Level 2 quotes

Level 2 quotes are market data that show the depth of the order book: the resting bids and offers at several price levels beyond the best bid and ask, often with the size at each level and the market participant or exchange posting it.

How it works

Market data is often described in levels:

• Level 1 shows the best bid, best ask, their sizes and the last trade. This is essentially the NBBO.
• Level 2 adds the queue of bids below the best bid and offers above the best ask, across exchanges or from a single exchange's full depth feed (for example Nasdaq TotalView).

A Level 2 screen might show 5,000 shares bid at $12.40, 8,000 at $12.39 and 20,000 at $12.35, with 3,000 offered at $12.42 and 15,000 at $12.45. Participants are often identified by exchange or by market participant ID (MPID).

Level 2 is usually paired with "time and sales," the tape of executed trades.

Why it matters for traders

Day traders use Level 2 to judge short-term supply and demand: large bids can act as support, stacked offers as resistance, and a thinning book signals that a move could accelerate. It also shows how much size you can trade before moving the price.

The limits are important:

• Hidden and reserve orders do not show their full size, and dark pool liquidity is invisible.
• Orders can vanish instantly. Large displayed orders may be canceled before price reaches them. Placing orders you intend to cancel to mislead others (spoofing) is illegal, but the book is still not a commitment.
• Off-exchange volume means a meaningful share of trading never touches the displayed book.

FAQ

Do I need Level 2 to trade?

No. Most long-term investors never use it. It is most useful for active traders working in less liquid stocks, where book depth materially affects fills.

Is Level 2 data free?

Some brokers include it, others charge exchange data fees for full-depth feeds.