I happened to see a beginner asking how to read the five levels, and it reminded me of when I first entered the market and was completely confused.

Actually, the order book software shows internal volume, external volume, and five-level quotes, which look complicated at first glance, but once you understand the logic, you can quickly judge the market's buying and selling strength.

Let's start with the most basic concept.
When you want to sell immediately, you place an order at the bid price, which is the seller actively matching the buyer, and the traded volume is counted as internal volume.
Conversely, if you want to buy immediately, you place an order at the ask price, which is the buyer actively chasing the price, and the traded volume is counted as external volume.
Simply put, internal volume indicates sellers eager to offload, while external volume indicates buyers eager to jump in.

How to read the five levels?
Open your brokerage app; the green on the left is the top five buy levels, representing the highest five bid prices and volumes;
the red on the right is the top five sell levels, representing the lowest five ask prices and volumes.
For example, if the top bid is 203.5 yuan / 971 shares, and the top ask is 204.0 yuan / 350 shares, this reflects the most immediate supply and demand situation in the market.
But note that the five levels are just orders placed; they may not necessarily be executed and can be withdrawn at any time.

Next is the internal vs. external volume ratio, calculated as internal volume traded ÷ external volume traded.
A ratio greater than 1 indicates internal volume is larger, suggesting a bearish market sentiment;
a ratio less than 1 indicates external volume is larger, showing strong buying interest, usually a bullish signal;
a ratio equal to 1 indicates a stalemate between bulls and bears, requiring more clear signals.

However, a special reminder: do not judge solely based on the internal/external volume ratio.
I’ve seen many cases where external volume is significantly larger than internal volume, yet the stock price doesn’t rise but falls instead, with trading volume fluctuating wildly.
At such times, be cautious that the main force might be inducing buying to attract retail investors, while secretly selling off.
Conversely, there are situations where internal volume exceeds external volume but the stock price rises, which could be the main force deliberately placing buy orders to lure retail investors into selling, while actually accumulating shares.

Therefore, the key to technical analysis is to combine multiple factors such as price position, volume, support and resistance zones for comprehensive judgment.
When a stock drops to a support zone, if the five levels show large buy orders stacking up, that’s a signal to go long;
Conversely, when it rises to a resistance zone, if sell orders from level one to three keep stacking up, consider reducing your position or shorting.

Honestly, although internal and external volume are highly real-time and conceptually simple, they can be easily manipulated by the main force.
Relying on them alone can lead to wrong directions.
In the short term, they reflect current trading behavior but cannot determine long-term trends.
The best approach is to combine fundamental analysis and overall economic conditions to improve your success rate.
I personally practice regularly with a demo account to deepen my understanding of how to read the five levels and use the internal/external volume ratio, so I won’t be caught off guard during live trading.