Zuizo, I totally hear what you have to say about the illiquid plays. Using TA to find my levels along with L2 to guage momentum in these areas has worked very well for me on the highly liquid plays. So let's talk about these "..very predictable level II patterns, that can be played with high % probability...," as well as the "head fakes."
D1, A proper explanation of high % probability patterns and head fakes would need an aweful lot of *words*... the market is fluid and dynamic, all of the many components and nuances that make up the "whole" picture, and the part which level II plays, would constitute me writing a discourse... and I am not going to put that much time or effort into this topic. Level II is practically useless for stocks trading over 3mil a day. Level II becomes more practical/useful for stocks that trade under 750K ADV. The longer you observe, the more you observe, while your mind remains silent and open, you WILL see patterns emerge in the dance of supply and demand. Best. -- Z
I just got fooled all the time when I saw big limit orders at either the bid or ask. Tough for me to determine if it's real buying/selling or simply a trick to make me think that there is real buying/selling. Using time and sales simply lets me focus on the actual trades taking place, not intent or deceit. Also, it's less data to look at. I suspect that's why it helped me.
Zuizo, Yeah, I know that it would take too much effort to really address my questions....I do suppose that it would be so much easier to discuss and comprehend the oh so significant imperceptibles of L2 play if I was to sit side by side(I wish) with someone who has tons of experience reading it. I can only assume that I am on the right path with what I am doing becasue the L2 games are starting to make sense. For sure the true worth of it all is not L2 alone but how it relates to the prints.(ahh, hearing the signal sound through all that noise!!) I have learned everything on my own thus far, sometimes trekking down the long road, and was hoping for any such insights that may kick me up this learning curve. I feel that I would benefit from the smallest of hints, or words of wisdom. I do know that talking with other likeminded traders has helped understand other similar topics in the past. Thanks for any such insights.
Yes, it is very difficult to discern a trick from a truth...or maybe even just noise. L2 is intent(whatever it may be), while prints are fact. But then again I believe that even they can be used to deceive.....eg-sometimes I think prints are not posted in a timely manner. Whatever works I suppose. If these big limit orders were just a trick then I am sure then run the risk of getting caught, espeically on the inside. I have recognized "fake bidders/offers" in the past and often wondered if they were the ones using a different ID to take the otherside. You can't con a con right ?.....yeah
I have found Level 2 to be helpful. A few suggestions - 1. Don't pay attention to big size showing, this is used to trick you. 2. The real big size is (usually MMs and not ECNs) showing 10 (1000 shares) or less. Look for many prints at that price with them staying put at their price. This indicates they have reserve. Look for MMs that do this alot in the stocks you watch, and trade on the same side as them. 3. Do pay attention to big size moving up/down in price, this is more likely to be real buying/selling interest rather than a trick. 4. Look for ECNs (INCA usually) crossing the market. They are doing this more often since Supermontage and a crossed mkt gets you at least an extra .01. Not much, but nice if you are scalping. 5. Watch T&S in tandem with L2. If prints are going off at the price, if the bids/offers are being taken out. No T&S prints? - they are being pulled (not real buying/selling interest). 6. If your charts are telling you something, don't do the opposite based on what the L2 looks like. Charts aren't the most reliable, but are more reliable than L2. 7. Realize that daytraders are out there that will join a bid/offer if there is a wide spread. You can bid/offer, after they join you - cancel your order and take them out. If enough people do this, maybe we can get rid of the "liquidity traders" for good! Nasdaq gaming is great fun!
Daniel_M referred to the 'Soes bandits'. I hadn't (and still don't) any idea what this is all about. Google referred me to http://www.rhymelines.com/soes_bandits.htm Freealways
Don't the MM's purposely delay the prints just to give you another head fake? What are the requirements, if any, on the timeliness of posting prints? How long are they allowed to delay? Thanks for any replies in advance.