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Level 2 & the tape — the basics

Bid/ask stacks, big orders, and what the tape can and cannot tell you.

10 min · Intermediate

What you'll learn

• Read a Level 2 display and a time & sales window
• Estimate the slippage of an order from the depth of the book
• Use the tape to confirm or reject a break of a key level without over-trusting it

Key takeaways

• Level 2 shows intentions that can be cancelled; the tape shows what actually traded.
• Thin books cause slippage, so calculate your likely average fill before using size.
• A wall is not a level; confirm with prints on the tape and a candle close.
• Level 2 and the tape support a chart-based plan; they never replace it.

Glossary

• Level 2 — A display of the orders waiting at each bid and ask price, showing the depth of the order book.
• Time & sales (the tape) — A live list of executed trades showing time, price and size.
• Absorption — Heavy trading at one price that fails to move price, suggesting a large hidden buyer or seller.
• Slippage — The difference between the price you expected and the average price you actually got.

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