Market Depth Explained: A 2025 Guide for Australian Investors

For anyone trading on the Australian Securities Exchange (ASX), market depth is more than just a technical term — it’s a real-time window into the psychology and liquidity of a security. In 2025, as markets become more volatile and algorithmic trading grows, understanding market depth is vital for investors who want to sharpen their trading strategies and avoid costly mistakes.

What Is Market Depth and Why Does It Matter?

Market depth refers to the electronic order book that displays all current buy (bid) and sell (ask) orders for a particular stock, arranged by price level. Unlike a simple price quote, market depth reveals the supply and demand at every price point, not just the current best bid and ask. For traders, this information is gold — it reveals how much volume is available if you want to buy or sell, and at what price your trade might actually execute.

• Liquidity Insight: Deep markets with many orders at various prices mean you can trade larger volumes without moving the price too much.

• Order Flow Transparency: You can spot large buy or sell orders, which might signal institutional activity or a pending price move.

• Trading Strategy: Market depth helps short-term traders identify support and resistance, and allows investors to set smarter limit orders.

With the ASX continuing to upgrade its trading platforms in 2025, retail investors now have access to more detailed and real-time market depth data than ever before.

How Market Depth Works in Practice

Let’s say you’re interested in buying shares of a popular ASX-listed tech stock. The market depth screen might show the following:

| Bid Price |Bid Volume |Ask Price |Ask Volume | |

| $10.00 |3,000 |$10.01 |2,500 | |

| $9.99 |1,800 |$10.02 |4,200 | |

| $9.98 |2,000 |$10.03 |1,000 | |

This table shows not just the best prices but also the number of shares available at each price. If you place a market order to buy 5,000 shares, you’d likely pay $10.01 for the first 2,500 shares, and $10.02 for the next 2,500 — unless more sellers appear at those prices. Understanding this helps you avoid ‘slippage’, where your order is filled at a worse price than expected.

In 2025, advanced trading platforms and mobile apps from major Australian brokers now offer customisable market depth views, heat maps, and even AI-powered alerts that notify you of unusual order book activity.

2025 Policy Updates and Market Depth Access

This year, the ASX and ASIC have introduced new transparency guidelines requiring brokers to offer real-time Level 2 market data (full market depth) to all retail clients, not just professionals. This move, part of a broader push for market fairness and efficiency, means:

• Retail traders now access the same data previously reserved for institutional investors.

• Improved transparency around ‘hidden liquidity’ and iceberg orders.

• Lowered costs for Level 2 data subscriptions, with several brokers offering it for free with active accounts.

Additionally, the ASX has announced plans to expand its digital education initiatives, helping more Australians interpret market depth and use it in everyday investing.

Real-World Example: Using Market Depth for Smarter Trades

Suppose you’re considering a swing trade on a mining stock after a major commodity announcement. By analysing market depth, you notice a huge buy wall at $4.95, suggesting strong institutional support at that level. Placing a limit buy order just above that wall could improve your entry price, and if the wall starts to disappear, it may signal a trend reversal.

Traders in 2025 are also watching for ‘spoofing’ — where large, fake orders are placed to influence price perception. ASIC’s updated surveillance technology has made it easier to detect and penalise this behaviour, but staying alert to sudden changes in order book depth remains a key skill for active investors.

Tips for Australian Investors in 2025

• Use Level 2 data to see the full market picture — not just the top bid and ask.

• Watch for large order clusters that could influence short-term price direction.

• Set realistic limit orders based on visible liquidity to reduce slippage.

• Stay updated on ASX and ASIC policy changes affecting market data access.