Level 2 quotes is the term given to enhanced market information that is unique to the Nasdaq, OTC BB and Pink Sheets because, unlike NYSE or AMEX aka NYSE MKTthese trading markets handle buy and sell orders via an electronic dealer market. Level 2 quotes use to contain the best means by which a day-trader could trade stocks directly with market makers.

However when you consider the growing participation in ECN's and SuperMontage Total View described under "Real Time Quotes - Explained" this is no longer the case. Level 2 quotes, and direct trading using Level 2, is only one of the major ways that shares of stock are now being traded on Nasdaq and the OTC markets.

Unless you are a day-trader, Level 2 quotes are not likely going to help you trade stocks. But knowing about Level 2 access and how it functions is important and helpful in the sense that you will not become confused or fall victim to sites that make you think you do need it just so you buy their services. In additioneach person who successfully trades stocks are creative thinkers, and may find successful uses for Level 2 quotes that this author is not presently aware of.

In additionone day you may choose to try your hand at day-trading. By easing yourself into this subject, as revealed on this page, and the previous page on Real-Time Quotes, you will be feeding your mind the information it requires to make sense of all this in the meeting of your investment goals.

In an electronic dealer-marketmarket makers dealer-brokers for each stock actually create or originate bid and ask quotes or orders and directly trade with each other and other market participants providing trade liquidity for the stock.

In what was just described, Market-Makers create liquidity for that stock, thus "making the market" for that stock. Liquidity for the stock is important so that other traders may buy and sell shares of that stock with greater ease. The NYSE and AMEX aka NYSE MKT are auction marketsso no market-maker or dealer-broker activity to see on those exchanges.

In an auction market, the orders are created by the traders themselves and one broker-specialist manages all trading activity for a stock - He matches and manages the stock orders of the traders. Auction markets also have market-maker type traders for any given stock called 3rd market makers.

Such traders, usually firms, trade stock with others on the open market with their own money Note that Level 1 Quotes was previously discussed in "Real-Time Quotes - Explained". Level 2 quotes, in addition to Level 1 info, shows the actual trade orders of market makers for a stock and the identity of those traders.

Real-time streaming quotes for the TSX and other major exchanges - The Globe and Mail

Level 2 quotes shows the viewer of a Level 2 Screen how the prices are arrived at origin for a current share price of a stock and the identity of the dealer-brokers, ECN's and Order-flow firms wholesalers that trades on behalf of a retail-broker for the best prices. I will now go into more detail on exactly what Level 2 quotes is and how it is of value to day-traders. In an electronic dealer marketbroker dealers called market makers create bid and ask prices that compete with each other to buy and sell shares with each other, and with other brokers-wholesalers, and with ECN's.

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Day-traders and sometimes swing traders possess and require Level 2 Quotes in combination with Level 2 trading desks through DAT software provided by their brokers so they are able to track nano-price trends and volumes at their origin the Market Makers and plan quick in and out trades on these trends.

Many such trades are filled each day by day-traders. If you personally had access to Level 2 Quotesyou would be able to see the identities and bid and ask prices of these broker-dealer market makers along with the volume of their trade orders. Make a note of the fact that Level 2 Quotes by itself does not give you the ability to actively trade with market-makers; rather, it just gives you the ability to see the trading activity of Market Makers, ECN's and Wholesalers as they actively trade for that stock.

To actively trade using Level 2 Quotesyou also need a DAT Trading Desk from your broker and access to trade directly on the Nasdaq. The SuperMontage order routing system handles all orders, and it routes each order to the appropriate financial market - the market s you specify - with high speed and efficiency.

Nasdaq Level 2 orders use to be handled by the following Nasdaq routing systems: SOES, SuperSOES, and SelectNet. SuperSOES Super Small Order Execution System and the SNET NASDAQ SelectNet System are ECN routing programs owned by NASDAQ.

These two programs use to allow individual traders direct access to the Nasdaq and place trades directly to the Market Maker of their choice for a stock just like Level 3 access brokers. As usual with all ECN Direct Access Trading DATyou need Direct Access Software DAS provided by your broker, and you always have access to streaming Real-Time quotes.

Using SNETyou had the choice to broadcast your order to all market makers, or to all participants of an ECN, at once so as to capture the best current price from all available financial markets. Terminating a trade in progress during those 7 to 11 seconds was not possible and therefore could be risky to use since there is really no way to tell which way the market will turn in 7 to 11 seconds. Obviously this fast pace trading is only important for day-traders and sometimes swing-traders.

SNET was not the only means by which smart order routing was available. Automated Programmable Algorithmic Trading Software provided by your broker or other sources also used, and still uses, smart order routing systems that are extremely fast and complex and are able to scour some or even all ECN's, Black Pools, Major Exchanges and even Local Exchanges for the best bid and ask prices for a stock in seconds of time.

