Level 2 Rookie

Discussion in 'Retail Brokers' started by Swoop, May 25, 2001.

  1. Swoop


    Just spent my first day with Level 2 quotes. The software I'm using does not show level 2 quotes as tenths of a cent. It only shows rounded cents. I sent a email to thier help desk, and maybe I'll get a reply ?

    Do some companies only offer rounded cent Level 2 quotes ? If so, who offers tenth of a cent breakdown in thier Level 2 quotes.

    It did help me squeeze a little more profit than I would have made without it.
  2. dlincke


    You must be really desperate if you have to try to squeeze out tenths of a cent with your trading.

    Nasdaq's NQDS feed does not support smaller increments than full cents. Some ECNs (e.g. ISLD) support fractional cents but to see those in your LII your data provider has to integrate the ECN order book with the NQDS feed. I believe Realtick III offers that.
  3. Swoop


    I would not define it as desperate. Fact is the more information you have the better you can act on obtaining a profit. Whats the use of level 2, if not to see what the bid and ask is, the closer you can get to actual bid and ask the better. I don't chase runners. I look for stable stocks that I can squeeze into and out of. What would be the case of caring about price anyhow if you look at it like that. Throw a market buy out there, then follow it with a market sell. If I can squeeze a few tenths more on 10,000 share limit orders every time, then it adds up big at the end of the week.

    I did get a reply back from DTN. They say it will be out in June on their version 2 software.
  4. PKJR


    I will take any day extra 5c on 1000! If I can do it 10x a day that is additional $500. Not bad :)
  5. Cesko


    Correct, it is $500 if every trade you make is profitable and pay no commission.
  6. mjt


    It's true, tenths of a cent can add up. I just can't imagine making any kind of trading decision based on whether something's trading at 32.152 vs. 32.157. I mean, would you actually change your mind about whether to buy a stock because it's a half cent more or less than what's showing on level 2? I know $50 adds up over time, but when you're trading 10K shares at a time, does the half a penny or so actually affect your trading decision?

    I really wish they hadn't gone to tenth of a cent increments. I think it's pretty silly. If you have it in your montage, it can be very confusing. Like the figures above, let's say the 32.152 is the bid, and the 32.157 is the ask, I would look at those two numbers, and look at the last digit on each (the 2 and the 7) and automatically think there was a 5 cent spread, rather than a .5 cent spread. I remember on one stock thinking a 4 cent spread was 40 cents. It can actually break your concentration to have to look at 3 numbers after the decimal. I would prefer to have just 2 digits and rounded off. I mean, come on, we're down to penny spreads, isn't that enough?

    Besides, it's all going to come out in the wash. You buy 10K shares and save $50, because someone's offering stock at a half penny less. Then you sell, and a bidder bids a half cent less, so you lose the $50 back. I just can't imagine any individual over time gaining a significant advantage because they were able to trade in tenths of a cent.
  7. dlincke


    Swoop, and you really expect to be able to fill your whole 10k share order at a single price level of a fractional cent? Good luck. Even on most very liquid stocks such an order will need to be spread over at least 5 cents to be filled completely.
  8. Swoop


    not true, I do it often. High volume stocks is the key.
  9. Cesko


    What's the minimum daily volume of such a stock? (So you can trade 10,000 shares at a single level.)
  10. dlincke


    Swoop, you must be trading stuff that hardly moves like WCOM, CSCO etc.

    There's a lot of high volume stocks that offer much more profit potential (e.g. VRTS, JNPR, CIEN) where you'd have a hard time trying to do that without going against the trend (i.e. offering out into buying pressure or bidding into selling pressure) which does not seem to be your style.
    #10     May 26, 2001