Level II Quotes FAQ (2024)

FAQs

Are Level 2 quotes worth it? ›

Why Use Level II? Level II quotes can provide a lot of information about a given stock: You can learn what kind of buying is taking place (retail or institutional) by looking at the type of market participants that are involved. Large institutions don't use the same market makers as retail traders.

Unlike Level 1 Quotes, which only displays one bid & ask, Level 2 Quotes can provide in-depth quotations of up to 50 bids & asks. Investors can get a fuller picture of the market and better insight in forecasting the potential direction of near-term moves as well as potential floors and ceilings.

Benefits of Trading Using Level 2 Quotes

The main benefit of using Level 2 quotes is getting access to a wealth of information related to the market. This information can be used in various ways for profit-making. For example, you can ascertain liquidity volumes and order sizes for a stock traded on Nasdaq.

Order book of Level 2 Quotes

It shows the prices and volumes that traders in the market are willing to buy and sell the security for. With Level 2, you can see up to 50 best bids and asks and an order book depth chart to show the accumulated volume depending on price level.

Level II market data

This won't help all Robinhood users. But it's useful if you're an active trader who uses technical analysis. You may find seeing the full list of current bid and ask prices for a stock very helpful.

Level II typically shows up to the 5-10 best bid and offer prices. Level III quotes add greater market depth by providing up to 20 of the best bid and ask prices. Users, primarily brokers and market makers, can also input data directly.

Where do I find Level 2 data? The depth of book is found in the Directed Trade ticket, under Trade and Orders > Directed Trade & Extended Hours. The Level 2 data, is a combination of multiple data sources in the depth of book view, including NASDAQ TotalView and the NYSE ArcaBook.

Level 1 data only shows the current best bid and ask prices – the trading equivalent of seeing just the tip of an iceberg. Level 2 data shows all of the outstanding orders around the current stock price.

Limitations of Options Level 2

You can only sell options if you have the right collateral: Level 2 options trading does not let you sell naked calls and puts. You have to own 100 shares for a covered call or enough cash to buy 100 shares if you use a cash-secured put.

The Level 2 order information shows a weighting of bids and asks where volume has accumulated. These points indicate thresholds for supply and demand where sentiment may doubt price movement to surpass. This level of detail is necessary for trading algorithms seeking to forecast liquidity.

How much money is safe in Webull? ›

Webull Financial is a member of SIPC, which protects securities customers of its members up to $500,000 ($250,000 of cash).

It's a list of orders waiting to get filled. And it can help you spot whether a stock is bullish or bearish… If Level 2 shows a lot of orders stocked in the bid column, with prices close to the current bid, that can be a bullish sign.

Level II displays the stock order book along with the best bid. Level II discloses the trader's identity, the price offered and the order size. Traders who sell and buy stock, electronic communication networks (ECNs), and wholesalers who work directly with brokers are three main players in the stock market.

Market Depth

Using this information, a significant gap between the highest bid and the next highest bid indicates the stock might not be particularly strong. This is an advantage of using level 2 market data. By relying on level 1 market data alone, a trader will only be able to see the highest bid.

Level 2 stock data shows all of the orders that have been placed at prices below the best bid price or above the best ask price. These are limit orders that could be executed if the price of a stock were to fall or rise.