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close. This is usually the only information made available to your broker. |
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The two vertical windows represent the "members-only quotes" and more importantly show order size (which affects the supply and demand) on both the bid and the ask side of the equation. The Level I and Level II data are constantly updated and refreshed by every relevant market transaction. Each participating market maker must display both a bid and an ask quote and can be executed against at its firm quote. |
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Size is quoted in multiples of 100 shares. The normal market is 10 by 10, meaning that the market maker is willing to buy or sell 1000 shares at its quoted prices. |
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Quotes on both the bid and ask side are listed by price, and all market makers willing to trade at the same price are color-coded, with the best price on the top of the so-called trading deck. As the price decreases, all market makers willing to trade at the lesser price are grouped in a different color, and so on down the price scale. When the market is volatile, the MARKET MAKER window scrolls up or down to indicate aggressive buying or selling. These price movements herald price change, which is the trader's opportunity. |
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You can have as many open MARKET MAKER windows as you can comprehendand fit on your monitor. |
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Interpreting Nasdaq Level II Information |
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As dealers adjust their quotations, the new prices are automatically displayed on the Nasdaq Level II screen. These changes are on line and therefore displayed instantaneously. The DAET trader closely monitors these second-to-second price movements and interacts with them by buying or selling these shares while the stocks are still movingwhile the trend is still intactrather than after they have stopped or even paused. This is essentially the DAET strategy. The "trend is your friend," and a skilled tape watcher can benefit from immediacy of execution by spotting the developing trend early. |
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