Level 2 Quotes or better know as Level II Quotes or L2Q is uncommon in the Traders' World. Every Fund Manager, Market Maker, Serious Trader and all other Professional Traders have them on their screen when they trade. It just can't be like a car without a wheel.



The Level II Quotes is divided into 2 sides. On the left side is the Buy Orders queue and on the right side is the Sell Orders queue. Below the Buy Orders are divided into the number of the shares bid and the bidding price. The Sell Orders column are divided into the number of ask shares and the asking price. At each and every price level you will be able to see how many Bid and Ask are in place to trade.

Before the start of any trading sessions, the Buyers and the Sellers will place their bidding and asking price together with the number of shares they want to trade. During the opening bell, new Buyer may offer a Bid higher when they are bullish about the stock.

This process will match the Ask price from the seller. The transaction is considered done.

If the next buyer wants to own the stock, he may consider taking on the next Ask price from the seller. From the point of view of the Level 2 Quotes, technically the number of queue on the Bidders will increase where as the number of Ask on the Seller’s side will decrease.

Eventually during the active market activity, the Bid price level should increase in terms of buyer who has yet got their orders filled. But on the sellers side their asking price are being matched up actively. Since the activity is being computed in real time, the figures move in the matter of split of second.

As time pass by, if the market is Bullish on Stock A, the queue for the Buyer side will expand and the queue on the Seller side will subside. From the perspective of a Trader, the scenario poses a good opportunity to enter along side with the Bulls. Like wise if it happens otherwise, he may consider doing the opposite, the Short.

I did not use tool as the sole decision to trade. I used this tool to time the best entry level and exit level to maximize my return. Normally after doing my fundamental research on a Company, I would then proceed to the price chart to check on the price trend, support and resistance level and also various indicators such as MACD, Stochastic and Price/Volume.

Trading is a complex process which can be simplified when you know how to break it down to parts. Using Level 2 Quotes is one of the important parts to determine whether to make or break in a trade.