If there were such a thing as a foolproof method of making a killing in the stock market, you probably wouldn’t be reading this article and I probably wouldn’t be writing it—we’d each be off cruising the Caribbean in our private yachts. While that may be a bitter pill to swallow, the going down may be made easier by the following: there is information within Level II quotes, that will help you make more informed stock trading decisions, provided of course you know what to look for.
Level II quotes provide investors with detailed stock price information that’s far more comprehensive and in depth than a standard Level I stock quote. In addition to standard Level I information, Level II quotes provide traders with participating market maker, price and trade size information. By their nature, Level II quotes provide more insight into short-term activity.
Level II quotes aren’t a precise science. There are pitfalls that even an experienced trader can stumble into. For example, many of the big market makers take pains to conceal their buying or selling activities to make anticipating their moves difficult. For this reason and many others, it’s important to understand that Level II quotes, on their own won’t help you entirely, however, they can be used together with additional analysis to help make more informed trading decisions.
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