Level 2 Questions

[mik1973]

Been reading with interest the potential of Trading Nasdaq via Level 2.
I have a load of questions and would appreciate if anyone could answer /provide advice to the following:
1) When i've seen screen shots of level 2 it seems to be multi coloured. Are these colours system generated or manually set (to allow the user to follow specific ecns/mms

2) I've read about pattern day trading which apparently requires significant amounts of capital to trade on a daily basis- what are the alternatives (if any ) . I've also heard about another way which limits the number of trades in a certain amount of days to 3- can anyone enlighten me further?
3) What is the typical cost (apart from the spread ) of trading shares.
4) I've heard a lot about IB- what exactly is this - does this service provide a complete patform of data feeds and trading tools?
5) what exactly is the uptick rule (with reference to shorting shares?)
6) What is the queing system- is it possible to identify how many are in queue and at what position you are in.



Not asking much am i?!!

Cheers
Mick

 

[Naz]

Hi Mik1973,

As you say you've got a load of questions you'd liked answered.

If you e mail me with your tel number i'll answer all of them for you when i've got a moment.[email protected]

Naz

 

[Skimbleshanks]

The colours denote price bands - if you look you'll see that they're grouped according to price. All platforms vary slightly, and on some of them you can also identify ECNs, it all depends on the platform you have.

PDT (pattern day trading) status is a US federal requirement if you want to day trade every day. The minimum required in an account to open a trade is $25,000 but once you are below this you can only trade again when you inject more funds to bring you over $25,000. Some brokerages, like Interactive Brokers, automatically limit you via their software to three day trades (open and close within a day) in any rolling five-day period if your account falls below $25,000. So you cannot accidentally open any more than three trades. The actual law states four day trades, but just to make sure that there is no confusion, everyone seems to use three to keep you safe. The reason is that if you violate the four trades rule, you have to have your account suspended for 90 days, which would be a nightmare for brokerages to administer, so that's why they all go for the three day trades in a five-day rolling period. To get around it the easiest answer is to use more than one account, held at different brokerages, each with under $25,000 in it. It's not that satsifactory as you are still limited to three day trades in each account per five days. So it's OK for swing trading with the odd day trade, but not for pure day trading. Or you trade a mix of direct access and spreadbet - there are ways around, but the easiest is usually to have one $25,000+ account and just trade that.

IB (Interactive Brokers) are the biggest retail brokerage and they charge $1 per 100 shares. Have a look at their website for all the commission charges at interactivebrokers.co.uk

IB is a brokerage, and it provides you with a trading platform. Some software programs, such as Sierra, permit you to use the IB price feed to the trading platform to provide the feed for the software. Again, have a look at the website and you will see virtually every question answered for you. There's also a demo trading platform you can play around with (but it's not a patch on the real thing).

The uptick rule is that you can only short a stock when it is going up, so if it is trading at $5.67 and you want to short it, then the best price you can get in is at $5.68 as it will have had to go up one cent (or one tick) to enable you to short it. To short a stock you also need to make sure it is on your brokerage's 'stocks available for shorting' list. If it's not on the list for that day they do not have the stocks to enable you to short it. Stocks heavily in demand for shorting can be difficult to find sometimes.

 

[mik1973]

Naz,
Thanks for your reply-will be emailing you with my contact numbers.

Skim,
What can i say - can't thank you enough - just think it's great that someone can provide the level of detail you have. To be honest it was more of a shot in the dark (asking that amount of questions)- didn't really expect the reply i got. You're an absolute star- keep up the great work!!

A total contrast to the mail shot i received today from VS asking £818.19 for his home video training course.

Cheers
Mick

 

[robq]

level 2 mmid?

I'd be grateful if someone can please tell me what "a" refers to under market maker identification (mm id) on the attached screenshot.

I can't find it on http://www.nasdaqtrader.com

robq

 

[Lee]

Would someone tell me if Level II is available for the mini Dow or if it is solely for Nasdaq. Thanks in advance.

 

[Trader333]

I think you can get Depth of Market (DOM), but Level II in the same sense as for the Nasdaq is not available as far as I am aware.


Paul