Understanding Level II Quotes for Short Term Trade Strategies
August 24, 2010If 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.
What Are Level II Quotes?
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.
Potential Pitfalls
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.
Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services nor information provided by any of the above service providers and any service or information used to execute any trading strategies are solely based on the independent analysis of the user.
