Level II Market Data

What’s Level II Market Data?

We’ve partnered with Nasdaq to give Robinhood Gold members access to Level II Market Data powered by NASDAQ Totalview.

Level II Market Data shows multiple bids and asks for any given stock so investors can better determine the availability or desire for a stock at a certain price. Bids are like limit buy orders that other investors have open on the markets. Similarly, asks are like limit sell orders from other investors. Like any limit order, each bid and ask is represented by the price and quantity of the order.

Level II Data is unique because it shows more than just the best bid and best ask on the market. It also shows the full depth of orders on the market, including quantities at the individual bids and asks.

How do investors use Level II Market Data?

Level II market data gives investors more information to make investment decisions by showing changes in the bids and asks on the NASDAQ stock market. Some traders compare how many shares are on each side of the market as an indication of the short term direction of the price.

Investors often use this data in conjunction with the price chart representing recent trades. The price chart on Robinhood is the main chart available on our stock page.

How is this related to the main price chart?

The main price chart on the stock page represents the prices of recent trades on that stock. On the other hand, Level II Data represents a current snapshot of pending orders for that stock. If one of the open orders on the Level II chart executes, it will become a trade and appear as the next data point on the price chart.

For example, suppose an investor places a limit order to buy 10 shares of MEOW at $100. While the order is pending, it will appear on the Level II Chart as a bid. Later, suppose the order executes at $98, it will drop off the Level II chart and instead will appear as a datapoint on the main chart at $98.

Note that only orders from investors directly participating on the NASDAQ stock market will appear on the Level II chart from Nasdaq.

How is this related to the Bid and Ask Spread?

The highest bid and the lowest ask form the bid/ask spread. This represents the best offer to buy or sell a specific stock on the market. The gap between the best bid and the best ask is called the spread.

For example, say the best bid is to buy 10 shares of MEOW at $100 and the best ask to sell 10 shares of MEOW at $110. This means that MEOW’s spread is $10 wide. If you place a market order to buy MEOW, you would likely pay $110. Similarly, if you place a market order to sell MEOW, you would likely receive $100.

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