Market Depth

Category: finance

The measure of how many buy and sell orders exist at various price levels for a specific stock.

Depth is "cushion." If a stock has high depth, you can sell a huge block without crashing the price. If it has low depth, a small sell order can cause a massive price dive. It’s a key metric for institutional execution.

Common Examples

• We look for high market depth when executing trades for our clients to avoid "slippage" in our entry and exit points.
• The liquidity and overall market depth are what give investors the confidence to move large volumes without distorting the price.