Level 2 question for Naz or anyone else

[AC1]

When market makers are buying/selling on the inside bid/ask, are they required to use their MM ID on one side or can they do it through INCA,ADFN, ARCA etc. on both sides completely anonymously?

e.g. GSCO buys through INCA on best bid and sells using ADFN on the best ask whilst his GSCO ID is displayed nowhere near the inside.

Also, what's the list of ECNs market makers can use to buy/sell.

Thanks

AC1

 

[Naz]

Mainly a mm will buy through INCA if he wants to use an ECN but there is nothing to stop him doing anything he wants.The trick is to understand when he's doing it.

Watch the screen and dont get hooked on the idea of a mm faking things all the time because they dont.

 

[AC1]

I kind of expected they can do anything they want.

I have to re-iterate Naz's enthusiasm for using level 2. The first time I saw it, I felt like a kid with a new toy and could see again.

 

[Naz]

AC1

Good point, you trade completely blind if you don't have Nasdaq level 2.In the t/a and level 2 thread i was running a live short trade on BGEN.I attach the chart below.The blue arrow was where i exited half the position and that decision was posted live at the time.Look how much extra profit is eeked out by understanding the shift in sentiment on the level 2 screen.Other players may only have closed out when the trend line had been broken.

Nasdaq level 2 gets you right in there with the Market makers.The more you watch it the more you get the feel of whats really happening.Direct access gives you the tools to trade directly onto the screen meaning that your entries and exits will be right there in the action giving you tighter stops and cutting down your risk on every trade.

 

[Naz]

What i find frustrating is that the US companies that offer all this aren't allowed to advertise it here in the UK.

If this were so it might give the UK the kick it needed to start offering the UK trader better trading platforms than are currently available at the moment.

All the negativity i hear about Nasdaq level 2 makes me smile."Its just a scalpers tool".Why do scalpers use it because its the best trading tool out there.Do you have to scalp with it? No of course not."

"I don't understand it." No you wont in the beginning,but neither did you understand anything else until you made a conscious effort to start learning it.

Here is a chart in NVLS from yesterday.Was i trying to scalp it? No.I just wanted to know EXACTLY what was going on at the $30 resistance yesterday.Armed with that knowledge i can look at it today and have a really good feel for a potential trade either way.

Level 2 has just given me the eyes to see into the market at key points,giving me more confidence with my trades.Its a tool which helps all traders regardless of their style of trading.