IG Markets Level 2 Data + Newbie!

[hazza147]

Hi There all,

My first post and I'm pretty new to trading. I did some work experience at Barclays Capital in Canary Wharf for a week and have done some kind of medium to long term investing in the past. I want to be a trader not an investor, from what I read it appears that the traders are the ones having the fun, and making money whilst there doing it. I was 15 when I went to Barclays Capital and now I'm 18 and have my gap year and want to primarily spend it TRADING! I've done Economics, Physics, Chemistry + Maths and awaiting my results, worked hard though so lets see! Got a Multi-Screen on my Desk, 1 22" TFT and a 17" TFT, thats the best I can do at the moment to replicate the 6 to 8 screens the traders had at Barclays Capital! Gonna be using CFDs with 1:10 leverage as I feel thats the best way to work my £2000 starting capital.

Okay heres a few questions:

I have attached a copy of my Level 2 Data screen. What I would like to know is what I can learn from it. I understand about the principles of the order book, such as Right Column is people + 'institutes' trying to sell us shares and vice versa for the Left Column. However what I can't come to terms with is which way the market is heading. Now Vodafone is down 1.75p however there is a great volume of people trying to sell us shares about 70% more that the buy side. Okay, so does this mean that these greater number of sellers are going to keep pushing the share down or does it mean there could be a reversal.

If anyone could devise a trading strategy based upon that screen then this would be great! Or alternatively if anyone could describe ways to read this and interpret it so to give me that edge over other traders!

I understand that trading is not easy and requires a lot of hard work and effort, let me assure you that I'm willing to put the effort it and it exites me to think I'm playing with the big boys from my own bedroom office!

Anyways any help would be great and I hope you all have a good trading day.

Cheers,
Harry Seager (Should I devise a trading 'Nickname'? Any suggestions?)

 

[normbeef]

I find its good idea to watch the level 2 screen in times of volatility as it will give you an idea of just how fast the market can move plus volume / depth / liquidity etc.. ... and how you can be caught out... I prefer it sometimes to a chart..

but as for a strategy nope... but if your just starting out, you should just sit and watch it for a while... just to get some perspective.. perhaps try to develop a sense for what you think is happening.. and see how many times what you think is going to happen goes the opposite way !!

 

[24601]

Hi Haza147,
You should head over to the new steps forum for newbies its full of very good advice.
For now all I will say is that I bet the Barclay trader would be amazed to see all his six screens freeze up when some important news comes in, you wont however when this happens to your 2 screens with igindex, which it does often enough, then you can not deal or anything till you refresh the site and when you do that it takes your carefully set up charts down with it, FRUSTRATING.
Have a great Future.

Bets Regards, sorry Best Regards
Croman

 

[hazza147]

Cheers Guys,

Currently trading with IG Markets with CFDs and Forex. I'm yet to experience any freezes on my screens but then again I haven't really spent a lot of time on the screens yet.

I have been watching the Level 2 Data screens for HBOS when it went up around 10% on Friday. Was interesting and I also recorded the screen when I went out. Came back and tried to make notes on it! I have been analysing some other Level 2 solutions like those from Money AM and these look a lot better as you can filter out the depth of order book based upon a certain percentage of the current price. I wish all Level 2 data providers could have the same platforms it would make life so much easier! Anyways I will be spending some more screen time on Monday and Tuesday on the Level 2. Would I be right in saying the most worthwhile stocks to watch will be the top risers or fallers of the FTSE 100? These should provide some momentum to study and could also look out for reversals or continuation of trends. If I were to do this what should I be paying particular attention to?

Anyway, I'm off to Essex tomorrow which is a bit of a trek. With anyluck we'll have a some rain to get people off the roads and allow me to get some speed on the roads!

Cheers,
C-Ga

 

[jammyd]

I'm only a newbie to trading as well. But I've found both the work of:

Wyckoff- Richard Wyckoff - Wikipedia, the free encyclopedia
and Curtis Faith (Way of the Turtle) helpful in understanding these things.

Let me know how you get on with IG Level 2! I'm interested in using this
in the future - I use the IG index service at the moment.

Actually - definitely read 'Way of the Turtle'. Please read it - there is essential material in there on 'position sizing' and managing money and risk!!! You've studied maths, physics etc..... so make sure you are familiar with the concepts of 'risk of ruin', and of gambling 'edge'. As I understand it - the pro's make many many losing trades, maybe even more than the winning ones (though they keep the losers small, and run big winners). They have a long term 'edge', and they manage their position sizes (the amount they are staking on each trade) very well.

What is sure is that from time to time there will be a long run of losing trades. You must make sure the stakes on each trade are small enough that you still have enough money left after this to make a comeback. Predicting the future is impossible, so large stakes are always a bad idea. The only possible way is to have an edge over many many trades - each of which has a small stake (i.e. limited risk). Curtis Faith even goes as far as having an 'edge ratio' that quantifies the edge of different systems. You know you have an edge with your system, if you know how big that edge is!!!!

I can't explain this all here. It's worth reading the book.

Good luck Harry!

jammyd

 

[normbeef]

if your looking at the level 2 screen, you might want to learn a bit about Market Makers, and the order driven stocks..

 

[hazza147]

Yes, I've done a bit of research on them. I can often see the WINS orders but they are always far down in the order book. Would I be right in saying that Market Makers don't always use their name when it comes to buying and selling?

Also checked out the SEAQ screen for AIM shares and it has allowed me to learn about how they operate.

 

[hazza147]

Its actually funny you should suggest this book as I bought it off amazon last Wednesday and I'm waiting for the postmen (comes about 1PM) to deliver it. Also got Liars Poker which apparently is a good read as well but isn't based towards trading strategies.

Looking forward to that soft thud when the parcel lands on my mat! I'll probably read into it tonight.

After my last post I have started to screen record the order book moving in times of volatility, this allows me to come back and analyse price movements on charts and then try and correlate this to the Level 2 order book. I'm starting to find myself prejudging whether a stock will go up or down and it would appear that I'm getting better at it day by day.

As for IG Markets Level 2 data platform. You can subscribe to the Level 2 data for £6 a month and the fee is redeemed if you make just 1 trade. I recommend just trying it for 1 month and use something like 'BSR Screen Recorder' to record the action. If you're willing to shell out a bit more money then I'd recommend the Money AM Level 2 platform as it allows you to filter orders so you only get the volume and depth within a certain percentage of the current bid and ask. This would be very useful as often you get a load of orders that will never be filled clogging up the order book, and then you can simply filter these out. I believe it's about £25 a month.

Have a good trading day.

C-GA

 

[jammyd]

Hope you like the book. I'm sure you will - it's good stuff!

Thanks for the IG info. I have the money AM level 2 data at the moment, sounds like IG would save
a bit of money.

Have you tried any dealing on the IG level 2? I've never done any level 2 dealing, but
might give it a go sometime when I'm a bit more experienced with IG index.

jammyd