• Level 1 shows only the best bid/offer and volume.
• Level one does not show any market depth.

What is Level 2?

• Can see the price level and volume of all bids/offers that are currently placed in the market.
• View market maker quotes
• Level 2 can be of major benefit to your trading especially if you tend to place ‘Market’ orders as compared to those who trade with Limit and Stop Orders.

Advantages of Level 2

Basic Rules for Level 2

1. At the most basic level use Level 2 to check that there are other people making the same trade as you – creating the momentum necessary for an outstanding trade!

2. Do not trade purely because the Level 2 screen looks strong – use fundamental and technical analysis to find your trades and then use Level 2 to back up your idea.

3. Check for buyers outweighing sellers if you are going long and check for sellers outweighing buyers if you are going short.

4. Check for large buyers in high volumes of shares for going long. Conversely, check for large sellers in high volumes of shares for going short.

5. Check for gaps in the depth of orders against the direction you are trading in.

6. Avoid gaps in the depth of orders against the direction you are trading in.

7. Gaps can mean that stop losses are tiggered at levels further away than would be expected in normal trading circumstances.

8. Gaps can provide highly profitable trading opportunities if used correctly.

Support and Resistance

• Large buy orders on the bid can provide support for stocks that would not be visible on a chart.
• Large sell orders on the offer can provide resistance for stocks that would not be visible on a chart.