level 2 OPINIONS please

DATTrader · Apr 13, 2002

Originally posted by Tradewinds
The 1,000 reserve size rule was changed back to 100 in Nov.

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The implementation of the rule change for minimum display size from 1000 to 100 when posting reserve volume was postponed and to my knowledge it was never put in place. If you truly watch level 2 screens closely it is apparent that MM's who have reserve volume use the 1000 share display size and if they had the choice, I am sure they would use the 100.

http://www.nasdaqtrader.com/Trader/News/2001/headtraderalerts/hta2001-164.stm

Tradewinds · Apr 13, 2002

DAT,

Thanks for the info!

Chris

limbo · Apr 13, 2002

Seanote good post as I was just thinking about that yesterday-mm's all lined up on ask--ecns on bid etc.-------Dat --Yeah man I have often wondered-- Do they just see------?OR is it a form of collusion. I think it's a form of collusion. I'd bet it's a form of collusion. It's all so f---king corrupt.---- I'll never forget some good advice praetorian2 gave me a while back regarding nyse--"Just think of yourself as a specialist on the floor and think how you can F--k as many people as possible."

Speedracer · Apr 13, 2002

Originally posted by Seanote

When you have ECNs line up in a row on one side or the other (we'll assume the Ask) and there are only MMs on the bid, this is a huge sell signal. If you look at the MMs on the bid all lined up at the same price, they generally will execute 100 shares or so, whatever their obligation is, then almost simultaneously all the MMs will leave the bid and the price will quickly drop.

Speed:
I found this comment interesting since scalpers are often these ECN's all lined up on the offer. I do it myself a lot to get out of positions. If you know it is market makers then I would say it is a sell signal, but often it is just someone trying to get out of their shorts, so it is a buy signal. You can often hit the ecn size, watch the guy panic because he is getting hit and hit cancel and all the offers will disappear for 4-5 cents since a couple guys were all the offers through those levels. Then the sheep high bid, you hit them and get out for a cheap 5 cents. Of course this will depend on what MMs are on the bid. If it is a big guy, you can take your chances, hit the size and play the scenerio I talked about above. If the MMs are pikers then they will bail against the fake scalper size and the scalper will get out as he/she wished. If the MMs are pikers and pull and it goes down because of all the ecn offers, I still look to fade the move long with the sheep who low offers.

I don't know why I am talking strategies on here since we all compete with each other, I just like to talk scalping.
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daniel_m · Apr 13, 2002

This isn't directly related to the reserve size ruling (whatever that was). I still see most MMs refreshing to 1000 so I'm assuming nothing ever changed. Has anyone noticed orders on Bloomberg (BTRD) at the inside showing 100 and soaking up thousands? I've seen it happen often, movement just halts while BTRD's at the inside. When he's at the bid there's about 10 others at the ask trying to get a short and as soon BTRDs get all filled stock tanks a real quick 20, especially on a drop in the Naz. Reliable as scalp as you'll find.

Daniel

Thug_Life · Apr 13, 2002

<i>Bloomberg (BTRD) at the inside showing 100 and soaking up thousands</i>

and INCA. It's probably a mm working a large order. BTRD and INCA seem to be their ecn of choice.

Tradewinds · Apr 13, 2002

ARCA is being used more also, with the "phase out" of REDI.

F1Trader · Apr 13, 2002

I am a scalper and the level 2 box is a necessity. I understand that 100 shares could mean 100 thousand but that is all in the game. Players Beware !!!!

Don Bright · Apr 13, 2002

L2 is just part of the game.....it's how you use it that matters. Of course you have L2, and you look at it when you need to...nothing more, nothing less. Understand that it is used by "game players" who are bluffing, hiding, and manipulating numbers for their own gain....no big deal.....as long as you are "in on the game."....

marketsurfer · Apr 13, 2002

thank you for the detailed answers to my question. don, we met at the online expo in NYC, happy to see you recovered from the surgery.

all the best,

surf