Mr. Charts said:
babymush,
Yes, imo, level2 is a great help in determining whether a price will hold, rise or fall at any level, but my own use of it in conjunction with several other factors keeps me out of many breakouts which then fail. Equally that micro analysis points to successful break outs. Nothing is totally infallible, but this means I take fewer trades but with a higher success rate.
Level2 is like a microscope, an indispensable tool but not some magic wand. It is not easy to learn as there are many subtleties to its use - and it has several uses.
It is also a skill which grows with use and experience. I very often find I enter trades before the move appears on a chart or volume bar - and I frequently exit a trade at or before it turns against me. My own use of level2 is integrated with other factors and is essential to my trading.
Level2 is about faking MMs, buying and selling pressures, behaviour of market participants at different levels and how and when that behaviour changes.
Between the above comments and ardhill's helpful post, you might get a glimpse of what it's all about.
The person on these boards who I think is a great level 2 trader is Naz and you should also read what he writes.
Richard