Market Insights

Trading has evolved from bustling exchange floors where hand signals and shouting were the norm to fully electronic markets. Though the technology has changed, the core concepts of order placement and matching remain the same. Today, limit orders to buy and sell are displayed in the electronic limit order book, also known as Level 2 or market depth, accessible to all traders. TradeStation offers a robust Market Depth window that provides detailed insights into this dynamic environment. 

Understanding Market Depth in TradeStation 

• Market Depth, or Level 2, shows the real-time limit orders to buy and sell for many instruments 

• This depth of market is accessible in TradeStation via the Apps Selector by opening the Market Depth window 

• The Quote Bar displays basic price data and information about your current position 

• The Summary Pane provides a concise overview of market data and price levels 

• A graphical summary presents each price level visually for clear interpretation 

• The Detail Pane reveals limit order activity at each price level, showing the actual supply and demand dynamics for the stock or future 

Bids, Asks, and Order Matching 

• Buyers are represented on the bid side, sellers on the ask side of the book 

• A bid is the price a limit order buyer is willing to pay for the instrument; market orders to sell are filled at the bid price 

• An ask is the price a limit order seller is willing to accept for the instrument; market orders to buy are filled at the ask price 

• Each shade of blue in the Market Depth window corresponds to a unique price level 

• Traders can see the exchange or ECN ID, bid or ask price, the number of shares available at that price, and the time the order was placed 

• Market orders are matched instantly against these resting limit orders, driving price movements up or down based on trade volumes hitting bids or asks 

Placing and Managing Orders in Market Depth 

• Add a trade bar by right-clicking within the Market Depth window and selecting Trade Bar from settings 

• This bar allows you to place orders directly from the Market Depth interface for quick execution 

• Autofill your limit price by clicking on a price level in the Detail Pane, making order entry faster and more accurate 

• After placing an order, you can track its progress and status directly within the Market Depth window for full transparency 

TradeStation’s Market Depth window may help traders gain a clearer understanding of supply and demand, improve order placement timing, and manage trades more efficiently, all crucial for success in electronic markets. 

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