Buy, Sell Prices and Depth Explained

As we transition over to order books, some traders are mystified by what is actually shown in the buy and sell buttons as well as what is shown in the depths.

In this post, we will try and explain what’s shown.

Buy/Sell Buttons – What does it show?

Sell Button: Sell price is calculated by taking the average of the highest 300 bids (buys)

Buy Button: Buy price is calculated by taking the average of the lowest 900 offers (sells)

Both buttons display an average. It’s very important to understand this as it does not display the highest/lowest prices traders are looking to sell/buy for.

What traders are looking to buy or sell for is shown in the depth.

Depth – What does it show?

Depth shows the highest 5 price levels on the buy side (bids) and the lowest 5 price levels on the sell side (offers). Traders looking to buy. Traders looking to sell.

So in the above example, on the bid side (blue) you can see the top bid for 1 share is £5.42 and is showing in the top row because it is the highest price someone is willing to buy for. This is likely to be one trader basically saying “I want to buy one share for £5.42”.

In the 2nd row you can see 23 shares with a bid price of £5.41. 3rd is £5.40 and so on.

Now you could be wanting to buy this player urgently, you might jump the ladder by bidding £5.43 and you would be first in line if someone decided to take you up on your price.

Or you could market buy (buy now) and buy 100 shares at £5.75 (top offer on sell side).

On the offer side (red) you can see the 180 shares for £5.75. This is likely to be one trader who is basically saying “I will sell my 180 shares at £5.75 each”.

Then you have another 20 shares at £5.77 and so on.

You could list your shares at £5.74 and jump to the top and wait for someone to match your offer. Or you could instant sell your shares to the top bidder at £5.42 and £5.41 depending on how many you are selling.

Why do we only see 5 rows?

We only see the highest 5 levels (for now). Some traders are calling out to see the highest 10 rows, but that is for Football Index to decide how many levels are shown.

Ok so the price in buy/sell buttons aren’t really what I’d be buying or selling for right?

Correct.

The top prices shown in the buy/sell buttons are NOT what you would be buying/selling for if there is depth available.

Buy button shows £6.09. But if you were looking to buy now, you would pay £5.75 as this is the lowest price someone is willing to sell for (top offer).

Remember, the buy/sell buttons are averages.

This is where many traders are left bemused as to whether to buy a player or sell a player – you cannot rely solely on the prices shown on the buttons – you must consider and view the depth also.

Hopefully, this helps understand the prices shown in the buy/sell buttons and what is displayed in the depth view.

Here’s a visual representation of the above:

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Written by fiinvestor
Joined Football Index in October 2017 and focus more on PB dividend returns as I find it suits my trading style much better. Get rich slowly. Avid Leicester City supporter and FPL fanatic also.
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