How Useful is Level II?

[Stockaddict]

During the early days of Level 2, traders were able to find edges and step in front of the market makers and profit from this.

Level II is full of manipulation and market maker games. Market makers will hide size, step off the bid/ask, etc.. to fake traders into making mistakes.

Does Level II allow a trader to gain an edge? Or are traders better off trading without it?

Thanks

[Follow The Trend]

If you are a real "player" in the market, you need to have access to as much information as possible, and try and stay one step ahead of the game.

With this in mind I would say that Level II is essential. Even if you only make one extra successful trade because of this, it will pay for itself.

While there are many "free" live pricing facilities around, Level II does give you that extra edge.

[tab321]

If you day trade, Level II is a must

[Trade Up]

Im not sure how anyone can really call themselves a trader without at least access to Level II.

While I appreciate saving money may be a factor when starting to trade, you really cannot afford not to have level II. Level II gives you a better feel for what is actually happening underneath the surface, with more detailed quote, size info.

[dctrader]

Market makers however manipulate daytraders who interpret Level II quotes too literally

[Kiwi]

Yes dctrader ... if you ever want to see this happen then watch the Hang Seng Futures in action (HSI on IB, free data). Its a master class in manipulation but extremely tradable once you get past that.

[dctrader]

Are there any technical books out there that teach you about the different tactics market makers use?

I'm familiar with the NASDAQ Level II Market Maker traps using false size, and inet book traps, but that's about it

[svj888]

How useful is Level II for more thinly traded stocks?

I'm specifically referring to TSX. Is it more reliable there (due to the smaller market) or is it more suseptible to head games?

Thanks for the help

[mcichocki_]

In my limited experience with L2 data it was more noise than anything.
And when it was legit you should already know where support is from the chart.
Time and sales is not as full of noise since it's legit transactions going through, though there can be games here as well for sure.

JMHO

[strtedat22]

dctrader,

how can you tell what a market maker trap using false size and inet book traps?