Using Level 2

The data is streaming live prices - there is no need to refresh the screen. There are 2 types of order book - SETS (order driven) and SEAQ (quote driven). The SETS order book matches buy and sell orders from Market Makers or Brokers on a price/time priority on an electronic basis. On SEAQ all buys and sells go through a Market Maker or Broker who acts as an intermediary. Order book statistics are displayed at the bottom of the window (A).

The yellow strip (B) shows how many Market Makers are quoting the best bid price (2), the best offer price (4), and the number of shares they will trade on the bid side (11,590), the offer side (46,200), the best bid price (119.05p), and the best offer price (119.10p).

The Buy Orders column (C) on the left hand side shows the prices at which Market Makers are prepared to buy stock from you. This is the price that you can sell at.

In this case the best price is 119.05p and there are 2 orders here totalling a quantity of stock up to 11590 at this price.

The next best price is 119.00p and there are 11 orders totalling 50426 shares. The green indicates that new shares have been added to the total order sizes.

The Sell Orders column (D) on the right hand side shows the prices at which the Market Makers are prepared to sell stock to you. This is the price that you can buy at.

In this case, the cheapest offer is at 119.10p and there are 4 orders here totalling a quantity of stock up to 46,200.

The next best offer is at 119.15p and there are 3 orders totalling 20,200 shares. The red indicates that part of the order at that price point has either been deleted or executed.

This is only part of the story; as you also need to look at the order book statistics for an idea of how the market is positioned. Note that there are 121 (E) buy orders totalling nearly 5.9 million shares and 192 (F) sell orders totalling nearly 9.2 millions shares.

So what does that tell you?

In simple terms because there is a higher concentration of sellers than buyers with a day high of 120.90 (G) and a day low of 117.65 (H), a strategy of selling into rallies (i.e. short-selling when prices rise) would be sensible as you could reason that the market looks overly long and prices might fall.