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How to Read Level 2 Data in Webull | Level 2 and Time & Sales
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Dec 16, 2022
Today we’ll be quickly covering Level II and Time & Sale within the Webull platform. These two tools will let us get a better look at a stocks liquidity and supply and demand in real time. Level 2 is essentially the order book. It’s simply a list of all the open orders out there to buy and sell the stock right now. Time and sales on the other hand is a list of all the trades that have already filled and the prices they filled at.
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Today we'll be quickly covering Level 2 and time in sales within the Webull platform
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These two tools will give us a better look at a stock's liquidity and supply and demand in real
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time. Level 2 is essentially the order book. It is simply a list of all of the open orders out
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there to buy or sell the stock right now. Time in sales, on the other hand, is essentially a list
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of all the trades that have already filled and the prices that they filled at. But don't worry
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I know I went through that quick, so we'll be going through it one step at a time to make sure
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you really get the hang of it. If this is your very first time hearing about these tools
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this is what they look like. Right up here at the top, you've got level two data
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whereas down here below, we've got the time and sales information. If you were to log into your own platform and you didn't see either of these little widgets here
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in order to add them, it is very, very simple. We simply need to click on the three little lines
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in the upper right hand corner of any of our gadgets. So right here, we'll simply click on these three little lines
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in the upper right of the time and sales. We'll then be coming to the right
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and looking in this old drop down menu. And we're simply gonna find the one that says add a widget
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then come over here to the right and select all widgets. That'll then open up a menu over here on the right hand side
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And if we were to look in the quote section, we can actually see both the time and sales
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as well as the order book right here. So in order to add them
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we would simply click on it and you'll actually see it appear over here on the left now. And then
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we could actually drag and drop that little widget wherever we wanted it. So in this case
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if we wanted this level two data or the order book to actually overlay the chart right here
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we could simply drag it up here and then let go. Now, if we wanted to move it out of the chart
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section, we wanted it to be somewhere else. We could simply click on it and then drag it out
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and then drop it where we wanted it. Now, in my case, I actually already have both of these widgets
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over here on the left-hand side. So all I want to do is go ahead and delete them. So come up here to
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the three little lines and then come down here and say remove order book. But I think you guys get the
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idea. In order to add them, we simply need to find the add widgets menu like it is over here on the
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right and then click on the widgets that we want to see. But moving on from how we actually add them
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to our screen, if we go ahead and delete this out of here, let's go ahead and begin with the level two
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first and let me first discuss how to read it before we talk about how to use it
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So first off like I said before it be important to remember that this is simply a list of all of the open orders to buy or sell this stock right now Looking right here at the bid column this is going to be a list of all of the open buy orders
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so orders to actually buy the stock right now, whereas if we were to look in the asking column, these are all orders to sell the stock right now
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The numbers that you're going to see in the size column on the far left or far right-hand side
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depending on the bid or ask column, that's going to be the actual number of shares available at those prices
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So how many shares are people actually trying to buy or sell at those specific prices right this very second
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Looking at the very top of the level two, you'll actually see the very best order to buy or sell the stock right now
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And this is also known as level one data. We could even get rid of all the other noise out there, all of the other orders, by coming up here to the top where it says 20 and then just coming down to one
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So again, this is going to be level one data or essentially the best buy order and best sell order on the market right now
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So looking here as just an example, we can actually see the best order out there to buy SPY right this very second is at $393.24
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And if we look to the left, it's an order to buy now 500 or 400 shares right this very second
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Coming to the right and looking in the asking column, remember that's the best sell order out there right now
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and it looks like somebody's trying to sell at $393.35. Looking to the right, we can see they're trying to sell essentially 500, 400 shares, but you can see it's moving constantly
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It is constantly changing in value, constantly changing in the size of the order
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Now, the difference between these two orders right here, the difference between the bid and ask is also known as the spread
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You'll actually hear that mentioned a lot. Other traders referencing the bid-ask spread and using it as a gauge to measure liquidity
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or how easily it is to get in or out of the stock quickly
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Here we can see the current spread and it is constantly changing, but we'll say the current spread is 393.32 by 393.39
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So that essentially means the difference between the current bid and ask is about $0.07
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Generally, the tighter that spread, basically the closer those two numbers are together, the better
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The further apart they are, or the wider the spread, the more illiquid the stock
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Now, as you can see, this is changing constantly throughout the day. And as of right now, I am looking at it in the after hours, which is when it's going to be a little bit less liquid
