Level II is a general term for a range of stock data that can provide enormous insight into a stock's price action. It can tell you what type of traders are buying or selling a stock and where the stock is likely to head in the near term.

Level II quotes can also help you better understand 澳洲幸运5开奖号码历史查询:open interest in♚ a given stock as well as market d꧙epth and momentum.

Levꦆel II data is available b✨y subscription from Nasdaq.

What Is Level II?

Level II is essentially the 澳洲幸运5开奖号码历史查询:order book for stocks that trade on the Nasdaq exchange. Orders are placed through many 澳洲幸运5开奖号码历史查询:market makers and other market participants.

Level II displays a ranked list of the best bid and ask prices from each of these participants. This gives you detailed insight into the price action. Knowing exactly who has an interest in a stock can be extremely useful, especially if you're 澳洲幸运5开奖号码历史查询:day trading. 

Here is what a Level II quote looks like:

This tells us that UBS Securities is buying 5,000 shares of stock at a price of 102.5. The figure for numbജer of shares represents the size of the current order, which you determine by multiplying by 100 (50 x 100 = 5,000).

Players in the Marketplace

There are three types of players in the marketplace: market makers, electronic communicatiꦏon networks, and wholesalers.

Market Makers (MM)

These are the players who provide 澳洲幸运5开奖号码历史查询:liquidity in the marketplace. They're requir🥂ed to buy when nobody else is buying and sell when nobody else is selling. They "make the market."

Electronic Communication Networks (ECN)

澳洲幸运5开奖号码历史查询:Electronic communication networks are computerized order placement system𒐪s. Anyoඣne can trade through ECNs, even large institutional traders.

Wholesalers (Order Flow Firms)

Many online brokers sell their order flow to who♐lesalers. These order flow firms then execute orders on behalf of online brokers, usuꦐally retail traders.

Each market participant is recognized by the four-letter ID that appears on Level II quotes. Here are some of the more well-known participants.

The Most Important Market Maker

The most important market maker is called the ax. They control the price movement of a given stock. You can determine which market maker is the ax by watching Level 𝐆II activity for a few days. It's the market maker who consistently dominates the price action.

Why Use Level II?

Level II quot𒊎es can provide a lo🐷t of information about a given stock:

• You can learn what kind of buying is taking place (retail or institutional) by looking at the type of market participants that are involved. Large institutions don't use the same market makers as retail traders.
• You can discover when institutional players are trying to keep their buying quiet if you look at ECN order sizes for irregularities. These can mean that a buyout or accumulation is taking place.
• You can greatly increase your odds of a successful trade by trading with the ax when the price is trending. The ax provides liquidity (but its traders are out there to make a profit just like everyone else).
• You can get a good idea of when a strong trend is about to come to an end by looking for trades that take place between the bid and ask. These trades are often placed by 澳洲幸运5开奖号码历史查询:large traders who take a small loss to make sure that they get out of the stock in time.

Tricks and Deception

While watching Level II data can tell you a lot about what's going on in the market for particular stocks, be aware that there's also the potential for a lot of deception. Some market makers use tactics to hide their trades and actions to throw other participants off.

Here are a 🦄few of the most common tricks🔜 played by market makers.

Hiding Order Size

Market makers can hide their order sizes by placing small orders and updating them whenever they get a fill. They do this to unload or pick up a large order without tipping off other traders𒀰 and scaring them away. Nobody is going to attempt to push through a 500,000 share resistance but traders may still thi🦄nk it's a beatable barrier if a persistent 10,000 share resistance is seen.

Order Sizes and Timing

Market makers occasionally try to deceive other traders using their order sizes and timing. JPMS may place a large offer to get 澳洲幸运5开奖号码历史查询:short sellers on board, only to pull the order and🌞 place a large bid. This will🌱 force the new shorts to cover as day traders react to the large bid.

Trading Through ECNs

Market makers can also hide their actions by trading through ECNs because ECNs can be used by anyone. It's often difficult to tell whether large ECN orders are retail or institutional.

The Bottom Line

Level II stock data can give you unique insight into a stock's price action, supply and demand, and levels of support and resistance. But there are also a lot of things that market makers can do to disguise their true intentions.

The average trader shouldn't rely on Level II quotes alone. They should use Level II in conjunction with 澳洲幸运5开奖号码历史查询:other forms of analysis when determining whether to bu𒆙y or sell a stock.