Market data is the backbone of every trading platform, charting tool, and financial analytics product. Prices, volume, order flow — all of it shapes how traders think, react, and make decisions.
But not all market data is created equal.
Developers building financial software quickly learn that depth matters: the more visibility you have into the market, the more powerful your application becomes.
This guide breaks down the three major data levels—Level 1, Level 2, and Level 3—what they mean, who uses them, and how they affect the tools you build.
What is Market Data in Stock Trading?
At its core, market data is every piece of information tied to a trade:
- the latest price
- how much volume is trading
- the highest and lowest trades
- what buyers and sellers are doing right now
It’s not just numbers — it’s the live pulse of the market.
And depending on the depth of data you access, you get a very different picture of what’s actually happening.
Level 1 Market Data: Basic Information
Level 1 gives you the basics:
- Last traded price
- Best bid (highest buyer)
- Best ask (lowest seller)
- Trading volume
For many users, this is enough.
It shows where the market is right now without extra complexity.
Who uses Level 1?
- Retail investors
- Mobile trading apps
- Basic charting tools
- Finance dashboards that only need “headline” pricing
Level 1 is fast, simple, and widely available.
But it has one major limitation: you only see the top of the order book — not the layers beneath it.
If you want to understand real momentum, liquidity, or hidden pressure in a stock, Level 1 won’t get you there.
Level 2 Market Data: Greater Depth, Insights and Market Maker ID
Level 2 reveals the depth of market (DOM): the multiple price levels and order sizes sitting behind the best bid and ask.
This is where market structure becomes visible.
What Level 2 shows:
- Multiple bid/ask levels
- Order sizes at each level
- Market maker IDs
- True liquidity behind the scenes
If Level 1 tells you the weather, Level 2 tells you the wind direction.
Why traders rely on Level 2
It helps answer questions that Level 1 simply can’t:
- Where are the real support and resistance levels?
- Which market makers are aggressive right now?
- Is someone hiding a large order?
- Is a breakout real or an illusion?
For day traders, Level 2 is essential.
For developers, it's the difference between building a simple chart and building a real trading tool.
DOM (Depth of Market) in action
A DOM window visualizes Level 2 data — bids on one side, asks on the other, sorted by price and size.
Traders use it to:
- spot large walls of liquidity
- anticipate reversal zones
- identify fake orders
- time entries and exits
Even so, Level 2 isn’t perfect. Orders can be canceled. Some are hidden. Liquidity can vanish in a second.
But it’s still far more transparent than Level 1.
Level 3 Market Data: Complete Transparency
Level 3 is the top of the mountain.
Only institutions, market makers, and certain trading firms get access.
Level 3 provides:
- Every open order
- Every price level
- Trader identity
- Actual order intentions
If Level 2 tells you the crowd, Level 3 tells you who in the crowd is doing what.
This is why it’s typically restricted: the data is extremely revealing and extremely valuable.
Who uses Level 3?
- Institutional traders
- Market makers
- Advanced algorithmic systems
- High-frequency firms
Algorithms that monitor Level 3 can see large players positioning themselves before the market reacts — a powerful advantage.
Why Developers Should Care
If you're building financial software, choosing the right data depth shapes everything:
- Level 1 works for charts and basic tracking
- Level 2 is essential for real trading tools
- Level 3 powers institutional-grade models and execution systems
Better data means:
- more accurate algorithms
- clearer liquidity analysis
- stronger technical patterns
- faster, smarter decision-making
Developers who want to build competitive trading products need access to more than just top-of-book pricing.
The Cost Problem (and a Hint at the Solution)
Here’s the catch:
Level 2 and Level 3 often come with high licensing fees from exchanges.
Some APIs charge extra for deeper market data.
Some charge per exchange.
Some lock developers into expensive recurring plans.
But not every provider does.
FinFeedAPI gives developers Level 1 and Level 2 depth without charging hidden exchange fees, making advanced market data far more accessible for startups, indie developers, and growing fintech products.
Final Thoughts
Level 1 shows the surface.
Level 2 reveals the structure.
Level 3 exposes the entire market.
Developers who understand these layers can build tools that traders actually trust — tools that don’t just show the price but explain the market behind it.
And with modern APIs like FinFeedAPI offering deep data without enterprise pricing, advanced market data isn’t just for institutions anymore.
If you’re building trading software, explore FinFeedAPI to unlock Level 1 and Level 2 depth across global markets — all through one simple, unified API key.
