I am implementing a pretty simple market making strategy. I want to see if the demand is higher than the supply in the short term so that I will be able to buy and sell decently fast. My goal is to be able to buy and sell within the same minute, if certain market conditions are met.
I've thought about checking the order book and looking at the first 5-10 prices on the buy and on the sell side and then compare them. If there is more volume on the buy side than volume on the selling side, then I can assume that there is more demand than supply currently on the market.
Then I will check the time and sales and see if there were more transactions to buy than transactions to sell in the past 30-40 transactions.
Is it correct to think about short term supply and demand this way ? I'm using a market making strategy in a mean-reverting highly liquid market.