Great posts and thanks. One of the things the prop firm I'm considering teaches is how to use Level 2 data in making decisions. For that reason, I started looking on my own to see what I could find. It seems it's a lost art due to the changes in how markets work today. Beyond telling if a stock is thin at the time of the scalp, I'm not sure how much can be trusted on the Level 2 screen. From my reading and research it seems the Time/Sales may be far more important to watch as it shows actual sales. I've yet to find any book that really helps with Day Trading. In fact, the best books I've read on trading in general are William O'Neil's book(s) and Reminisces of a Stock Speculator neither of which were written for scalpers. The lessons about stocks making new Highs tend to go higher and making new Lows tend to go lower is the grand lesson that I use when scalping and refining that principle has done me more good than watching the MAs, the Oscillators and all the rest of it combined. Well, that and minimizing losses of course. I used to put so many indicators on my chart. Now, I feel more comfortable with just price action. I do look at Time/Sales, L2 but mainly to verify the stock isn't too thin. I have no way, at least not yet, to use it for anything beyond that. I do watch other things outside of the chart like market direction for example but nothing seems a better indicator for that beloved .20 move than price action itself. The prop firm I'm considering has given me free access to some of their educational videos and it has really helped me refine my approach. Yet Level2, Time/Sales is still a mystery. Maybe it's not the holy grail I thought it was and wanted it to be. Thanks for the input.
In the level 2 you can see the games the big boys are playing... you can see the expectations of the market... TAS & Charts are history. Level 2 is possibilities.
Great. Now please tell me how to read it in such a way as to actually use the information. Maybe give a examples of how you have know or been able to confirm trade entries and exits using L2. Please see my original post that started this thread before you do. I've spent a great deal of time watching L2 data. Just when I think I know the stocks direction, it changes and I realize I didn't know. Add to that the fact that some trades are hidden and all the other games that MMs play, how is it useful? How can you tell what is really going on? Not trying to sound ungrateful for your post, but I have very specific questions about this topic as pointed out in the original post. I'm also becoming more skeptical as to the real use of L2 data for the scalper in today's markets. But I'm open to new ideas. In fact, I'd love for you to educate me otherwise on the use of L2 data. Kind regards, Randall
I'm no expert but I did hear or read that if the bid or the ask expands a lot, you need to look at time and sales to confirm whether it really represents buying or selling or not. But, I believe I already mentioned in this thread there is a video at trader's library on level II and some details in the Oliver Velez book. So, I think it's worth to look at those as well.
Great post!!! I completely agree. Also, it's easy to fake TAS, but you can't fake the orderbook. Sure, orders can cancel on a dime and the situation can change, but you can always swipe the liquidity before the orders cancel. How many hours have you spent watching the LII quotes move around? I have spent over 2000. Maybe it took me 250-300 hours to start to sometimes see a clear picture.
There's nothing like getting filled on your "fake size"in a single print... And yeah... it sure takes many hours to understand what the players are doing with the bluffs, reseves, hidden liq... etc...