Level II Info

Discussion in 'Trading' started by Axiom, Nov 20, 2001.

  1. Axiom



    I am looking for a good book, tutorial, website, etc. which specifically focuses on the tactical elements of Level II order execution (SuperSOES, ECN routing, SelectNet, pros and cons of each, regulations for each, etc.). From a trade selection point of view, I have always been more of a chart trader so I am not quite as experienced as the classic Level II traders when it comes to routing my NASDAQ orders.

    Let me emphasize that I am really not looking for anything which teaches you how to select trades from Level II, nor anything which teaches you how to read charts or indicators. I am just looking to fine tune my knowledge of Level II so that I can get the best executions on trades I have already selected using charting and technical data.

    I did check out the Elite Trader book reviews, but its hard to tell if any of those meet my criteria. I also know of a lot of 1998/1999 books which go over this stuff, but those are somewhat dated and a lot of them talk more about trade selection as opposed to trade execution.

    Any recommendations would be appreciated. Many thanks in advance.

  2. axiom-
    I don't know if you really need a whole book on that. If you've got the setup and the trade signal how much can level 2 info help you? Most often it's a lot of noise...if you're trading a liquid stock just hit island , it's fast...but if you're moving size it can be a pain in the butt 'cause you can't change the order...in that case use ARCA where you can change the order and even hide the size by using reserve function.
    Maybe I'm not fully understanding your request.
  3. jsmith


    I personally believe Level II is completely useless.
    I believe chart and tape reading is much more important
    skills to master.

    Market Makers are not required to show their real size
    and may put fake bids and asks just to toy with people.
    I believe Level II may have been effective early on but
    people have gotten smarter thus rendering it useless.
  4. Nasddaq II shows who is bidding and offering on the NASDAQ market. Just like a chart, NASDAQ level II is subject to interpretation by the trader. If Goldman(GSCO) is bidding for 1000 shares , are they really "bidding" to buy or just trying to hold the stock up to sell . If I see 50,000 for sale in INCA, is that a hedge fund or Merril trying to make the stock look heavy because they are short and they want to cover? Nasdaq Level II is of help to daytraders , if you are trading for short term profits. If you are a swing or position trader, Nasdaq Level II may not be as useful as short-term trader.
    Try a course that has some good information on NASDAQ Level II like Scott McVickers TradeCourse at www.tradecourse.com/ . It
    would be impossible to go through all the possible scenario's
    on NASDAQ level II . You will have to learn by mentoring and experience.

    Gene Weissman
    Lieber & Weissman Sec., L.L.C.
  5. Axiom


    Thanks to all for the responses.

    To clarify as simply as possible, I am looking for any good resource (book, website, whatever) that can help me understand all my options for NASDAQ order routing as well as possible. Not all the stocks I trade are fast moving, and thus there may be a couple cents difference between the best price and the next tier. Accordingly, having the option to route to a specific ECN or MM can save a few cents per share, which adds up over time when trading in lots of 1000 or more.
  6. Magna

    Magna Administrator

    The best book I have seen on Level 2, order routing, etc. is Rogan LaBier's "The Nasdaq Trader's Toolkit". Also has info on SuperSOES and the upcoming SuperMontage.

    Level 2 can be useful for entries and exits, determining thinness or thickness of a stock (by proper tier reading), and of course Time & Sales. I don't pay much attention to all the jockeying around that the MM's and ECN's do, nor the fake sizes posted (particularly on INCA). But for Nasdaq trading, to dismiss Level 2 completely is just plain silly.
  7. Turok


    >if you're trading a liquid stock just hit island , it's
    >fast...but if you're moving size it can be a pain in
    >the butt 'cause you can't change the order

    Way off subject, but WHAAAT?? You can change an Island order 10 ways to sunday.

    Perhaps you mean that with some brokers you will get charged another ticket if you change your order, but that really isn't an "Island" issue since at many brokers you can't change an ARCA order either without the same charge

    The TerraNova (MB etc group of brokers will allow you to change an ARCA order because they are all owned by the same outfit. At IB you can change anything, anytime since is it per share. None of that is related to Island.

  8. http://www.hardrightedge.com/work/orderrouting.htm

    I hope all the info on Supersoes is correct. I don't think there is any book really addressing SuperSoes. I found L2 pretty much useless if you are not a scalper and it's said scalping is not the best way to make money today , L2 is useful to route your order that's it. The UnderGround trader is not the best book you can get I think, order routing explanation are confusing ( I think they printed some mistakes) and I don't know about these trading tactics with stochastic...
  9. Steve72


    Although I am still fairly new at Daytrading, I do try and use level 2 to help me guage the short term momentum of a stock and to help me decide how to route my order based on who is showing in the L2 box.

    Also, I came across the TradeCourse site that Gene Weissman mentioned in his post while in a virtual seminar for Daytradinguniversity.com. I purchased the course and found it to be an excellent resource for learning level 2 and order routing. It is web based and includes simulated animated level 2 scenarios with narrated explanations which made it much more hands on than reading a book in my opinion.

    By the way for what its worth, the narrator makes it a point on several occasions to emphasize that Level 2 by itself is practically worthless as a trade decision tool, and that it should only be used to guage momentum and help in order routing.
    #10     Nov 20, 2001