Education · Stage 7 · 02
The DOM, the order book
A live list of everything waiting to trade, at every price, on both sides. It is the most information-dense window in the platform and the one most people misread on the first day — because what it shows is intent, and intent is free to change its mind.
Mak · 4 min read · Stage 7, article 2 of 9
The whiteboard
The playbook this site is built on describes it as an electronic whiteboard where everybody who wants to trade writes their intention publicly, and that is exactly right.
Prices run down the middle. On one side, everyone willing to buy below the current price, with how much. On the other, everyone willing to sell above it. Between the highest bid and the lowest offer sits the spread, where nothing trades — the same spread from the first article of the previous stage.
Everything in that window is a passive order. Every one of them is waiting for somebody aggressive to come and take it.
What it is genuinely good for
- Depth. Large numbers at many levels mean you can get in and out without moving the price much. Thin numbers mean the opposite, and that is worth knowing before you need to leave rather than while you are leaving.
- Changes in depth. The book emptying is a real event — the article on news showed exactly when and why it happens.
- What happens to size when price reaches it. This is the useful question, and it is the subject of two later articles in this stage.
The belief that costs the most
Almost every introduction to the order book says some version of: more size on the bid side means price is likely to go up. It is intuitive, it is what the window looks like it is telling you, and it is not reliable. Four reasons, and none of them is exotic.
- Displayed size is not commitment. A limit order can be cancelled instantly and at no cost. Most of what you see in a modern book is removed rather than filled.
- A visible wall is a target. Everybody can see it, which makes it a known place to trade against — and the article on chart patterns already described what happens at prices everybody is watching.
- Size can be deliberately misleading. The playbook names this directly: orders placed to be seen rather than filled, pulled before price arrives.
- And the deep one: the book only shows the passive side. Aggression is invisible until it happens. A thousand contracts of buying that arrives in the next ten seconds is nowhere in that window right now.
The book tells you what is waiting. It never tells you what is coming, and price is decided by what is coming.
The question that is actually worth asking
Not «which side is bigger». The useful question has a verb in it:
When price arrived at that size, what happened to it? Did it get traded through, contract by contract, until it was gone? Did it get consumed and immediately replaced by more? Or did it disappear without a single trade?
Those are three completely different events that look almost identical on a chart, and telling them apart is what the rest of this stage is for. The first is a level failing. The second is somebody defending a price with real money. The third is nobody having been there at all.
Which is why the book on its own is not enough. It shows intent; the next articles show execution, and the two together are the whole subject.
One practical note
Depth is a paid, separate feed — the article on market data explained why. If your subscription is top-of-book only, the window will show you two prices and no depth at all, and nothing will announce that you are missing the rest.