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For display traders, Level 2 commonly describes the subsequent quotes to the best bid and ask at either end of a spread.

trading from news levels

However, there is more distinction to Level 2 and the order book when planning for market data requirements. Understanding the types of market data is first in delineating market data access needs.

What is Level 2 Market Data? Level 2 is a generalized term for market data that includes the scope of bid and ask prices for a given trading from news levels.

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Also called depth of book, Level 2 includes the price book and order book, listing all price levels of quotes submitted to an exchange and each individual quote. Certain exchanges offer summarized views of the price book, supplying the highest bids and lowest offers to simplify the book view and provide more affordable access to Level 2 data.

How to trade the news - news based trading strategies How to trade the news - news based trading strategies June 28, UTC Reading time: 19 minutes In the past, trading the news has long been the domain of Forex day traders. However, with an ever more globalised society, news from one country can have a huge impact on another. Trade wars, companies going bust, changing political situations all now have an impact on global markets. Whether you are a short-term trader, long-term trader or investor and whether you trade foreign exchange, commodities, stocks or indices, ignoring how to trade the news is no longer an option. In this article you will learn: Why trading the news is important How to trade the news with the right broker, platform and strategy The different types of news announcements you need to know about News based trading strategies you can start with straight away Where to find some of the best news analysis and resources to aid in your trading decisions How to trade the news in a virtual holitrade binary options environment to test your ideas and theories by opening a FREE demo trading account with Admiral Markets UK Ltd!

For traders, the price book is an easily referenceable view of demand for a security and can underscore where points of support or resistance exist. This depth of book for a security is valuable for garnering the true demand and more accurately forecasting the behavior of price movement.

trading from news levels

The order book is referenced by some professionals as Level 3 market data to distinguish the detailed view of quotes from the aggregated view of a price book. Regardless of terminology, understanding the nuances allows a broker-dealer or asset manager to better assess market data needs and communicate those to suppliers and connectivity providers.

Earnings reports: It is generally advisable to have a trading strategy in advance of an earnings report, because a stock can bounce around in a much wider range post-earnings, as compared to the swings in an index after a data release. In this case, the investor needs to weigh the merits of leaving the position unchanged over the earnings report or making changes prior to it. Factors that should play a part in this decision include: The current state of the overall market bullish or bearish ; Investor sentiment for the sector to which the stock belongs; Current level of short interest in the stock; Earnings expectations too high or comfortably low ; Valuations for the stock; Its recent and medium-term price performance; Earnings and outlook reported by the competition, etc. An alternative option could be to buy puts to hedge downside risk.

Multiple quotes from different banks confirm the Level 2 data is the order book and not a summarized or aggregated view of book depth. Alternatively, Level 2 is sometimes used on trading displays to differentiate the best bid and offer BBO at each exchange from the national best bid and offer NBBO.

trading from news levels

Each of these views are commonly considered Level 1 data or top of book, as they lack the distinction of price levels for bids and asks. While the BBO of all 13 exchanges may emulate a price book, the BBO listed second may not be the second-best bid or offer in the price book.

trading from news levels

Table 1. The types of market data quotes summarized by their level and book depth.

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Tiers of market data.

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