The ability of a security to absorb buy and sell orders without the stock price dramatically moving in either direction. Depth is closely related to the liquidity of the market. A deep market can be expected to absorb larger buy and sell orders before an order moves the prices. Generally, deep markets will have smaller bid-ask spreads because of the increased competition among market makers for order flow.

Also referred to as "market depth."


In a deep market there will be a long list of buyers and sellers at various prices in the order book. This is good for investors because it means that the market is not dependent on any one market maker to provide adequate liquidity.

Depth is particularly important for institutional investors who routinely need to buy and sell large amounts of a security. It is much easier for an institution to trade a security that has a deep market without broadcasting its intentions or moving the market against itself.

  1. Liquidity

    The degree to which an asset or security can be quickly bought ...
  2. Ask

    The price a seller is willing to accept for a security, also ...
  3. Ask Size

    The amount of a security that a market maker is offering to sell ...
  4. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
  5. Liquidity Risk

    The risk stemming from the lack of marketability of an investment ...
  6. Bid Size

    The number of shares being offered for purchase at a specified ...
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