If you would like answers to your questions about program trading then please click here.

NASDAQ Level 2


Are you using Level II?    No?    Still on Level I with your broker?    Or, don't have a clue?

Here is what you need to know if you are going to be successful at day trading.

NASDAQ provides three levels of service for stock quotations on their otc system:

Level I displays the best bid and the best offer for a particular stock. It was designed for stockbrokers to give them a good general indication of a stock's current market.  But because of program trading and other fast market fluctuations, this information may not be accurate for you.

Level II displays all of the bids and all of the offers and the actual size of those bids and offers from every market maker in a particular stock.  It was designed for broker/dealer firms to see what all of the market makers were doing with a particular stock at the exact same time, and therefore much more of a reliable indicator of a stock's true market and worth.  But, only in the past few years has Level II become available for use by the general public, usually through other broker/dealers that specialize in electronic day trading of NASDAQ securities.  And this is a very big deal if you are flipping NASDAQ stocks.

Level III does everything that the other two levels do, plus it allows a particular market maker to go into the system and change his bids and offers and size on the stocks in which he makes a market.  A market maker can make those changes at any time, no matter what is quoted on Level I or Level II.  So if you have seen the price and size change on Level II right before your eyes and for no apparent reason, remember that all market makers stay glued to the S&P 500 Futures Contract price first and foremost.  For more information on that, click here.

Most day traders now use Level II screens and pay special attention to what ever GSCO, SBSH, and  MLCO are doing in their stocks.  But the best four letter symbol that the most profitable day traders use is not even on a Level II screen.  And there is only one firm in the world, whose entire research effort and day trading research is based on it.

We are the firm.  The symbol is PREM (@PREM, $PREM, PREM.X, $SPS, $SPINX).

Want to know some more NASDAQ Day Trading Secrets?   Then click here.

Want to know which Level II Market Makers we watch?  Then click here.

Looking for some more Program Trading Indicators?  Then click here.

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