Real Nasdaq Level Ii, Fake Nasdaq Level Ii?????

Discussion in 'Trading' started by kapama, Sep 30, 2007.

  1. kapama


    I met this experienced trader who was talking about how he was using Nasdaq Level II platform and talking about his strategies and he told me that not every Nasdaq Level II trading platform is same and some of them are fake and some of them are real.

    According to him, if you utilize the Nasdaq Level II trading platform of Scottrade or other smaller brokerages like ZECCO, the bids and asks you are seeing on the screen are not necessarily asks and bids of real people but in reality prices are manipulated (marked up) by the brokerage.

    In other words, when you sell, you are selling 2 or 3 cents less than what the market really bears at that moment. The difference is pocketed by Scottrade. He mentioned that they monitored different Nasdaq Level II platforms at the same time side by side and they had all different prices for the same volumes for the same stocks.

    He also added that the only true Direct Access platforms (Nasdaq Level II) where George's bids and asks meet John's with no middle man manipulation is Fidelity, Terranova, Cybertrade and Tradestation Direct Access Platforms.

    Anyone has an idea if this is true or not?

    Can you recommend any brokerages that offers low commissions for unlimited shares and REAL Nasdaq Level II platform?
  2. I'm pretty sure brokerages don't mark up, but some Level IIs might not include quotes from all market makers and ECNs. Direct Access brokers will generally have TotalView, which shows you every single quote from each ECN.
  3. kapama


    How come you are so sure? Are you an experienced trader or do you work one of the brokerages?

    The trader that I was listening to was an old guy with years and years of experience in this. He said he monitored several direct access platforms next to each other and they have all different bids and asks.

    But terranova fidelity traderstation and cybertrade were all same and according to him these comapnies provide real level II.

    So who is telling the truth? I am confused.
  4. I've been in futures markets for 28 years and have been investing in stocks for 28 and trading them for about 6.

    It might have something to do with connection times with the brokerages. I'm not sure exactly how it works, but if your connection is directly to the ECN or exchange it'll be faster and more responsive (although fractionally) than if it processes through your brokers servers, which may take a half-second to process and dissemminate back to you, the trader.

    What kind of trader are you? If you're a scalper, sure this may matter to get the 1 cent ups and downs, but just for a plain old day-trader who makes trades for as few as 2 minutes to upwards of 2 hours, this shouldn't really affect you, too much.
  5. vectors101

    vectors101 Guest

    the fact that these exchanges even charge fee for data or getting quote or even pay for bullshit level II quotes really says something about these brokers and exchanges.

    they want to suck every penny from I'm stupid.

    i know it's bullshit and they make most of their money on trading against you an the spread.

  6. vectors101

    vectors101 Guest

    the small fee you pay is just another way to take your cost them nothing to provide those bullshit level II quotes.

  7. vectors101

    vectors101 Guest

    the market makers (brokers) broker/dealer put fake bids and ask in level II or market. everytime a trade takes bait,,,they make more money than you fucking commission

  8. vectors101

    vectors101 Guest

    they are machines who make the market. same guy(1 market maker) on the bid and ask. especially in afterhours.

  9. Dustin


    There are many brokers that have direct access LII...Tuco, Bright, Assent, Echo, Genesis etc. These will all offer per share pricing of .3-.5cps for most clients.
  10. I used to trade stocks exclusively a number of years ago and I found Level II quotes to be absolutely useless because of the games market makers play, especially on thin stocks. If the stock is heavily traded, like AAPL, the sheer volume renders Level II useless. I traded OIH for a while and went thru times where Level II was a big help but it only lasted for a while. There were periods during the summer when fake orders seemed to appear constantly. They were always in multiples of 1000 shares above or below the price, depending on the direction the stock was heading. It was as though a new specialist was working the stock to fill in for the one who just went on vacation or called off sick.

    If you don't pay for Level II don't waste your money sub'g to it. If you get it for free use it loosely. It has very little value.

    Oh, and if you decide to trade futures it's even more useless. The only thing DOM is good for is placing orders.
    #10     Sep 30, 2007