Level 2 quotes.
In plain English
A basic Level 1 quote shows only the best bid, the best ask, and the last trade. Level 2 quotes reveal the depth of the market: the stack of buy and sell orders sitting at prices above and below the current one, and which market makers or venues posted them. Active and short-term traders use it to gauge supply and demand and to guess where a price might stall or move. For long-term investors it adds little, and the data can be noisy or gamed by large players placing and pulling orders, so it is a tactical tool, not a crystal ball.
01Why it matters
Level 2 shows the depth of buy and sell interest that a basic quote hides, which matters to active traders but adds little for long-term investors, so knowing which you are clarifies whether it is worth paying for.
02The math, step by step
A basic quote shows a stock at 50.00 bid, 50.02 ask. Level 2 reveals thousands of shares wanting to buy at 49.98 and a wall of sell orders at 50.10, hinting the price may struggle to climb past 50.10.
03What this is NOT
Level 2 does NOT predict where a stock will go. It shows current resting orders, which large traders can place and cancel to mislead, so it is information about supply and demand, not a forecast.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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