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Definition: NASDAQ Level II

NASDAQ Level II provides a list of all buyers and sellers for a given stock. Buyers (Bids) are arranged by price from the highest to the lowest price (best to worst) and sellers (Asks or “Offers”) are arranged from lowest to highest price (best to worst).

NASDAQ Level II allows a stock trader to determine the depth (size) of the market and thus, better control the execution of his order. In order to use a level II platform correctly, a trader must understand how each participating system and market maker in the level II screen operates. Without this knowledge, it will be difficult for a trader to know which participant to send the order to for the best execution.

Although not simple to use, a direct access trading system that incorporates NASDAQ Level II is essential to trade stocks.

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