Level 2
Market Structure
What it means
A deeper view of the order book that shows multiple price levels and the size at each, plus which market maker is quoting. It reveals more than the top-of-book bid and ask.
Example
Level 2 for a stock might show five levels of bids ($100 x 500, $99.95 x 1,000...) and five levels of asks ($100.05 x 300, $100.10 x 800...), helping you see where large orders sit.
Mistake beginners make
Beginners trade off Level 2 as if it is a crystal ball. It changes constantly, includes spoofing, and tells you nothing about hidden orders in dark pools.
Related terms
- Order Book — A live list of all pending buy and sell orders at different prices. It shows the depth of …
- Market Maker — A firm that quotes both buy and sell prices and stands ready to trade on either side, earn…