Market Depth

Market Depth refers to the market's ability to absorb large buy or sell orders without significantly affecting the asset's price, as reflected in the order book. A deep market has a large number of pending buy and sell orders at various price levels, resulting in tighter bid-ask spreads and lower price impact for large trades. Market depth is particularly important for institutional investors and high-frequency traders. Exchanges like NSE display Level 2 data—the top five bid and ask orders—giving traders real-time visibility into available liquidity.