Question about LEVEL II quotes

[Goods]

Not sure what Level II quote systems do or how they give a better market view. Can someone explain it and is it worth bothering with?
Scottrade offers it free with 10 or more trades a month. They also have something called TotalView which they describe as Level II with 15 times more liquidity. This is free with 15 or more trades a month.

Thanks folks

[whodi]

Here is a link that should help you out goods. Level II is extremely important when it comes tp daytrading because it allows you to see inside the stock itself and not just the bid and ask like level I. Without level II, IMO, its like daytrading blindfolded as far as seeing market movements for entry and exit points even though you can look at charts. You still need to see whats actually going on inside the stock as far as the trades and this site should be able to help give you an idea. Level II will show you market makers loading up on buying or selling although as you read this link below it can also be tricky.
http://www.investopedia.com/articles...vel2Quotes.asp

[Goods]

So the Level II screen will show the number of bids/asks at specific prices? I'm looking at it now trying to absorb it.
Can you give me a basic idea of how it shows which way the market will move?
Thanks man.

[The Little Giants]

Well, you want to look at it during the day. Often times, when a stock is having a hard time breaking thru a certain level you will notice there is a market maker sitting on the offer side with a humongous lot.

So, each time the stock runs up to that price with any momentum the market maker will unload a decent amount of their stock and then you have a pullback, soon after another retest of that price, and another pullback etc... That is how many intraday charts are formed. The point being is that you may be able to tell that it is either going to have the moemntum to push thru and decide to sell what you have or even get short or if you feel that the market maker is running out of what he is selling and the volume is still active you could easily see a breakout and buy at that time.

You will visually see the lot size grow or shrink.

Don't make any trades according to level II data until you feel you have a strong grasp for it tho. I would suggest that you papertrade with it until you feel you are seeing things clearer.

[whodi]

Here is a picture of what level II looks like, so you get a better idea. The part that can be tricky is kinda what LG was talking about. If a large brokerage firm wants to unload 500,000 shares, they are not going to show this on the asking price. They may just show 1,000 or even 500 shares for example, but as its being bought, u will see the the market maker symbol stay there and they just keep unloading in small increments until they are all sold. They don't want to flash there hole position to scare traders away because then u know its not going anywhere anytime soon, so if you see the same market maker sitting there for a while, you pretty much can figure out whats going on, at the same time, they might be sitting there buying a lot of shares up slowly and if you watch it carefully, if they selling slows down, you know u can catch a little run. Again, LG brings up a good point, u want to paper trade 1st and even buy an updated book on Level II and you will get the hang of it. If you look at the pic, you see there are a lot more bids and a lot more shares on the buy side than the sell side, thats where you will start understanding that by looking at that, most likely it will be moving up, at the same time, the example is CSCO, which is a monster, a small stock with a small float will be even clearer since these monster stocks don't move so fast. GL on it GOODS.

http://www.scottrade.com/scottradeel...q_level_II.asp

[JeromeFromSoutheast]

level 2 is pointless unless you're scalping for 5-10 cents a times.... its also unreliable in the sense that it's never accurate. If you place an order for 1000 shares at 5 cents below the best bid, you don't have to show your full order. Most direct access shops let you select how your bid/ask shows up on the level 2... often times you'll find resistance where 1 guy is holding up the stock trying to offload 10k shares.... but level 2 only shows 100.... in essence the guy is just refreshing his ask at 100 share increments. The reason people due this is to avoid "Scaring off" the buyers (or sellers, in reverse). If someone placed 50k on the ask and advertised it, buyers would run away

[Goods]

Watched it a bit today but wasn't clear why it moved how it did. I'll pick up a Level II book shortly.

Thanks for the info fellas.