Forex Magnates has reviewed the new Depth of Market (DOM) feature of Metatrader 5. What DOM affords a stock trader is a view of current market activity for a particular stock. Market depth information is generally not available for retail Forex traders because their is no central exchange from which to derive the data. The best a broker can do is provide a mechanism to show a consolidated view of available orders from their liquidity providers. A small forex broker, for example, with only one liquidity provider is more restricted in what they can offer a trader. Since their pool of orders is smaller, the trader may not get an order filled at the price requested. A broker with more liquidity providers will have a larger pool of orders from which to match a trader’s order and trading generally runs smoother. Fewer requotes and less slippage.

For example, Tradeview Forex’s Platinum trading platform offers DOM information, but market depth data has been generally unavailable to retail traders up to this point. Metatrader 5 will change all that. Here’s an example of how it might help you as a retail trader.

Example: you want to place a buy order for 1 lot EUR/USD and the market depth window on the platform indicates that, on the buy side, there are 10 lots available at 1.3000. Knowing this information, you can feel assured that your request to trade 1 lot can be guaranteed an immediately filled at 1.3000. There’s no requote and no slippage. You should then see the DOM window reflect the change in buy-side order availability. With your current Metatrader 4 forex broker, and no market depth information, the retail trader really has no idea of what the market conditions really are other than what is evident from analyzing the trading chart.

Access to market depth information can take a lot of anxiety out of the trading environment and potentially change a lot of traders’ strategies. Source: Forex Magnets


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