How Depth-of-Book Data Increases Visibility into Stock Trades

Timing is everything. And when it comes to buying and selling securities, your timing is only as sharp as the quality of information you’re working with. That’s why you need real-time financial data that can be trusted for its accuracy and provides a comprehensive view of the markets day after day.  

No one has a crystal ball to forecast market performance, but harnessing up-to-the-minute data can provide far greater visibility—and take active trading to the next level. That’s what investors get with depth-of-book data, which shows the robustness of an order book for all stocks traded on major US exchanges. This includes the record of buy and sell orders, and helps investors grasp liquidity levels for specific stocks or investment products. The higher the quantity, the more robust the order book.

TotalView, Nasdaq’s depth-of-book product, is so sophisticated that it surpasses even Level 2 data. It gives traders a comprehensive view of all activity that happens across all exchanges. That means every quote, every bid and every offer, whether the trade happened or not. It means visibility into the granular details that add depth and nuance to the trading game. It means a new way to differentiate yourself from the competition without cutting into already narrow margins. 

It means your good timing will now be superior. 

So how exactly can TotalView’s comprehensive data transform your trading strategy? 

I. Greater Visibility=Multiple Advantages

TotalView can give you insight into the true demand of a security at each price point, allowing traders to make decisions accordingly. Here’s how depth-of-book data can help investors time their actions and take their game to the next level: 

Address order imbalances: Market imbalances happen for several reasons. If the number of buyers isn’t high enough for a given security, that creates an imbalance—and you’re better off waiting to sell. Or investors may see that purchase volumes aren’t high enough and opt to divide a sale into various blocks to offset the lack of demand on the buy-side. 

TotalView’s depth-of-book capabilities can help traders time their trades to maximize their impact by providing net order imbalance indicator, or NOII. This figure provides an accurate snapshot of imbalances that can’t be replicated by other metrics. 

When you look at averages, for example, they often don’t tell the whole story and can hide a fragmented market. An imbalance could reflect a bifurcated data set that skews very high and very low (with very little in the middle). This can happen with heavily traded stocks, such as those in the tech sector. Level 1 data just shows the top of the book, or the best bids and offers for a given stock, but look closer in TotalView, and you can spot where there can be stark divisions. With deeper data, traders gain a totally different, and a more insightful, view of the stock than just looking at Level 1 data.

Simply put, Level 1 data can be insufficient , and investors need to drill down to a deeper level to make more informed trading decisions—and that’s what they get with TotalView.

NOII provided by depth-of-book is particularly helpful during times when imbalances tend to occur, be it intraday, during earnings announcements, at the end of the reporting season, or at the year’s end to offset large tax gains. NOII not only displays imbalance data used to determine the buying and selling opportunities of a security, but also gives investors more confidence that their trades have the potential to garner results. 

Forecast market patterns: Total View helps indicate where the price of a security is heading. That type of information can help you make informed real-time decisions—and anticipate what’s ahead. TotalView can give investors greater insights into the opening and closing costs of a given security, meaning they’ll have a clearer sense of liquidity and overall market movement. As investors race to lock in shares near the closing price, for example, TotalView gives them greater visibility to see further down the road—and make decisions in light of trends that are on the horizon, not in the rearview mirror. It’s here where depth-of-book can help investors decide whether to take a long or short position and when.

II. Sophisticated, Nuanced, Powerful: The Case for TotalView 

Many investors are hard-wired to move fast. They thrive on momentum and are driven by competition. But to improve results—and boost alpha —you need both speed and sophistication. You need to know when to jump on a fast-moving opportunity, and when to take a step back and watch as a data story unfolds. 

For day traders working independently, investors working with a fintech trading platform—or any investor who strives for excellence, really—depth-of-book is extremely important. QUODD’s TotalView, depth-of-book data stream provides the tick-by-tick information to fill in knowledge gaps. We think of TotalView as a tool for increasing awareness and cultivating excellence. The goal is to help traders make smarter decisions in less time.

If more precise timing of trades can lead to greater gains, then investors who want to up their game should dig deeper. Get the total view of what’s happening with trades. Contact QUODD to get a trial version of TotalView today.