Such trading software as just described is designed to trade automatically or semi-automatically according to the technical perimeters the trader programs into it. Intelligent Algorithmic Trading Programs can Learn: The better trading programs are actually able to learn what works and what doesn't to achieve the trader's desired result.

Such software keeps improving and the prices are becoming more affordable. Online brokers could also legally use SuperSOES to place trades for their clients - stock traders like you and me. The SuperMontage Routing System now efficiently and swiftly handles all orders once only available through the SOES, SuperSOES, and SelectNet SNETand does so extremely fast. Level 2 Quotes of dealer trading activity from these computer networks was once only available to licensed securities agents, but is now available to private or retail investors through many websites and broker account services sometimes for free but usually for a fee.

Access to Level 2 quotes trading is different when compared to DAT real-time access to the NYSE and AMEX aka NYSE MKT because NYSE and AMEX aka NYSE MKT operate as auction markets not dealer-broker markets.

Nasdaq, OTC BB and Pink sheets are dealer markets. To gain another in depth review of this difference between the Market-Dealer Network, Auction Market and ECN's, see:.

Nasdaq Trading Penny Stocks. Level 2 Sbi foreign exchange rates aud as seen in the Nasdaq and OTC Markets is different when compared to: Nasdaq and OTC stocks traded on Electronic Communications Networks ECN's allow trading of stocks from all major exchanges and even OTC stocks between all traders, including brokers, broker-dealers, large firms, and mutual funds.

Other differences between Level 2 Quotes and ECN's is that ECN's display all actual buy and sell order lots including the number of shares in each lot for all trading earn money online freelance writing the ECN.

This is called unlimited market depth. ECN's provide a history of buy and sell order lots over a period of time. The detail of such trades and the depth of the history of trades will depend on the ECN you are viewing, the options you are willing to pay for, on your DAT trading desk. Only day-traders would be aware of, or concerned with, or need to know the differences between Level 1 quotes, Level 2 quotes, ECN trading data and the work at home pharmacist jobs ohio quotes as seen on many free financial sites like Yahoo Finance or Google Finance.

Why are Level 2 quotes potentially helpful to day-traders? Day traders initiate and complete trades on fractions of percent moves in share prices in a very short space of time many times a day. With level 2 quotes, a day-trader can track the potential trading trends of broker-dealers and the other participants and hopefully profit by their trading. Professional Day-traders use sophisticated intelligent trading software to compete with intelligent trading platforms of how to buy dassault systemes stock day-traders, broker dealers, firms, and wholesalers.

Level 2 Quotes are necessary for day-trading to be effective in electronic dealer-markets. The algorithmic programs used by most day-traders are programmed to scour the financial market for the best prices of a stock and execute trades when specific technical indicators or perimeters are met.

Level 2 information for Best manual forex trading systems, OTC BB and Pink Sheets stocks allows day-traders to see in streaming real-time the identity of all the market makers, ECN's and Wholesalers trading on a stock, including their competing bid and ask prices. All of this Level 2 information is displayed on websites offering Level 2 quoting.

A day-trader with an active direct access to a Level 2 trading platform level 2 trading desk provided through his broker can now target a stock, see all the market makers and other market participants and their trading activity for that stock, plan trades accordingly. The day-trader can then shop around and buy or sell shares from competing market makers who are offering what the day-trader interprets as the best quote level 2 stock quotes tsx for shares of that stock at that point in time.

Programmable algorithmic smart trading software a Must! As noted earlier, most of such trading strategies buyback binary options accomplished by successful day-traders using programmable algorithmic smart trading software.

Such day-traders regularly fine-tune the trading perimeters etrade transfer out fee their trading programs to reflect the particular day stock option skew stock they are trading at the time.

Without such programs, the day-trader cannot effectively trade against the high speed and sophistication of the dealer-brokers and other market participants. Day-traders trade on a variety of financial markets at once to attempt gain the edge - the best price possible at a point in time. As well, many day-traders, besides trading just on Nasdaq through Level 2, will simultaneously scan ECN's and even Black Pools for the best price they are seeking on a particular stock at a point in time.

The Extraordinary Penny Stock Investor trades on another level beyond the white noise of such quick trades on fractions of a percent of the day-traders, dealer-brokers and other market participants.

The trading strategies of such Extraordinary Investors do not require Level 2 Quotes knowledge at all. Such traders are not trading directly with or against broker-dealers for the best bid or ask price within tenths to millionths of a second frame. Any serious day-trader will require DAT Level 2 trading access coupled with a DAT smart routing system and intelligent highly advanced algorithmic trading programs, because that is what the big player day-traders including mutual funds, ECN's and other large trading firms and dealer-brokers use to obtain the pair trading strategy r. This does not put call parity in options that day-traders do not day-trade NYSE and AMEX aka NYSE MKT shares.

Day traders must implement different strategies for trading on an auction market. A closer look at the Level 1 screen compared to the level 2 screen how to make money owning a coffee shop what information you would see: You can see this activity displayed by typing in a ticker symbol of a stock on any financial website like charts.

