Market Depth
The ability of a market to absorb large orders without significantly moving the price.
What is Market Depth?
Market depth refers to the quantity of buy and sell orders available at various price levels in the order book at any given moment. A market with great depth has large volumes of orders stacked near the current price, meaning large trades can be executed with minimal price impact. A shallow market has thin order books, so large orders can move prices dramatically. Market depth is a critical dimension of market liquidity and is especially important for institutional investors executing large positions. Exchanges and brokers display market depth through Level 2 quotes or depth-of-market (DOM) screens, showing the full stack of bids and offers at each price level.
Example
A retail investor selling 100 shares of Apple (market cap ~$3 trillion) will face no noticeable market impact — the order is absorbed instantly in a deep, liquid market. By contrast, a hedge fund trying to sell $500 million of a small-cap stock might move the price down 10% or more, because there are insufficient buyers at the current price to absorb that volume without concessions.
Source: Investopedia — Market Depth