Depth of Market (DOM) is a list of traders’ actual bids (orders) to buy (bid) and sell (ask) cryptocurrencies. That is, traders make a decision about the operation and announce it in the form of an order to conduct it. On different exchanges, the market may be displayed in the form of a table, a bar chart or a diagram.
Screenshot how DOM looks on Tiger Trade platform
How is the DOM generated?
When a trade order is placed, the main parameters of the transaction are specified: the price at which the trader agrees to buy/sell the cryptocurrency and the number of coins. After confirming the order, the exchange starts looking for a counter-order to satisfy the order.
After the execution of the trader’s order, the price of the transaction is displayed on the cryptocurrency chart and recorded in history. That is, the more transactions made in one direction (to buy or sell), the more the price of the asset will change.
How do I read the DOM?
Bulls and bears or sellers and buyers can put pressure on the market to move the price of Bitcoin in the direction they want. Pressure refers to making large trades in order to shake the price more on the above principle.
The deal tracker shows already completed transactions to buy or sell the cryptocurrency. It has information about the recent trading volumes. Most of the time, buy trades are marked in green, sell trades are marked in red.
Traders’ orders in the DOM are not permanently recorded: the order can be cancelled, and then it will disappear from the DOM.
See more in the video
Footprint is a display on the chart of completed sell or buy trades (at what exact time the bid and ask are executed). Ask is the price at which the seller can sell the asset. Bid is the price level at which the buyer of the offered instrument is ready to make a deal. An outprint is a special type of chart that shows the activity of market participants by the volume of passing transactions. Footprint has several names: horizontal volume profile, cluster chart. There are a lot of ways to display information on the Footprint, so it can look completely different.
In addition to the body and shadows, there is a lot of information inside the candlestick. You can see two columns of numbers and horizontal bars of different colors. The left bar indicates the number of sales that took place at each price. The right column indicates the number of buys, which took place at each price. The horizontal bars indicate the amount of volume that has passed at each price. The wider the bar, the more volume was at that price. The color of the bar marks the dominance of the buyer over the seller and vice versa. The brightest bar marks the highest volume in a candle.
As a result, more information is available to the trader, which makes market analysis more accurate. And this applies to any question: levels, strength of levels, trend, flat, entry and exit.
The main advantage of Footprint is the visibility of the internal struggle. The level of maximum volume inside the candle is the main reference point for the trader. Movement of this level when looking at the whole chart informs about the market sentiment. A trend movement is accompanied by movement of the maximum volume level following the trend irrespective of the candle direction. Both in an uptrend and in a downtrend there are trend and correctional candlesticks, but the volume level within them moves in one direction. In a flat market, the movement of the volume level will constantly change direction, thereby indicating that there is no dominant side.
Looking at the chart, you may notice areas where the maximum volume levels are on the same price in different candlesticks. This is not accidental, such coincidence of maximum volumes inside the candlesticks indicates the location of limit orders, which in turn should be perceived by a trader as a strong support/resistance level.
How it looks on real example