markkinasyvyyden

Markkinasyvyys, often translated as market depth or order book depth, refers to the quantity of buy and sell orders at various price levels in a financial market. It provides a visual representation of the supply and demand for a particular asset. Essentially, it shows how many shares or contracts are available to be bought or sold at prices above and below the current market price.

A deep market indicates a large number of buy and sell orders at prices close to the current market price. This suggests high liquidity, meaning that trades can be executed easily without significantly impacting the price. In a deep market, the bid-ask spread, the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept, is typically narrow.

Conversely, a shallow market has fewer orders and larger gaps between price levels. This implies lower liquidity, where executing a large trade could cause a significant price movement. A wide bid-ask spread is characteristic of a shallow market.

Traders and investors use market depth information to gauge liquidity, assess potential price movements, and make informed decisions about order placement. It helps in understanding the immediate buying and selling pressure in the market and can be a crucial factor in short-term trading strategies.