Whats the difference between order book, depth of market and level II ?

[predator001]

Does anyone know the difference between the terms "order book" and "level II" ?

I know the definition of these terms, but they sometimes appear to be (misleadingly?) used interchangeably. Depth of market for instance is equivalent to level II information (I stand to be corrected), but order books (e.g. limit order book) seem to be quite different (at least in their defnition) from level II and therefore, I can't see how these two terms can be used interchangeably.

Are there any MM or specialists out there who know what the difference is ?

 

[JTrader]

Whats the difference between order book, depth of market and level II ?

As far as I know these terms are inter-changeable and refer to the same thing - electronic stacking of buy and sell orders.

 

[Directional]

yep, order book, DOM and level 2 - L2 term is used more in relation to stocks, but they are all interchangeable basically referring as Jtrader says to the electronic display of price levels and volume available

 

[predator001]

many thanks guys

 

[Over the Top]

I'm confused by the responses to this question. Level II does not give you the full order book whereas Level III does. Issues on veracity of the data is a side issue.

Depth of Market is generally used to indicate the blocks of stock available on Bid and Offer at each of the various price strata. But the formal definition of Depth of Market is the number of shares which can be bought or sold without impacting the price of the stock.

 

[JTrader]

Over the Top -
I'm confused by the responses to this question. Level II does not give you the full order book whereas Level III does. Issues on veracity of the data is a side issue.

Are you sure that you do not mean -
"I'm confused by the responses to this question. Level 1 does not give you the full order book whereas Level Il does. Issues on veracity of the data is a side issue."

:?: :?: :?:

Cheers

jtrader

 

[Trader333]

Over theTop is correct, there is a Level III that is only available to MM and the likes. Level II only shows the best Bid and best Ask of all individual participants. It does not show the depth of market for the individual participants that make up the Level II screen. That said, in my view it is sufficient (in most cases) for our trading needs.


Paul

 

[Anonymous]

Trading by using the best Bid and best Ask available requires one method, knowing where are the locations of the big orders allows trading by another method.

 

[tome]

You might peruse this Investopedia article that describes the differences in trading levels.

www.investopedia.com/university/electronictrading/trading7.asp#axzz210sG8FZw