# DOM Also known as: depth of market. A Volume & Order Flow concept (Order-flow & microstructure) in the LuxAlgo Library, with 2 indicator implementations. ## What is the DOM? The DOM (depth of market) is the live order book displayed as a price ladder: the size of resting limit orders at each level on the bid side and the ask side, often ten or so levels each way depending on the feed. It shows intentions rather than transactions; every number on the ladder is liquidity someone has offered at that price and can cancel at any moment. Futures scalpers read the DOM to judge where liquidity is thick or thin and how fast it is being consumed or reloaded. The ladder is the electronic descendant of the pit: when futures migrated to screens around the turn of the millennium, the price ladder became the scalper's primary instrument, and a whole trading culture (ladder software, one-click execution, queue tactics) grew around reading it. The display itself is simple, bids stacked below the market, asks above, sizes updating tick by tick; everything difficult about the DOM is in the behavior, not the layout. Because resting orders can be layered, spoofed, or pulled, the DOM is read together with executions: the [tape](https://www.luxalgo.com/library/concept/tape-reading/) shows what actually traded, and [footprint charts](https://www.luxalgo.com/library/concept/footprint-concepts/) aggregate those executions bar by bar. Large size that persists and absorbs incoming orders as price approaches is more informative than size that vanishes on contact, which is what [liquidity heatmaps](https://www.luxalgo.com/library/concept/resting-liquidity-liquidity-heatmap/) are built to track over time. The craft reads are behavioral. Absorption is the constructive tell: a level whose size holds and refills while market orders hit it, business actually transacting into the wall. Pulling is its opposite, displayed size cancelling as price approaches, and reloading (the same size reappearing after partial fills, the iceberg signature) sits between them. Venue matters as much as behavior, since equity depth fragments across exchanges, crypto books differ per venue, and centralized futures books remain the cleanest habitat for ladder reading. ## How to read a DOM ladder The ladder's numbers are cheap to display and expensive to interpret; the reading is behavior over snapshots. 1. Orient the ladder: resting bids stacked below the last price, resting asks above, with the inside market at the center. 2. Scan for outsized levels: resting size that dwarfs neighboring levels marks the prices other participants have committed to visibly. 3. Watch approach behavior: size that absorbs incoming market orders and holds is defense; size that cancels as price nears was decoration. 4. Track reload speed: levels that refill after being consumed (iceberg behavior) show commitment beyond the displayed number. 5. Cross-check against executions: the tape and [volume delta](https://www.luxalgo.com/library/concept/volume-delta/) confirm whether the aggression the ladder implies is actually transacting. 6. Discount the theater: layering and spoofing paint depth with no intent to trade, which is why displayed size is evidence, never proof. ## How traders use it - Locating thick liquidity: unusually large resting size often acts as a short-term barrier or magnet, and traders watch whether it absorbs incoming market orders or gets pulled as price nears. - Timing entries at a level: rather than buying a level blind, DOM traders wait to see bids refresh and hold under pressure before joining, and stand aside when the ladder thins out. - Gauging pace and urgency: the speed at which levels are consumed and reloaded shows how hard one side is pressing; a ladder being eaten level by level is the microstructure view of a sweep. - Managing queue position: limit-order traders join behind visible size to inherit its protection and gauge fill odds from how much of the queue stands ahead, ladder mechanics invisible to chart-level analysis. - Pairing intentions with history: the ladder shows where liquidity waits now, while a [volume profile](https://www.luxalgo.com/library/concept/volume-profile/) shows where business concentrated before, and confluence between a thick level and a [high-volume node](https://www.luxalgo.com/library/concept/high-low-volume-nodes/) marks prices doubly defended. ## DOM vs neighboring order-flow views - **Volume Profile** (https://www.luxalgo.com/library/concept/volume-profile/): The profile is history: volume that actually transacted at each price over a window. The DOM is intention: orders resting now, cancellable at will. One cannot be spoofed and cannot see forward; the other sees the queue and can be theater. - **Volume Delta** (https://www.luxalgo.com/library/concept/volume-delta/): Delta measures executed aggression, who crossed the spread, while the DOM shows the passive side waiting to be hit. Read together they complete the auction: the ladder proposes, the delta disposes, and absorption is precisely heavy delta against unmoving depth. ## FAQ ### Is the DOM the same as Level 2 data? Essentially yes. Level 2, or market depth, is the data feed of resting bids and offers beyond the best price, and the DOM is the ladder-style display of it. Futures traders usually say DOM; equity traders usually say Level 2. Depth of coverage varies by feed, and some venues aggregate or limit the visible levels. ### Can you trust the sizes shown on the DOM? Not at face value. Resting orders are commitments only until cancelled, and spoofing or layering (posting size with no intention to trade, illegal in many jurisdictions) can distort the picture. Iceberg orders hide true size in the other direction. That is why most order-flow traders weight executed volume more heavily than displayed depth. ### What does absorption look like on the DOM? A level that takes repeated market-order hits without giving way: the displayed size holds or refills while the tape prints trade after trade into it, and price stalls despite the pressure. That combination, heavy executions against stable depth, is the ladder's strongest tell, because it cannot be faked by posting and pulling; someone is genuinely standing there and paying to defend the price. ### What is an iceberg order on the ladder? An order that displays only a slice of its true size: each time the visible portion fills, the venue automatically replenishes it from the hidden reserve. On the DOM it reads as a modest level that keeps reloading after being consumed, and on the tape as far more volume transacting at one price than the ladder ever showed. Detecting reloads is a core ladder-reading skill precisely because the displayed number understates the commitment. ### Is the DOM useful in crypto markets? Yes, with a fragmentation caveat: every exchange runs its own book, so a single venue's ladder shows only that venue's liquidity, and serious depth analysis aggregates across the major books. Crypto DOMs also carry heavier spoofing folklore than regulated futures, since surveillance varies by venue. The reading craft transfers intact; the trust calibration changes. ### Why do scalpers care about queue position? Because at one price level, fills arrive in queue order: a limit order behind ten thousand contracts needs all of them to trade or cancel before it fills. Joining early in a forming level buys priority; joining behind a wall means the wall must be consumed first, which is protection when it holds and a missed fill when price turns before reaching you. Queue arithmetic is the hidden cost structure of passive execution. ## Implementations in the Library - Depth of Market (DOM) (LuxAlgo): https://www.luxalgo.com/library/indicator/depth-of-market-dom/ - Liquidity Price Depth Chart (LuxAlgo): https://www.luxalgo.com/library/indicator/liquidity-price-depth-chart/ ## Related concepts - Volume Delta: https://www.luxalgo.com/library/concept/volume-delta/ - Resting Liquidity / Liquidity Heatmap: https://www.luxalgo.com/library/concept/resting-liquidity-liquidity-heatmap/ - Cumulative Volume Delta: https://www.luxalgo.com/library/concept/cumulative-volume-delta/ - Delta Divergence: https://www.luxalgo.com/library/concept/delta-divergence/ - Footprint Concepts: https://www.luxalgo.com/library/concept/footprint-concepts/ - Bid/ask Imbalance: https://www.luxalgo.com/library/concept/bid-ask-imbalance/ - Absorption & Exhaustion: https://www.luxalgo.com/library/concept/absorption-and-exhaustion/ - Sweep Detection: https://www.luxalgo.com/library/concept/sweep-detection/ - Unfinished Business: https://www.luxalgo.com/library/concept/unfinished-business/ - Execution Algo Footprints: https://www.luxalgo.com/library/concept/execution-algo-footprints/ --- Source: https://www.luxalgo.com/library/concept/dom/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/