Will anyone help me out reading the tape / level2 ??

Discussion in 'Trading' started by Sky123987, Oct 22, 2008.

  1. I've been looking at this for the past few days and really have no idea what to be looking for.

    I wondering if anyone would like to help me out w/ this?


    * I know I'm going to get a lot of snear remarks but oh well
  2. Following the AX used to work years ago. Here is something that I pulled off the web.

    The Players

    There are three different types of players in the marketplace:

    Market Makers (MM) - These are the players who provide liquidity in the marketplace. This means that they are required to buy when nobody else is buying and sell when nobody else is selling. They make the market. In other words, the Market Maker buys and sells the stock to brokerage firms.
    Electronic Communication Networks (ECN) - It is an electronic system that brings buyers and sellers together for the electronic execution of trades. It disseminates information to interested parties about the orders entered into the network and allows these orders to be executed. It is important to note that anyone can trade through ECNs, even large institutional traders.
    Wholesalers (Order flow firms) - Many online brokers sell their order flow to wholesalers; these order flow firms then execute orders on behalf of online brokers (usually retail traders).

    The Ax

    The most important market maker to look for is called the ax. This is the market maker that controls the price action in a given stock. You can find out which market maker this is by watching the level II action for a few days - the market maker who consistently dominates the price action is the ax. The ax isn't always trading the stock in one direction or another. Sometime he is keeping it in a tight range and sometimes he is not there at all and another ax may step forward. Note that there are times where there is no ax present. The point is the ax is the one to watch closer than all other parties or MMs. Many day traders make sure to trade with the ax because it typically results in a higher probability of success. Note that the ax is not static. On any given day any party can be an ax, there may be one ax in the morning and another in the afternoon. If a big order comes onto the trading desk of a firm that doesn't do big volume in a certain name, the ax will take care of it and command the action. An ax can easily use an ECN to hide much of their action. They can and will use fake outs. Keeping an eye on Level 2 will reveal the ax.

    Each market participant is recognized by the four-letter ID that appears on level II quotes. Here are some of the most popular ones: NITE, ETRD, SCHB, TDCM & ARCA.

    NITE - wholesaler
    SCHB - wholesaler
    TDCM - retailer
    ETRD - retail ECN
    ARCA - an ECN

    NITE : This is the king MM of the OTCBB. He intimides traders and other MMs use that to their advantage knowing that he scares them. That's why NITE is the shaker on most stock runs; he is the most common ax. NITE could be on the ask all the time, he could be leading a dip scaring sellers to SCHB and TDCM on the bid.


    Wholesalers : ETRD, HRZG, MASH, NITE, SHWB

    Big Shorters : JIMK, POND, GNET or ARCA (anyone can use GNET, even other MMs because it's an ECN).

    TDCM - retailer MM.


    Biggest OTCBB ECNs : GNET, TRAC & DATA
  3. I hope you get paid per SPAM post, that's 48 in a row!
  4. I pretty much gave everything away at one point or another on this site. Scroll through my old posts. Search for my name spelled with an O, not a 0, as well.
  5. TACGNOL MMID TACG is the worst. Anytime you see that MMID anywhere on the screens, sell ASAP or you will blow out your account if you are long.

    When Tacgnol arrives, expect a sudden major downturn on that specific stock within seconds.
  6. Kris


    That being said... is there a way to scan for MMID's?
  7. oh geez, dont even bother trying to figure out what L2, let alone time and sales is telling you. Its all bull$hit.

    the only thing that matters is the direction of the trade over your time span.
  8. So my P/L in 08... was purely random?