I would say that 70% and above is quite deep - but it depends how it gets there.
If the retrace is big but happens in just a few minutes, an explosive move down, then I'd let it go very deep because the chance of it moving back up is much higher then. If it took a more gradual move down, I'd be less inclined to take a deeper pullback.
Level 2 is a good tool for me and it is an additional dimension. Still it can't be used without Time & Sales in my opinion because the 2 give you intent and actuality. Small bids, lots of sells is quite telling. Big bids few sells is also. Still - mostly what I get from it is a feel of when something is running out of steam which you could probably get from the charts.
What you wouldn't get from the charts would have been yesterdays 10,000 contracts across just 2 levels of bid on the ES at the low which did not move out of the way when sellers (albeit tentative) hit it.
Still - if you look ath this chart (ignore the block trade spike). Think about when you'd get in and out using HHs, HLs, LL, LHs and trend lines for instance. You'd probably enter and exit a lot later than those chart markers.
I still haven't shown my carrot yet,either...
If I had to choose between L2 and the DOM, I'd choose the DOM - it's same thing with a much better UI in my opinion. DOM does have less info but a lot of the additional info on L2 is only useful a very small amount of the time.
You'd need to use in conjunction with Time & Sales. Probably a good place to start is Ninjas Partner page, find a broker, ask for a free trial and you'll have 30-90 days of free platform and live futures data. 6E & ES are good examples of thicker contracts. NQ & YM are thinner contracts, you'll see straight away how different they are and you'd probably need to study one type of market first. Maybe someone like Dash can point you in the direction of the slower interest rate futures.
This stuff works IF you have an idea where you want to enter anyway, otherwise you'll be looking at it all day and jumping at shadows with it. Of course, you could scalp with it, in which case you will need to stare all day. There's a $40 ebook called "NO BS Day trading" that will give you a primer, it comes with videos too.
Not sure if the mods will remove the link - but here it is:
http://www.nobsdaytrading.com/
PS - Please do not think I am buying bottoms and selling tops all day without a care in the world. The above trade worked out very well. In both entry and exit, I saw what I like to see. very often I do not. Please don't think I have a magic bullet or that there is such a thing based on my posts. If there is a magic bullet, I sure haven't seen it.