#4 Order Book (DOM) – Introduction

What Is the Order Book (DOM)?​

The Order Book, also called DOM (Depth of Market), shows all pending buy and sell limit orders at each price level.

In simple words:

• It shows where buyers are waiting
• It shows where sellers are waiting

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What You See in the DOM​

The DOM usually has three main parts:

• Bid side – buy limit orders (buyers waiting)
• Price column – price levels
• Ask side – sell limit orders (sellers waiting)

Buy orders are below the current price.
Sell orders are above the current price.

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What the Numbers Mean​

The numbers in the DOM represent:

• How many contracts / shares are waiting at each price
• These orders are not executed yet
• They only execute when hit by a market order

Example:

• 500 on the bid at 100 → buyers want to buy 500 at 100
• 400 on the ask at 101 → sellers want to sell 400 at 101

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How Trades Happen in the DOM​

• Market buy orders hit the ask
• Market sell orders hit the bid
• When orders are filled, the size at that price decreases

If all orders at a price are filled:

• Price moves to the next level

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Why the Order Book Matters​

The DOM helps you see:

• Areas of liquidity
• Where price may slow down
• Where price may move fast

Large resting orders can:

• Slow price (absorption)
• Or disappear and let price move quickly

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Beginner Tip​

• DOM shows intent (what traders want to do)
• Market orders show action (what traders actually do)

DOM alone does not predict price, but it explains why price moves.

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#3 What Candlestick Charts Don’t Tell You

#5 Market Depth