Is this link a good way to learn level 2?

[zackyat]

Hi everyone.
I am new to this board and i am new to level 2.
Is this a good link to learn level 2 nasdaq.
It's Pristine.com

One question is that how can we calculate all the shares so that we can decide when apparent buy or short side imbalance is occuring.And i think it's impossible for level 2 to remain static even for a moment and we have to decide very fast right?
Can anybody help me?Naz?Thanks.

The link is
http://pristine.com/aeduc/level2/

 

[Trader333]

zackyat,

Is this a good link to learn level 2 nasdaq.

Well it is quite old as Level II now trades in decimals and not fractions and has been for quite some time.

One question is that how can we calculate all the shares so that we can decide when apparent buy or short side imbalance is occuring

I wouldnt even try as many of the stated quantities will not be real. Each MM is only obliged to display 100 shares, (which is shown as 1, and 500 would be shown as 5 etc)

So you will frequently get a MM displaying only 1 when in fact they have thousands and thousands to buy or sell. You can sometimes see the effect of this as I have with say GSCO.

I have seen GSCO sit on the inside bid with a quantity of 1 and then seen the time and sales screen show thousands of shares being sold (shown by a sea of red trades on time and sales) and yet GSCO has remained on the inside bid buying every last share that was being sold but still with a quantity of 1

If you had added up the quantities on both sides the reality did not reflect the added up imbalance.

There is a lot of faking on Level II and one of the only ways to learn is to watch the screen. Colour in some of the key MM and watch how they move around the screen and how the price reacts to that.

In the screenshot on the left you have the normal Level II screen and on the right you have the Island book. Island is an ECN and not a market maker so they display the actual number of shares that are wanted at each of the shown price levels. From that standpoint it is more accurate in terms of imbalance of the bid and ask but again orders can be pulled very quickly and people can hide their orders when using Island.

I tend to use level II when I enter a trade to let me know at what price I can get out if things go against me. Sometimes you will see only a 1c spread between the bid and ask and I may be looking to go Long. But then on the Level II screen I can see that the next price level down on the bid is 12c away so if I go Long I could immediately find myself in a 12c loss situation. Based on this I would not take the trade. I would want to see good support on the bid for around 10c in depth so if the market starts to go down I can get out quickly with a minimal loss.




Paul

 

[TheBramble]

If the MMs (like GSCO) play the minimal display size game - and everyone knows they're playing these games - is there much technical merit in trying to use 'apparent' imbalance to establish entry criteria 'on that basis alone' as Pristine suggest?

 

[Naz]

Paul is right.

First there is so much out there written on Nasdaq level 2 that is now behind the times.Any level 2 screen showing fractions is a case in point.Next as has been said a mm will be a buyer when he's showing 100 shares and so counting the in balance in the amount of shares being offered at the inside bid and ask is not a reflection in which direction the stock will travel.Sad but true.

For me its the story that unfolds that gives the picture of the next move.Not one snap shot.This is why its hard to get over its benefits in just one picture.

Naz

 

[zackyat]

Ok.Thanks everybody.
I have seen several posts talking about the importance of identifying major MM.
Can anybody explain how can i identify major MM?
or if it has been explained in other posts could somebody tell me which post?
Thanks for all the prompt responses.

 

[triplepack]

Hi Naz,
Since going on your course last Dec I have found that Level II has given me another tool to identify potential movements.
As has been said ,you can't get an instant snap shot interpretation of what may happen , but if you watch you can get the 'feel' of the ebb and flow of the orders and in addition to support/resistance levels etc you can get a good picture of how the stock is going to play. Volume coming and going, the interest of the players ,are there many mms sitting with orders above or on a resistance level making a fence for the market to jump over and when it does the likelihood of a gallop afterwards is more probable.
I would say that Level II looks very pretty with all those colours, but the true value can only come after a long period of watching and studying when the subtle nuances will show themselves.

 

[triplepack]

To any level II trader ,

One question I do have , which does give me some trouble when trying to follow the movements of the mms , is that on my level II screen very often I find that there are no mms in the first 3 levels but it is populated with ecns .
Three levels down and up you might well see Brut, Island ,Size etc.,then come the mms proper. As the ecns are anonymous they could be schwb,mlco in disguise but their markers are further down with 100 lots. how do different traders interpret this ?
What value does it have appart from the fact that anon. is very interested ?

Triplepack

 

[Trader333]

zackyat,

There is an excellent CD set on Nasdaq and Level II that I would suggest that you purchase which is available from www.clickevents.co.uk/Alan-Rich.htm This will give you a good grounding in Level II including MM, their tricks, who they are etc.

You may recognize the author


Paul

 

[zackyat]

trader333
could u show me which one is the right one for me to learn more about level 2 and MM?
It's because i am only interested in level 2 and not other things.

 

[Trader333]

I suggest you call and ask them

0800 298 4691


Paul

 

[Two Bars]

Trader 333, have you actually bought this CD? I have, and quite frankly it was a complete waste of money. You get the talk and the odd slide, but Alan Rich spends a lot of time referring to things happening on the Level2 screen which you cannot see.

 

[zackyat]

Oh really
Thanks Two Bars for the warning!

 

[Trader333]

Two Bars,

A few slides ? Yes I have bought this and I found it of great use but it is each to their own. I have nothing to gain by recommending this and was just trying to help but I think will just leave it there on this issue.


Paul

 

[Two Bars]

zackyat, if you pm me with your address I shall send you the CD. Its no use to me, so your welcome to have it. This was the first and only thing I ever bought from clickevents and it will certainly be the last.

 

[OneGreater]

I've just ordered the CDs. When it arrives and after I've checked them out, I will post my thoughts.

They are offering a 60 days money back guaranteed so it is not too much of a risk!

 

[OneGreater]

I have the cds and these are my thoughts...

I've just ordered the CDs. When it arrives and after I've checked them out, I will post my thoughts.

They are offering a 60 days money back guaranteed so it is not too much of a risk!

...while I have not gone through all of the cds (there are five all together) I can say that I will keep them. There is stuff there that I can benefit from. True, some of it is boring and I refuse to sit through it. But other parts are revealing and I am looking forward to exploring the other cds that I have yet to look at.

Look, I've been trading for about 5 years with moderate success. In fact, I can say that I'm not really a good trader but I've been doing just good enough to stay in the game. And while I know that these cds will help, it is up to the individual to make him/her self into a successful trader. I don't think so that anyone will find the HOLY GRAIL in these cds or anywhere else. One must find his/her own way. But it is good to pick up tips in areas that you feel you may feel more understanding in. And if you feel that you should pay for it then so be it.

I would say to the newbie this: one has to spend a lot of time studying the market, doing paper trading as well as having some real money in market to test your strategy's. And there are all kinds of strategy's, you just have to find those that work for you.

One guy out there is giving people a chance to watch him trade in real time by joining him in a chat room and watching the dialogue that goes on between him and the other traders. He is doing this because he hope to find some people who are willing to pay for his continued help. I took advantage of his free trial and it help me some. These cds will help a little too.

There are a lot of sites, like this one, that give good tips on trading. I will say that you have to find your own way into successful trading, learn to do your own Due Diligence, and understand that this is a life journey because things are always changing and you must learn to adapt and use different strategy's.

Any thoughts or constructive criticism would be appreciated.