Please put me off level II !

[garyp75]

Okay, so I've done a bit of reading on level II and then downloaded the Direct Access Elite demo platform. With a realtime feed

I've had a look at the L2 feed and then started to play with it - and I just can't help but make money.

Just by trading 5000 shares a round trip making a cent (or less) on the spreads.

Now I am the first to admit that it can't be like this in the real world........etc........etc.....etc. But I do have a few questions as a result.


- Is 5k shares considered a lot/normal/low ?
- Will L2 brokers let you trade with leverage? Typically what?
- Is trading differenced between buy/offer a viable way to trade?
- What is the typical commission per trade of an L2 broker?

I appeared to be making around $50 per round trip using the DAE with 5K shares.

- The DAE app is simulating my trades - I am not really trading - so how do they decide who buys/sells my shares?
- Is the simulation an accurate representation of what would happen in the real world?

And finally

- Am I gonna get rich quick with Level II ? (This last one is a joke but I would appreciate some help on why I can't lose on the DAE demo????)

Rgds.

Gary

 

[Crossroads]

I'm no Level 2 expert, but some quick thoughts:

- To trade 5000 shares each at, for example, $50, you need at least $62,500 in your trading account (4:1 margin being the most allowed), realistically more to cover drawdowns.

- The commissions with IB would be $55 per round trip on 5000 shares, so if you are only making $50 you have actually lost.

- 5000 shares is quite a lot. Obviously it depends on the liquidity of the particular stock you are trading, but I would say it is unrealistic to repeatedly trade the spread with that size.

- I couldn't comment on how realistic your demo software is as I have not used it, but none of the simulators I have tried have ever been particularly accurate. I would double the losses and half the wins and see if you still make money, if you do then perhaps your strategy is worth trying for real.

Good luck!

__________
Xroads

 

[Trader333]

Taking your points one at a time:

Is 5k shares considered a lot/normal/low ?

It depends on the stocks you are trading. 5K is not much for MSFT but it may be a lot for TTWO and in reality you probably would not get 5000 shares filled at the simulated price.

Will L2 brokers let you trade with leverage? Typically what?

I am not too sure what you mean by this but to be a Daytrader using DAE I think the minimum account balance is $30K The minimum any broker will allow is $25K and in my view you should not attempt to trade with less than $30K

Is trading differenced between buy/offer a viable way to trade?

Yes it is but you need to be careful in doing it. Those that do make a lot of trades per day. Naz should be able to give you some more information on this.

What is the typical commission per trade of an L2 broker?

For trading 5000 shares you will likely pay up to $50 per round trip and possibly even more so based on that your profit is 0

The DAE app is simulating my trades - I am not really trading - so how do they decide who buys/sells my shares?

No-one does all that happens is that they have a datafeed that works with the application and the simulator works in conjunction with that.

Is the simulation an accurate representation of what would happen in the real world?

Highly unlikely for reasons I have given above and the fact that in the real world someone else may beat you to the price you want to transact at.

Am I gonna get rich quick with Level II ? (This last one is a joke but I would appreciate some help on why I can't lose on the DAE demo????)

I am sure it is possible but you would need extensive training. If I wanted someone to use my platform then I would also make sure that they virtually couldnt lose on the Demo. Real life trading is just not like that.


Paul

 

[garyp75]

I knew it, that all makes sense - it was too easy

Thanks, I'll look into it more.

Rgds

Gary

 

[Jerry Medved]

there is also an issue of emotion. When playing with play money, you don't have any emotion involved. In real trading, thats one of the biggest things to overcome.

 

[Salty Gibbon]

there is also an issue of emotion. When playing with play money, you don't have any emotion involved. In real trading, thats one of the biggest things to overcome.

"I second that emotion"

 

[philhackett]

You could of course trade Forex. It is much easier if you are properly trained and you do not get taken out by Marketmakers.

 

[BBB]

Look at Nextrend.com. I don't use them, but I've heard good things about them. ONLY $0.06 (6c) per SHARE! That would bring your costs down to $30.

Remember this: ALL demo accounts will make you feel like George Soros when you may be Nick Leeson. This is deliberate. The sole objective of ANY broker is to get you to transact so he can make his commission. The sooner you think you have it cracked, the sooner you start to trade, the sooner your broker gets rich while you tell yourself your lucky streak will come back and you will be trading as you did on the demo account. Anyone can see a profitable price on these systems, but getting it in the real world is very different.

Good luck

 

[redart]

are nextrend.com cheaper than IB? If trading just 100 shares, Is IB $2 per round trip? It says on the nextrend webite that they charge $1.20 for 100 shares, bit im not sure if thats per side or per round trip. I dont believe that there is a platform fee for using IB. Is there one for nextrend?

ta.

 

[Crossroads]

For US shares, IB charge $0.01 per share for the first 500, then $0.005 per share after that. So nexttrend sound considerably more expensive if 6 cents is the best they offer.

__________
Xroads