What is Stock Depth Analysis? Guide to Reading Order Book Levels

Behind every stock traded on the stock exchange, there is a 'board' or 'depth table' where pending orders of buyers and sellers match. Depth analysis is the process of examining the data showing how many lots of buy and sell orders are waiting at which price level in a stock instantly. When performing level analysis, one looks at whether buyers or sellers are more concentrated. If the total quantity of lots on the buy side is significantly greater than that on the sell side, it can be interpreted that the buy demand in that stock is strong and the probability of the price going up is higher. However, it is necessary to distinguish whether these orders are real buyers or fake orders trying to manipulate the price.

In the depth table, the left side represents 'Buy' (Bid) orders, and the right side represents 'Sell' (Ask) orders. Pending orders in the buy levels show buyers placed below the price, while those in the sell levels show sellers placed above the price. When performing level analysis, one looks at whether buyers or sellers are more concentrated. If the total quantity of lots on the buy side is significantly greater than that on the sell side, it can be interpreted that the buy demand in that stock is strong and the probability of the price going up is higher. However, it is necessary to distinguish whether these orders are real buyers or fake orders trying to manipulate the price.

One of the most notable topics in depth analysis is 'iceberg orders' (hidden orders) and large block orders. Some large institutions send their large orders in pieces so as not to create panic or extreme enthusiasm in the market. When pending lots at a level are finished, new lots appearing from underneath show that there is a hidden buyer or seller there. Monitoring depth data instantly is the only way to understand the intention of these big players on the board. For example, if there are millions of lots of sell orders waiting at a critical resistance level and these orders are melting rapidly, it can be predicted that the stock will break that resistance and rise sharply.

However, depth analysis is very dynamic and can change in seconds. When an investor makes a buying decision by looking at depth data, they may see that pending orders on the buy side are suddenly deleted (cancelled). This situation shows that market makers or big players are making misleading movements on the board. Therefore, depth data should be monitored together with order cancellation rates and instant transaction volume. Instead of trading by looking only at depth, using this data as a confirmation mechanism is healthier.

The free Telegram data terminal bot we developed as Sermaye Borsasi allows you to access instant depth and level analysis without paying license fees. By writing the `/derinlik STOCK_CODE` command to our bot, you can see the instant level distribution and the pending buyer/seller balance in seconds. We strongly recommend that you use our depth bot to trade like a professional investor in Borsa Istanbul and see the real forces behind instant market movements.