RiskPicksWhat is Level 2?
Level 2 (also called the order book or market depth) shows all pending limit orders from buyers and sellers at each price level. Level 1 only shows the best bid and ask: Level 2 shows the full queue.
What you can see
- Size at each level: how many shares are waiting at each price
- Order stacking: large orders sitting at a level can act as support/resistance
- Order pulling: when large orders disappear, it can signal a fakeout
Limitations
Level 2 only shows displayed orders. Dark pools and hidden orders don't appear. Also, orders can be placed and cancelled in milliseconds (spoofing), so don't rely on it alone.