Alright, imagine you’re in a candy store, and you want to buy some candies. Level 2 trading is a lot like seeing a special list that shows not just one, but many people who also want to buy or sell candies and how many they want, just like in a market where everyone’s making offers and deals.
This list is called a “order book.” It has a list of people who want to buy candy and how much candy they want to buy, and another list of people who want to sell candy and how much they want to sell. People who want to buy wait in line, and the ones who are willing to pay the most go to the front of the line. The people who want to sell also form a line, with those asking for lower prices going to the front.
When you look at Level 2 data, you see all these offers and bids from different people—like seeing all the other kids in the store who might want to trade their candies with you. The key things to look at are the “bid price,” what people are willing to pay, and the “ask price,” what people want to get for their candies.
If you wanted to buy candy, you’d look at the list to see where you can get the best deal. Or if you wanted to sell your extra candies, you’d check to see who’s offering the best price to buy them. It’s a bit like a game, where seeing this list helps you decide the best time to buy or sell to get the candy you want!
No responses yet