Introduction to level 1, level 2 and time and sales data

Level 2 screensas previously discussed, provides much more information about the stock, including. What has just been described about market maker trading activity is not an accurate description though.

Not accurate because what you see on the Level 2 Quotes screen of market maker trading activity is not complete - you will not see all the trading activity of market makers or the other major participants.

Market makers play tricks on day traders and other market participants by hiding trades they make or hide the volume of shares traded to gain an advantage over traders and their trading software to make a profit.

Market Makers are in the business of making a profit off of other traders and also to keep prices of a stock stable and liquid. Part of the strategy of market makers is to prevent other traders with level 2 Quotes from learning about all of their trading activity. They do this to confuse other traders about trends changes, and turn the tables on them, making profits off of their confusion. Then, after getting the desired result, they turn around and cancel the order and trade just the opposite.

When broker-dealers trade some of their shares on an ECN this creates problems for day-traders in implementing their strategies.

No matter how complex, intelligent and efficient a day trader's programmable trading software is, it will always be flawed and produce errors and losses because not all the data is present due to this trickery by market makers and other participants.

Hard to track Market Maker secret activity on ECN's. ECN's are the same networks where you or I, and many other retail investors, could trade stocks using DAT broker provided software.

On an ECN ATN Electronic Communications Network Alternative Trading Network the individual traders, brokers, day-traders, institutional investors, and dealer-brokers all trade without their identities revealed; so, attempting to locate who the dealer brokers might be that are trading on one or many ECN's is not accurate. Since the market makers' ECN transactions cannot be tracked by level 2 softwareday-traders and swing-traders are pretty much in the dark.

There is no clear easy way to make successful day-trades with Level 2 Quotes because of this trickery. Due to the tricks market makers play, technical software, algorithmic trading programs, and even your own logic will be flawed in discerning successful trades because all the facts of the trading activity of market makers is not accounted for when using Level 2 Quotes.

Summary of Level 2 Quotes compared to DAT Real-Time access to a non-level 2 exchange so far. The average is about 14 market makers per stock listed on the Nasdaq but could be as many as 42 or more market makers on fast moving stocks. No competition between specialists. Final summary and A few extra bits of info that you may want to be aware of. The average market makers per stock is You can see this for yourself by viewing Level 2 Quotes.

This information may be used to identify trading patterns for each market maker and could identify potential trends before they happen. In reality, this does not work as perfectly as hoped for, since market makers will attempt to trick traders - as described earlier on this page. All of this order activity is seen on Level 2 quotes.

If you have access to level 2 Quotes but have your orders filled by an online broker, then you might wonder why you didn't get a particular price, or got a better or worse price than what you see quoted by one of the market makers. The reason is that any one of the market makers may be filling your order.

Your online order does not necessarily go to the market maker with the best possible price per share. You do not have to worry or fret about how a stock is being traded in seconds of time for profit from minuscule moves in share prices. Why not be concerned? In this way, you cleanly avoid all the white noise and sophisticated day traders and market makers play. You avoid the highly intense games so common in day-trading.

You are trading on a different band width so to speak. You have now completed this study on Level 2 quotes. On the next page you will be given a very brief comparison between Level 1 Quotes and Level 2 Quotes.

This lesson is short and simplistic and quite effective in getting the point across of just how important each one is for the Extraordinary Investor.

Level 1 and 2 Summary. Level 2 Quotes Do You Need it to Trade Successfully? Why is this information important to day-traders? To gain another in depth review of this difference between the Market-Dealer Network, Auction Market and ECN's, see: Nasdaq Trading Penny Stocks Level 2 Quotes as seen in the Nasdaq and OTC Markets is different when compared to: DAT real-time access to NYSE, AMEX aka NYSE MKTand ECN's Nasdaq and OTC stocks traded on Electronic Communications Networks ECN's allow trading of stocks from all major exchanges and even OTC stocks between all traders, including brokers, broker-dealers, large firms, and mutual funds.

Level 2 only provides the best price for orders only by market makers. The market maker typically plays this trickery by: On ECN's all traders are equals on the same field. No Level 2 quotes. All trade orders are matched and filled automatically and anonymously by ECN software.

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Summary of Level 2 Quotes compared to DAT Real-Time access to a non-level 2 exchange so far In Level 2 quotes: You have now completed this study on Level 2 quotes On the next page you will be given a very brief comparison between Level 1 Quotes and Level 2 Quotes. Please pay it forward. Home Trending Stocks Investor Advantage Stock Market Basics Disclaimer Technical Analysis Fundamental Analysis Pennystock Trading Risks Hot Stocks List Stock Market Real-Time Quotes Technology Stocks Pink Sheets Canadian Stocks TSX Venture Trading Penny Stock Trading Penny Stock Broker SiteMap.