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This is when people aren't really trading it as much. But this will be especially important to watch out for if you trading more illiquid products like penny stocks or options Those types of products can have incredibly wide bid spreads at times which is going to make them incredibly difficult to trade Now in the case of SPY
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this is going to be one of the most liquid products on the planet. So looking right here
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if I wanted to buy it right now, I could buy it for $3.93.38. And then if I had to turn around and
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sell it right away, I could sell it at $3.93.34. So that essentially means I'm going to lose about
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four cents if I were to actually buy and sell it right away, instantaneously. I could also think
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of it as the minimum amount of movement that I'll need just to get back to breakeven. So if I were to
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buy it right now at $3.93.38, I would need it to essentially move up about eight cents just to get
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back to breakeven. Because right here we can see the current ask is $3.93.38, the current bid is $3.93
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So I need to come back up to $3.93.38 just to get my money back. Now if we were to come back up here
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to where it says one and we were to expand that a little bit, let's come down here and select 20
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Now we can see a whole lot more information. We can see where all the orders are resting
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and then potentially find levels of support and resistance based on where all those orders are resting
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Are there a lot of people trying to buy at a particular price or sell at a particular price
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And if so, it might be difficult to break through those levels. So again, just as a quick recap
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the order book or level two is going to reflect all of the open orders to buy or sell the stock right now
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It is not reflecting all the orders that have actually filled, but open orders
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Now, time and sales, on the other hand, is going to give us a real-time look at what the actual trades have recently filled at
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So looking down here, we can actually see all of the trades and the prices that they filled at
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From left to right, it's telling us the exact time that that stock was traded
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Then we can see the price that it traded at. We can see how many shares were traded at that price
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And over here on the right is the actual exchange. You may also notice the different colors popping up, whether it be green, white, or red
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and that is entirely dependent on where that trade just happened. If it was just filled at the ask, it'll be in green
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If it just filled at the bid, it'll be in red. And if it happens somewhere in between those two, it'll be in white
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So an easy way to think of it, if it's in green, someone was buying. If it's in red, someone was selling
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Just try and remember that someone buying could be them buying shares thinking it's going back up
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or they could be simply buying to cover a short position. On the other hand of that, selling could be someone selling their current position
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or just outright shorting the stock. But again time in sales is simply a list of all the trades that have already filled and the prices and times that they filled at We could also come up here to the little menu in the upper right hand corner if we wanted to clean up time and sales just a little bit maybe try and get rid of some of the noise out there So if we were to look in the menu right
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here and click on the time and sales filter and then come over here to where it says transactions
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with a quantity above we could then specify we don't want to see trades below a certain size
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And in this case, I'm going to come up here and say, I don't want to see any trades below 100 shares
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So now that I've done that, if we come over here and hit OK, we can now see that this is a lot more refined
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I've gotten rid of a lot of the noise of what we were looking at before. Now, in terms of actually using these two tools, it'll probably be most beneficial for those of you active traders or even scalpers out there
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Those of you who are trying to go in and out very, very quickly. It's mostly going to be used to find very short-term opportunities and potential levels of support and resistance
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So for example, if we were to come up here and look at level 2, we might find a very large order stacked up to buy or sell this particular stock
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So let's say we were looking right here and we saw a massive order at a particular price
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And in this case, let's just pretend we saw a huge order at $393.20 to buy 10,000 shares
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That means sellers are going to have a hard time breaking through that level of support
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Because remember, there are people willing to buy 10,000 shares at that particular price in our example
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So there needs to be at least a 10,000 share sell order to break through that support
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Now, if it were to break through that level of support, we could see it drop like a rock
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We could see a nice little breakout to the downside up until the next level of support
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So again, that's how this could be used to find very short-term opportunities
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We could also incorporate time in sales to see if there is a string of prints to one side or the other
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telling us there could be an imbalance in supply and demand. For example, if we were to see a long string of green prints or buyers
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that could be telling us that momentum is beginning to build and potentially push the stock price up even further
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On the flip side, if we saw a lot of sell prints down here or red prints
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that could tell us that there is a lot of sell side pressure pushing the stock price down even further
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But hopefully after all that, you do feel a little bit more comfortable with both time in sales and level two and a bit more about how they work
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If you do still have questions or recommendations for other video topics, please let me know down below
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And also, if you're looking to learn more, YouTube seems to think you'll find this next video helpful as well
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So go ahead and check it out. But that's it for now. Have a great rest of your week, everyone, and I'll catch you on the next video
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