Level 2 quotes show the top 5-10 bids and asks instead of just the best pair, revealing market depth. Narrow spreads mean liquid markets, wide spreads signal volatility. Time and Sales data displays real-time executed trades to gauge supply and demand.
Level 1 and Level 2 quotes. Level 1 is the basic stock data for the stock, which shows you the best bid and the best ask and their size as well. Level 2 quotes, on the other hand, provide you more information than the Level 1 by showing you market depth, which basically means you see the 5 to 10 best bids and/or asks on the table. This allows you to better gauge the market sentiment and potential price movement. Now, the spread is where things get interesting. It's the difference between the highest bid and the lowest ask. The smaller spread, which means that the buyers and sellers are more close to an agreement means the stock is more liquid and less volatile, while a stock with bigger spreads, meaning that the sellers and the buyers are not in agreement at all, basically means the stock is really volatile and less liquid, as if you will want to buy shares, you will have to pay a premium to get them right now, and that makes it harder to execute your trade at the desired prices. These orders interact with the bid and the ask in the marketplace, helping you to buy or sell and execute your trades. We will go deeper into the different type of orders in another video, so make sure you're subscribed. Time and sales is also something we need to take into consideration when reading the tape, as this will allow us to see the trades that happen right now. In conclusion, Level 1 and Level 2 with the combination of time and sales is key. They provide valuable insights into supply and demand and the market sentiment overall. In my perspective, not Paying attention to the level 1, level 2, and the timing cells is like playing checkers against a grandmaster. You're destined to lose.
The BlueSky Setup: The Strategy That Has Made Me Over Half A Million (INSANE VALUE)
