Dark Pool Question

[globaltrdr]

HOW MUCH DOES HIDDEN ORDER FLOW IN DARK POOLS IMPACT THE SUPPLY/DEMAND ANALYSIS IN LEVEL II TRADING?:innocent:

 

[Trader333]

Difficult to say because as you have commented it is hidden but this is just the tip of the iceberg. MM frequently only show a size of 100 when they are unloading or buying thousands more and just keep refreshing their quote.


Paul

 

[globaltrdr]

Difficult to say because as you have commented it is hidden but this is just the tip of the iceberg. MM frequently only show a size of 100 when they are unloading or buying thousands more and just keep refreshing their quote.


Paul

IT'S SOMETHING I FIND VERY INTERESTING. THIS RIGHT HERE DESTROYS THE EFFICIENT MARKET HYPOTHESIS..

 

[Trader333]

I used to use Level II extensively and I know that this happens and if you are skilled there are ways of spotting it. To be honest Level II is no longer the Holy Grail that it was at one time and I stopped using it a long time ago because I didn't need it to be profitable when trading US Stocks. Many others did the same and moved on from it.


Paul

 

[globaltrdr]

I used to use Level II extensively and I know that this happens and if you are skilled there are ways of spotting it. To be honest Level II is no longer the Holy Grail that it was at one time and I stopped using it a long time ago because I didn't need it to be profitable when trading US Stocks. Many others did the same and moved on from it.


Paul

IT SEEMS T0 ME THAT TRADING HAVE DEFINITELY GOTTEN MORE MECHANICAL AND THAT RIGHT THERE MAKES IT EVEN MORE REWARDING.:clap:

 

[maxima]

I used to use Level II extensively ...is no longer the Holy Grail

What is Holy Grail these days? :innocent:

 

[AnEdge]

Level II used to be really useful over 5 years ago...but since the changes in the last few years have now reached a critical mass whereby it no longer shows you the true market depth, but a snapshot of what *maybe* happening.

Why ?

- Dark pools (now 40+) in USA hide a lot of liquidity
- Increased sophistication of MMs and technology becoming automated.
- Algos that "play" the market to get block executions done, eg. post a large size to give the impression of a buyer or seller to help move their block.

In short, as more and more automation happens the level of information that can be read from Level II is diminishing...it is still useful, but no longer what it was.