Can you explain the relationship between NBBO and Level 2 in the context of digital asset exchanges?

2 answers

• Dec 25, 2021 · 3 years ago
  In the context of digital asset exchanges, the relationship between NBBO and Level 2 data is significant. NBBO represents the best bid and offer prices for a specific asset across multiple exchanges. It is calculated based on the highest bid and lowest ask prices available. Level 2 data, on the other hand, provides a detailed view of the order book, showing the depth of the market at different price levels. It includes the quantity of orders at each price level, allowing traders to assess the market liquidity. By analyzing both NBBO and Level 2 data, traders can better understand the supply and demand dynamics of digital assets and make more informed trading decisions. Please note that the information provided here is for educational purposes only and should not be considered as financial advice. Always do your own research and consult with a professional financial advisor before making any investment decisions.
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• Dec 25, 2021 · 3 years ago
  In the context of digital asset exchanges, the relationship between NBBO and Level 2 data is crucial for traders. The NBBO represents the best bid and offer prices for a particular asset across all exchanges, providing a benchmark for pricing. Level 2 data, on the other hand, provides a more detailed view of the order book, showing the depth of the market at different price levels. By combining the NBBO and Level 2 data, traders can gain insights into the liquidity and trading activity of digital assets, helping them make more informed trading decisions. It's important to note that different exchanges may have variations in their NBBO and Level 2 data due to factors such as order routing and market fragmentation. Therefore, it's advisable for traders to consider multiple sources of data and consult with professionals to ensure accurate and up-to-date information for trading decisions.
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