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How to Read Level 2 Quotes

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What are Level 2 Quotes?

Level II Quotes allow you to completely monitor any particular stock. It will show you a complete view of all the buy / sell orders before they are executed.
Showing all of the active orders along with the amount of shares and limit price of the order.
Level 2 also displays all of the recent transactions including (date, time, quantity, price)

How to Read Level 2 Quotes

Picture of Level II Quotes below.
Basically,
On the left side you will see the “bid” = buy orders.
On the right side you will see the “ask” = sell orders.
Also on the far right you will see the recent transactions(date, time, quantity, price).
You will also see what broker the orders belong too and the limit price of the orders along with QUANTITY OF SHARES which you really should focus on.

This way you can see if other traders are trying to buy a particular stock or if they are trying to sell their shares and most importantly you will see the quantity of shares of all orders which plays a major role. For instance, If someone buys mass amount of shares it can force the stock price to go up as long as there isn’t a lot of people selling.
You will need to carefully examine all of the buy and sell orders to get a idea which direction a stock is heading.
LOOK FOR BID SUPPORT Bid Support is a stack of bids(buy orders) on top of each other. Not necessary the green ones at highest price. The bid’s below are just as important and should be at a decent amount of shares. This is a great indication that the price of the stock could increase but the momentum can always change any minute from a large sell order on the “ask” side.

The reason Bid support is important is because, If someone decides to sell all of their shares using a “Market Order”and lets say they have a lot. This will prevent the stock price from dropping as long as there is enough shares on the “bid” side to cover the sell off.

But for fun lets say there isn’t any bid support and someone sells a lot of shares using a “Market Order” with (AON) box unchecked. This will cause the price of the stock to dramatically drop because there isn’t anyone selling at high prices so the order is forced to sell at any price available that is on the “bid” side and price will continue going down the list until all of the shares are sold. This is what makes a stock go down 5% in 2 minutes.

Here is a Example of Level II Quotes

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Here is a Example of what a Level 2 Stock Quote looks like.

How to Read Level 2 Quotes





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