Just referring to the screenshot below of the market depth at a particular point in time for stock VET (just picked this stock as it is topical), how do you go about analysing the market depth?
Can you gain anything meaningful by doing this?
This is what I can interpret from it below...
Looking at the screenshot, it shows 100 buyers and 45 sellers, so it looks like there are more buyers than sellers, and thus demand > supply.
There are also 2646692 units in the buy column and 1668340 units in the sell column, so again demand > supply.
That being said, if you only look at the totals of the first 10 price points shown in the market depth, there are 47 buyers and 29 sellers, so again demand > supply, but with 1004631 units in the buy column and 1139490 units in the sell column, so now supply > demand.
From this I take it that at this particular point in time, sellers outweigh buyers at these more realistic price points around the current market price.
The share price has fallen since then which seems to corroborate this view.
Is there any logic to this or is this interpretation way off the mark?
I read elsewhere that the market depth doesn't include buyers/sellers who are willing to trade at the current market price as opposed to at a specific price point, so perhaps this has an influence that you can't see too?
Does anyone here make trades on the basis of what they see in the market depth screen?