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A.J.
When I traded L2 it was about $2500/ month (with minimum commissions) and
was only available via a few Brokers who were set up for it. The
accompanying Frame Relay equipment to support it cost about $3000 to set up
and about $300/month to maintain. I haven't checked out any of the Internet
L2 ECNs, but I've heard from other traders that they're slow and
unpredictable and the lag is not detectible until you're filled (or not
filled) somewhere way outside of the spread represented on L2.
I found the supply/demand data to be useful sometimes and useless other
times because you never knew whether or not an MM was truly representing the
actual paper they were holding. It was not unusual to see a MM representing
1000, only to replace it over and over again as the 1K lots were foisted off
on the unsuspecting.
When you see the classic imbalance lining up that the original SOES bandits
attempted to trade, how do you know if its real or another fake? -- I
estimated that it was about 50/50 and if you took the bait you could easily
be underwater by several thousand dollars before you discovered that the MMs
were rolling in the isles laughing.
________________________________________________
At 05:44 AM 8/24/98 -0300, you wrote:
>
>I cannot imagine anyone choosing to trade NASDAQ stocks without the benefit of
>L2. Basically, all L2 consists of is a detailed listing of the various
MM's and
>ECN's that have bids and offers posted on the system. The NASDAQ market is
>tricky enough anyway - and this is valuable information to have for active
>traders whether or not they choose to make markets (the example cited - which
>btw, still can be done without a lot of trouble). One can see the in real time
>the quantity and number of bids and offers at various price levels, which is
>certainly more informative than the Level 1 quotes used by amateurs.
>
>Actually, the exchange fee is $50 per month - and if you are an active trader,
>you should be getting this for free, as well as any other fees other than
>commissions.
>
>While there are still hoards of traders scalping teenies all say long, most do
>not try to compete with MM's by making markets (although the wider spreads do
>present some decent opportunities to those so inclined), but rather attempt to
>take advantage of short term minor price fluctuations. While SOES is still in
>use, it has declined in popularity, and ECN's are taking over as the vehicle of
>choice for stock daytraders. However, not all these traders scalp, as
there are
>a variety of strategies of varying average holding periods that can and are
>being employed to trade stocks on a short term basis. Essentially, L2 is
simply
>a quote service, which can supply useful information to active stock traders,
>whatever style they use.
>
>Regards,
>A.J.
>
>
>
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