Business, Legal & Accounting Glossary
Level II quotes are everything included in Level I quotes for real-time quotes of the bid and ask prices for each individual market maker for a given NASDAQ or OTCBB stock. Level II quotes additionally let investors identify the market maker offering the lowest bid-ask spread for the stock. Level II quotes provide investors with considerably more information than Level I quotes. Day traders are most likely to use Level II quotes. NASDAQ platforms dynamically screen-display current Level II quotes and execution prices of individual market makers. Level II quotes supply the name of market makers wishing to buy or sell the stock. Level II quotes also provide the size and time for recent transactions. Day traders find Level II quotes data useful because Level II quotes shows who is buying and selling the stock and how liquid it is at any given time. Level II quotes show a likely short-term price direction of the stock. Level II quotes show support and resistance levels for stocks. Level II quotes were designed for broker/dealer firms so they had transparency on what all of the market makers were doing with a specific stock at the exact same time. Only in the past few years have Level II quotes become available for use by the general public and Level II quotes provide a big advantage for people who work as day traders or individual investors whose strategies requires them to follow program trading activity.
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This glossary post was last updated: 10th February, 2020