Which statement best describes Level 2 Data in relation to Level 1 Data?

Which statement best describes Level 2 Data in relation to Level 1 Data?

• A. Level 2 includes Level 1 data plus the listing of nearby bids and offers along with volume
• B. Level 2 duplicates Level 1 data
• C. Level 2 shows only historical trades
• D. Level 2 excludes bids and offers

Answer: (A)

Level 2 data expands on Level 1 by showing the full depth of the market: it reveals not just the current best bid and best offer, but multiple price levels on both sides of the book and the size available at each level. This means Level 2 includes the Level 1 information and adds the listing of nearby bids and offers along with their volumes, giving a clearer picture of supply and demand at different prices. The other options don’t fit because Level 2 isn’t simply a duplicate of Level 1, it doesn’t focus only on historical trades, and it certainly doesn’t omit bids and offers.

Level 2 data expands on Level 1 by showing the full depth of the market: it reveals not just the current best bid and best offer, but multiple price levels on both sides of the book and the size available at each level. This means Level 2 includes the Level 1 information and adds the listing of nearby bids and offers along with their volumes, giving a clearer picture of supply and demand at different prices. The other options don’t fit because Level 2 isn’t simply a duplicate of Level 1, it doesn’t focus only on historical trades, and it certainly doesn’t omit bids and offers.