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TradingView Depth of Market Explained | Buy & Sell Stock
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Dec 16, 2022
Today we’ll be diving into the Depth of Market Tool within the TradingView platform. We’ll learn how to read it, customize it, and even how to quickly place trades using it. The Depth of Market tool, or order book as its more commonly called, is a tool within tradingview that allows us to view all the open orders to buy or sell at specific price levels. People refer to it as an order book, because that’s essentially what it is. A view of open orders people have actually place to buy or sell the stock.
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0:00
Today we'll be diving into the depth of market tool within the Trading View platform
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We're going to learn not only how to read it and customize it, but also how to use it to place our trades much more quickly
0:10
Before we actually jump into it, if you use my link down below, you can get a free 30-day trial to any of their paid plans and give it a try for yourself
0:19
Now, the depth of market tool or order book, as it's more commonly called, is a tool within Trading View that allows us to view all of the open orders to buy or sell a stock at a specific price
0:30
People refer to it as an order book because that's essentially what it is
0:34
a view of all of the open orders that people have actually placed to buy or sell the stock
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In order for us to see it within Trading View and check it out for ourselves
0:42
we will simply come over here to the far right-hand side panel
0:46
and find the little icon Mark Dom. As soon as I click on that, it'll actually appear over here on the left
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and the very first thing we have to do before we can actually use it is link up one of our brokers to Trading View
0:58
To do that, we will simply come down here to the lower left-hand corner where it currently says trading panel
1:04
And then as soon as I click on that, a list of all of the available brokers will pop up right here
1:10
You can, of course, link Trading View to whatever account that you want to use, but just keep in mind that only a few of these brokers actually have Level 2 data that's going to be available within Trading Deal
1:20
The one that I'm positive offers it is going to be Trade Station, but I will tell you that they do charge a fee for their Level 2 data
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I think it's about $11 a month. Now, in my case, since I don't have a Trade Station account right now
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I am just going to come over here and click on paper trading and connect it to a paper money account
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Now that that's done, I can actually see I've got my account linked up right here
1:41
and it actually shows me that I currently have an American Airlines position in this account
1:46
But coming over here to the right, if we go back to the DOM or the Depth of Market Tool
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at the top it actually showing me we currently looking at a DOM for SPY or the S 500 ETF There clearly a lot of information to see on this very little screen here
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but we're going to break it down one step at a time. The most noticeable thing that you'll probably see right off the bat
2:06
is the price column running vertically up and down the center of the screen
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This is going to be in reference to the price of the underlying security that we're looking at right now
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So again, in this case, SPY. At the moment, each of these is going to be a penny increment
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So if we look here, it says $380, $380 and one penny, two pennies, and so on
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Now, the numbers that we see to the left and the right of those prices
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are actually going to be the open buy and sell orders for this particular sock
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The numbers are going to tell us the actual size of the orders themselves. So how many shares are available at those particular prices
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So, for example, if we were to come over here to the left, we can see an open order out there to buy 500 shares of SPY at 380
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Right above that, we can see an open sell order to sell 500 chairs at 380.06
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So again, all of the open buy orders are going to be on the left. All of the open sell orders are going to be on the right
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In this case, since I'm only connected to a paper money account, we can't see all of the open orders, only the best bid and ask
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So normally, if you were to connect to a trade station account like I mentioned earlier
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which is going to give you access to level 2, there are going to be a lot more open orders out there
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So you would see numbers in pretty much all of these boxes going up, and then from here you would see a bunch of open orders going down to left-hand side as well
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But besides just showing us the open buy and sell orders out there right now
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the pricing ladder is also going to allow us to place actual orders to buy or solve a stock as well
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So to do that, we are simply going to put our mouse to the left or the right of the price that we want to buy or sell at
3:40
and then simply click. So for example, if I wanted to buy some shares of SPY, if it ever dropped down to
3:46
let say 37987 Here you can see my mouse is just the left of that price right now and if I were to click there an order has been immediately placed to buy me one share of SPY at 379
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Not only can I see it right here on the active trader, but I can also see it over here on the left
4:06
displayed right here on my chart. I could also adjust that by simply clicking and holding down on
4:11
the order ticket and then dragging it down or up if I wanted to move the order ticket
4:15
Now later down the line, if I wanted to cancel that order, I would simply hit the Lex button over here on the right-hand side
4:22
If we instead wanted to short SPY because we thought it was going to go down in value, we can come over here to the right-hand column and simply put our mouse to the right of the price that we wanted to sell at
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So in this case, if I wanted to short spy if it ever went up to 380.09, if I were to click in the little box just the right of it, an order has now been placed to short the stock at 380
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Just keep in mind that that is not going to happen unless the bid price over here, the price that it currently says is at 380, moves up to the price that I just tried to sell it for
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So if I instead wanted to short the stock immediately, I know I would have to come all the way down here to 380 and click in the bus
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just the right of that in order to fill right away. Because right here it's telling me that at the
5:07
moment there is an open buy order out there to buy 500 shares at 380. So I could sell to them if I wanted to
5:14
But I think you get the general gist of the pricing ladder up here above. So let's go ahead and exit out of this
5:19
But besides the pricing ladder itself, you'll also notice a few different buttons down here below
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which is going to show us a bit more info. The very first two boxes, the ones that are empty at the moment
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are going to show us our current position, then to the right our current profit or loss on the position
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Since we don't have any shares of SPY right now, they are both blanked out. But if I were to come up
5:40
here and flip this over to American Airlines since I do have an American Airlines position coming back over to the pricing ladder on the right you can actually see I got a short position on American Airlines so I shorted five shares of stock at 1380
5:54
To the right, it's telling me that I'm currently down $2.60 since shorting it
5:59
But besides those two info buttons, if we were to look down below at the three buttons right below that
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we can see the very first one here, the flatten button. This is going to be used to quickly exit our entire position
6:10
So if we wanted to get out of our entire American Airlines position immediately
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we would simply hit flatten and it would get me back to zero shares. If we were to instead come over here and click on the Cancel All button
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it would cancel any working orders I have out there to buy or sell American Airlines right now
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So in my case, the only open order I have is down here to buy back this short position
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if it ever goes down to 12. So if I did come down here and hit Cancel All
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it's going to cancel that working order to buy back the short. Now finally, the very last button in the list here, the reverse button
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this is going to be used to completely flip what we're currently doing. So in my case, since I am currently short five shares of stock
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if I were to hit reverse, I would instantly buy back my five shares
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then buy another five on top of that. So essentially, I am instantly going into the exact opposite position that I currently had
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Now, looking right below that, we can see the quantity box, where we can actually specify how many shares we want to buy or sell
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anytime we initiate a trade. That's going to apply to both the buy market and sell market buttons right here
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but also to the pricing ladder right up here at the top as well. Or really, that is the gist of the DOM or the depth of market tool within trading view
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and I will tell you with a little bit of practice, you're going to get the hang of it pretty quick
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Hopefully after this, you're at least a little bit more comfortable with the DOM and how it can be used to place your trades more quickly
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but like I said, with practice, you'll be fine. I've also made a completely separate video on how to create bracket orders
7:37
within here, so go ahead and check that one out next. Otherwise, have a great rush your week
7:42
and I'll catch you on the next one
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