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I disagree as to the usefullness of Level II. Because of recent changes,
allowing MM's to show only 100 shares and tier sizes to drop to 200 on most
stocks, L2 is almost essential if you're trading any size. On anything but
slow moving stocks, ECN's are about your only chance for a good fill. You
need L2 to see where those ECN's are.
In a message dated 7/17/99 10:08:08 AM Pacific Daylight Time,
RonAug@xxxxxxxxxxxxx writes:
> NASDAQ Level II had some merit prior to rule changes that went into effect
> on NASDAQ in early 1997. Since then, it has become less and less useful.
I
> used it over two years ago and it was evident that Market Makers regularly
> mis-represent the size of their positions in an effort to create an
illusion
> in their favor. I spent several days keeping stats on which way a
potential
> trade would run-- based on the conventional interpretation of reading a
> Level II screen, versus the exact opposite scenario occurring. My informal
> observations showed me that it was 50/50 as to whether or not the Market
> would follow the conventional interpretation or run off in the opposite
> direction.
>
> I recently saw an advertisement for a training seminar on how to
> successfully mis-represent your Level II position-- from a Broker offering
> Level II trading. Imo, the head-fake scenario was frequently a result of
> the Market Makers working together against the sea of little guys to flip a
> trade in their favor. The only advantage of having a Level II ECN was the
> ability to enter and exit a position with the click of a Mouse, in 1/100th
> of a second, from 5000 miles away from the Exchange. Very useful in
bailing
> from a large position that will cost you a several thousand dollar loss if
> allowed to exist for the next 30 seconds.
>
> Draw your own conclusions --
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