Level II

Discussion in 'Trading' started by squirrel, Mar 16, 2001.

  1. squirrel


    Hey everyone,
    Still learning ,,still studying,,, I have one question as I have just been watching and studying level II screen.... Question is ,,,, When you are in a heavy trade and watching a fast or semifast market in one stock,,,long or short say 8 mil or better a day volume....on L II,,,,when you are watching the bid side,,, are your main concerns or focus more on the buyers of that stock or the people that are selling that stock....likewise with ask side... just would like to know a little psycology that goes into watching what is happening.... I realize this is somewhat of a twofold question,,but maybe you could help clarify a little for me,,,,,thanks
    I am editing this question as it is hard to relay what I am trying to ask here without being face to face with someone.... The way I look at it,,and the way I realize it will be once I start trading,,,,looking at this screen.... and TOS,,,, where if there is a lot of capitol invoved,,,, do you ignore the technical analysis.....and just try to read the mass,,,,when you have 10,,,20,,, 30 thousand on the line here,,,,this is no game.... crowd psycology has to play a huge part in this .... Is it too easy to over analyze what is happening and how do you control it if this is what you find yourself doing,,,,,there is such a wealth of info out there,,,,,don't you find yourself ignoring all this info,,,,and basicly just going back and reading the crowd ???? I see so much about what you all are doing to increase your odds in this market,,,,,so many great ideas..... Does it really help in the long run....or is it the basic principles that profit you all in the long run....Think about it
    I am basicly trying to build a plan to trade and make profits on ,,,as a beginner,,,just like you all did in the beginning... new ideas come and go... Do you all find that a certain percentage of your profits are centered around the basic strategies that you learned when you were in your initial learning curve,,,that those are the steadfast rules that consistantly earn you profits....that got you where you are today?? If someone just threw a level II screen in front of you.....nothing else.....are you lost without the charts,,,,,without the news,,,,without futures indexes,,, could you make a living just by reading level II alone ?? thanks for the input
  2. dlincke


    You can't trade successfully based on Level II information alone. Level II is useful to judge execution risk, micromanage entries and exits, and to find out where to best route your orders, but as a trading strategiy tool it's of very limited use. And those people scalping for teenies based on Level II will have their game taken away once Nasdaq goes fully decimal.

    My advice to you as a beginner is to focus on technical setups and ignore Level II as much as possible because it will only prematurely shake you out of perfectly good positions. IMO it's also not a good idea to try starting to trade in the smallest time frames. Contrary to popular belief among many newbies trading larger timeframes is a lot easier since there's much less noise.