What is the difference between NBBO and Level 2 in the context of cryptocurrency trading?

1 answers

• Dec 17, 2021 · 3 years ago
  NBBO and Level 2 play different roles in cryptocurrency trading. NBBO represents the best bid and ask prices across all exchanges, giving traders an idea of the most competitive prices in the market. It helps traders determine the fair value of a cryptocurrency and identify potential arbitrage opportunities. On the other hand, Level 2 provides a more detailed view of the order book, showing the specific bid and ask prices at different price levels. It allows traders to see the depth of the market and the potential supply and demand imbalance. This information can be used to gauge market sentiment and identify areas of support or resistance. While NBBO is more focused on the overall market sentiment, Level 2 provides more granular information for making trading decisions. Traders often use both NBBO and Level 2 to get a complete picture of the market and make informed trading strategies.
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