What characterizes Level 2 Market Data?

Level 2 Market Data is characterized by providing full order book information and depth of book. This type of data goes beyond the basic pricing information available in Level 1 data, which typically shows only the best bid and ask prices. Level 2 data gives traders access to the bid and ask prices at multiple price levels, showcasing the quantity of shares available at each level and offering insight into market depth.

Having access to this detailed information allows traders to analyze the supply and demand at various price levels, helping them to make informed decisions about entering and exiting trades. This granularity is crucial for high-frequency trading, scalping strategies, and for anyone looking to gain a competitive edge in the market. The additional context provided by the depth of book helps traders understand market sentiment and assess the likely price action in response to changes in supply and demand dynamics.

The other options do not encapsulate the essence of Level 2 Market Data effectively. Immediate reactions to market changes relate more to market volatility and not specifically to the type of data provided. A standard market price may represent a general understanding but does not reflect the comprehensive nature of Level 2 information. An overview of economic indicators is more aligned with fundamental analysis rather than the multi-layered data pertaining specifically to order book