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sábado, 6 de septiembre de 2014

What is the Nasdaq Level II?

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The Nasdaq Level II is a quoting system showing all offers and demands of the market makers, the daytraders and buyers and sellers. This system also tells the trader how many shares these market participants want to buy or sell for each stock traded on Nasdaq. For example:




Let us examine what this Level II of QQQ tells about this stock. Basically it is divided into the supply and demand for that stock. The left side shows the buyers and the right side the selllers, ie, who are interested in buying/selling this stock at different prices levels. Here, in the first line we see the CSE market maker who wants to buy 2300 shares at $22.95 (Bid Prize). On the offer side we have in the second line that the market maker NAS wants to sell 7000 shares for $22.96. Below there are more market makers who want to buy or sell at different price levels.

What does the Level II presents is the number of buyers and sellers who are in a particular price, and how many shares are trying to buy or sell at that price. If you are an active trader, and note that many shares are being sold at a certain price, then you know that the stock price would have to pass that level before increasing value. Also, if you notice that there are many buyers at a particular price, this could mean a support for the price from which the price could rise in the short term.

Daytraders also use the Level II to know which market makers are buying or selling a particular stock an at what prices and volume. For example, if you know that Morgan Stanley is buying many shares of a stock, that means it can be a good idea to buy this stock since it is likely that the price will go up Or if you notice that a large seller stopped selling their shares, this may indicate that the stock is ready to rise in the short term. The Level II also tells if a large block of shares was transacted. If you notice that large blocks are being buyed, this could signal a big buyer, perhaps a mutual fund.

The Level II provides much information about a stock that is not available to the public. The Level II is one of the many tools you have to use when actively trading in this stock exchange as a daytrader. Knowing what the major players are doing in a stock will help you make better decisions. However, if you are a long-term investor, the Level II is not required. A regular quote and price charts is enough, because long-term traders do not care about the short-term movement.


To order the Nasdaq Level II, just ask your broker, but this will cost a few extra dollars each month. There are different levels in the Level II service, as some brokers may offer more tools, services and other options. Recall that the Level II only supports shares trading on the Nasdaq. To order the Nasdaq Level II, just ask your broker, but will cost a few extra dollars each month. There are different levels in the Level II service, as some brokers may offer more tools, services and other options. Remember that the Level II only supports shares trading on the Nasdaq.



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