New research from Barclays Stockbrokers reveals that more than one in ten investors currently use Level 2 pricing and a further 33 per cent use Direct Market Access (DMA), both of which have only recently been made available widely to private investors.

Level 1 pricing enables investors to see the bid, offer and the day’s high and low prices of specific stocks in real time, as opposed to the delayed pricing information which is traditionally used by retail brokers.

Level 2 is a more recent phenomenon and allows investors to view the order book – the actual buy and sell orders for each share in the market as they are entered, amended and executed in real time. This in turn shows what is known as ‘market depth’ – the buying and selling for a particular share.

DMA enables private investors to react to this market depth, allowing them to place buy or sell orders directly on the London Stock Exchange (LSE) order book.

Barclays Stockbrokers offers access to Level 1 and 2 equity trading through its BARX platform. Stephen Grady, head of global dealing at Barclays Wealth, comments: ‘We have seen a real shift in recent years in terms of the techniques and products that our clients are using to gain returns.’

According to the LSE, the use of Level 2 data is growing at a frenetic pace, with a 400 per cent increase in usage in the last 18 months.

Martin Graham, director of markets at the LSE, explains: ‘There has been a huge expansion in trading volumes on our books recently, with the total number of trades per day now running at an average of 573,767, an increase of more than 70 per cent.

‘Private investors are able to gain a complete picture of the vast liquidity pool that generates these trades through Level 2 data and use this information to inform the pricing and timing of their trades.’