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First off, my congratulations to Ensign for breaking the ice with L2 trading
and opening up a possibility of tech analysis on L2 data. Other parties,
if smart, should follow.
L2 data could be categorized as Supply / Demand data and is very important
data, in fact equally important compared to price and volume, if and only
if you know how to use it. Analysis of L2 data is an endeavor in itself and
requires the knowledge of the laws of supply and demand - which in turn
govern the price movement in any type of market: electronic ( Nasdaq ),
auction ( NYSE ) or open outcry auction ( futures ) or electronic ( futures ).
Doing pattern analysis on MMID is a just one little thing that you can do
with L2 data. Overall analyzing MM movements is a tricky thing to do
and in most cases unnecessary for many reasons...
Some market makers already use AI based bid / ask systems and in
addition to that MM traders have years of trading experience...
Now, figure out what you need to compete with them ( plural )...
Jeff, for you I would recommend first to read some L2 books.
Then try to understand the "how and what and why" as much as you can.
Then you might figure it out. All I can do is point. Understanding is the key.
Val.
"Crystal, Jeff" wrote:
> Positional or swing trading with Level two Data (ot)
> Hi I usually do not post on this thread and some times one of my co-works /
> buddies that likes penny stocks post under my name. Anyway I am at work
> looking at some very Interesting Data. Before I post I need to make a
> disclaimer I work for DBCC and have for 6 years. Five years in tech support
> and one in sales. I must say for the record this is not a sales post. It is
> to help me educate my self.
> I am looking for help with some T&A I am working on, Also for the record I
> use all types of real time software packages. They all have some strengths.
> Lst night I was reviewing a beta release of Ensign Software. That Runs on
> Esignal Data over the I-net. Howard and Kimball at Ensign have done some
> very interesting things with Level Two Data. They allow you to plot the
> market makers bid and ask, Set Alerts on a mmid and Do technical work off a
> chart on the MMID. This type of data intrigues me.
> I would like some help doing some technical work with Level Two Data. For
> example. IF you go to www.nasdaqtrader.com and go into trading data you can
> find the lead MMID. I am looking at Plotting the top three MMids per stock
> and looking at their movements. The chart would look something like a moving
> average based on the bid and ask. In other works you have three channels
> that continually cross each other.
> My Goal is to look at three ratios, # of times a primary MMID was best Bid,
> ask, and the number of times he crossed his competitors fighting for
> position. For example If I had a stock that I thought would break to the
> upside because of any number of T&A formations and I also had a Bid and ask
> ration of 10 to one on the BID side I should see movement to the upside.
> This could tell me if the stock was under accumulation or if it was going to
> be held in a trading range. I can think of a lot of creative ways to use
> this data as a swing trader. Any thoughts on some interesting ways to use a
> Primary MMID against him self.
> I should say one more thing I only trade NASDAQ optionable stocks that are
> priced 50 dollars or lower and have volume of at least 100,000 shares per
> day. I have found that the # of MM's that lead the stock are more clearly
> defined. For example on the stock CRUS. MASH, MILCO are the clear leader in
> shares traded on this stock. This type of DATA is new to me so I would
> welcome any comments on how to more effectively use it. Ensign has not
> released this to the public and will not support it for several more days.
> So do not call them. I on the other hand would welcome any comments. I can
> be reached several ways.
> Before I go one more disclaimer, I am not representing DBCC tonight and I am
> only looking for my own edification.
> Jeff Crystal
> JCRYSTAL @DBC.com or KELTNER001@xxxxxxx
> 800-287-9517 Work
> 801-766-1044 Home office
> 801-859-6616 Cell Phone
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