What is Depth of Market?
Metatrader Depth of market indicates, how many orders are currently active in an exchange for a particular market instrument. The volume of trade placed on particular price. This small piece of information is very valuable in terms understanding how market players are thinking. How & where you should be executing your orders, on what price level. By default, MetaTrader trading platform provides this indicator in both of their version MetaTrader 4 & 5.
Depth of Market Metatrader 4:
With Metatrader 4 user can not see the trade volume of other traders like MetaTrader 5 depth of market. With Metatrader 4 it is more like a tool to place pending orders at a better price if in case the market moves too fast. It is very efficient for those traders to place lots of trades one at a time.
See the picture with this tool, you can place instant buy or sell orders, also pending orders, buy limit, sell stop, sell limit & buy stop type of orders. The Red arrow indicates sell stop or sell limit & blue arrow indicates buy stop or buy limits. Just clicking on those arrows can place your orders.
Eventually, you can add stop loss & Take profit in points with this tool. With this DOM tool, you can also change the pricing of your pending order, i.e moving your stop levels, also can cancel any other pending orders. Pretty handy tool for scalpers. In order open Depth of market in MetaTrader press Alt + B on the preferred chart. If you have EURUSD chart open, then pressing Alt + B will open depth of market (DOM) window for EURUSD. You can also open it from market watch section. Right click on market watch for any instrument to find the DOM option.
Depth of Market for Metatrader 5:
Now DOM for MetaTrader 5 is the real catch, why? Because of its shows the volume. Metatrader 5 is an advanced trading platform than MetaTrader 4. It was mainly designed for non FX instruments. As we all know forex instruments are decentralized market thus getting the volume of the forex market is a bit difficult. Because the broker doesn’t share all traders volume. In case of non fx instruments like indices or future contracts which is a centralized market, showing real volume is mandatory.
The picture at the left showing Depth of market window for EUR/RUB index future contract of Moscow exchange. You can see the volume for each price level. Means how many orders have been placed at those certain price level. Those numbers in the volume section indicate the number of standard lots. You can also view the tick data & its volume. Filtering tick chart price with volume is also possible for the advanced level of analysis. The trader also view the tick chart of the instrument in depth of the market window.
Market Depth Trading Strategy:
Trading with market depth information varies trader to trader. Generally, in simple word, suppose you are looking to buy EURRUB around a 63.70 zone. Your goal is to make 10 pips out this trade. With the example above, maximum trade order has been taken around 63.705 & 63.670 zone. So as you are target is buying, then it is better to buy it from 63.67 zone instead of 63.70. Cause that will be a better price. The main function of using this tool is to find & enter at a better price. For a scalper, 1-3 pip difference matters a lot. If you start using this tool then you can also see the difference.
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