Level 1 and level 2 data


    Level 1 and Level 2 data shows bid and ask quotes in real time for equities being traded on a stock market.

    Level 1 data refers to the lowest ask and highest bid currently offered, what’s known as the best bid offer, or inside quote. Level 2 data refers to current quotes for the best bids and asks being offered by market makers and known as the top of the book. These Level 2 quotes are for each and every trader of that security. Level 2 data usually appears on a split screen, with bids displayed on the left and asks displayed on the right.

    Using Level 1 and Level 2 in trading

    Level 1 and 2 data is usually used for stocks trading on the Nasdaq or on over-the-counter bulletin boards. The real-time quotes allow traders to follow the markets as they move, second by second, and by a trader. The volume of a traded security lets traders interpret the data for short-term movements, enabling them to decide when to open a trade on that security. It is a firm indicator of how participants’ interest in that security is developing and who is matching the orders.

    All Level 1 and 2 data is public, making it legal for traders to buy and sell at a profit because it is not insider trading.

    Level 2 in the UK

    In the UK markets, Level 2 refers specifically to an order-based trading platform called SETS (stock exchange electronic trading system), which matches bids and asks for stocks listed on the FTSE 100, the FTSE Eurotop 300 and some other blue-chip indices. Matching is done is according to price and time frame, without brokers or market makers. Traders buy and sell directly to each other.

    Popular stocks with high liquidity and trading volume can be matched to traders very quickly although spreads may be very narrow. The platform is less useful for traders wanting to buy or sell less-liquid securities as matching may take days or even weeks.