it

Displayed intent at a given instant. A visible order can be pulled, which is the tool's limit.

It is a very short-term tool, useful for scalping on centralised markets such as futures, where the book is the whole market's. It shows where liquidity piles up and how fast it is consumed, not where price is going.

The classic mistake

Taking displayed orders for a commitment. A resting order is pulled in a fraction of a second, and large blocks are displayed precisely to be seen then cancelled. The DOM shows declared intent, never the transaction: that is read on the footprint.