What it is
Level 2 shows the depth of visible orders at each price. It reveals where liquidity currently sits, though those orders can be pulled at any moment.
How traders use it
- To find where size is resting
- To judge how thin a move is
- To time entries at a level
Worked example
A scalper sees large offers stacked just above the current price and waits for them to clear before taking the long.
Limitations
- Displayed orders can disappear instantly
- Hidden and iceberg orders are invisible
Common mistakes
- Treating a large displayed order as a guaranteed wall
- Trading the book without price context
Educational content only. TradeCaster does not provide financial advice and past results never imply future performance.