Market Depth

1 min read

Market depth refers to the quantity of an asset available on a market. High depth means that there is a high quantity available to trade on an order book. Market depth is a primary indicator of the overall liquidity of a market, with high depth markets being much more efficient.

Greater depth allows investors to place large orders with less market impact. Large orders in markets with little depth will have market impact, causing slippage for the trader. Many markets rely on market makers to add depth to their order books.