Professional Documents
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NASDAQ Level II Trading Strategies
NASDAQ Level II Trading Strategies
Man’s Miracle
NASDAQ Level II
Trading Strategies
With Mike McMahon
To DAT and Back……..
• How we got here
• Synopsis of Trading History
• Online vs Direct Access
• Level II “nuts & bolts”
• Level II Reading
• Your Involvement and your Risks
• Summary
Progress …….
• We stood Face-to-Face
and Argued whether a
Wheel was worth 2 Clubs
Progress………..
• We stood Face-to-Face and Argued
whether
2 Pigs equaled a Bushel of Grain
Progress……..
Suddenly, it got formal
We could no longer
“see” each other
Somebody had to
exchange the pigs
for the clubs,
the clubs for the wheel
and the wheel for the
grain….
We wanted Bread!
Progress…??
• Big Brokers
Stepped in to
Help US!
• We Lost Sight
What’s a broker? A Middleman.
What do Middlemen do?
They cost you
• Money
• Time
• Control
You can no longer
see what’s going on
with your trade
So…
We decided that:
• We can do it ALONE!
• We can do it better!
• We don’t need to share
OUR profits!
• Just Give US the Info
and a Computer!
A Vital Piece of Information……
• We got the Computer
• We got Level I
• Or Did WE ?!?
Welcome to bigbroker.com
Trading…….
• Faster Executions!
• The Best Fills!
• Real-Time Data!
• Who are we
Kidding!
Shortcomings or Short-Sighted
• How can you climb up out of
the Online rut?
• How can you trade face-to-face again?
• Is there a a Better Way?
ECN’s……….Vision Restored
• Electronic
Communication
Networks
•Transparency into
the Market
• To “See”
– You only need $$$$….and the
window opens
• To “Use”
– A Direct Access Broker…who will help
you onto the Hwy of DAT
– CyBerTrader, Tradescape, TradePortal, RealTick,
On-Site, Momentum, GroTrade, A.B. Watley, and
others
Who Is that MASKED MAN…..?
• ISLD Island - Datek
• INCA InstiNet
• ARCA Archipelago - Terra Nova Sec.
• ATTN All-Tech Invest.
• BTRD Bloomberg
• BRUT Brass Utility (+ Strike 5/00)
• REDI Speer, Leads, Kellogg
• NTRD Nex-Trade
• MKXT Market XT (Joined 4/00)
The Other Players…Market Makers
• Firms that Make a Market
– On Bid & Ask at all times
• Major Players You should know
– Goldman Sachs = GSCO
– Merrill Lynch = MLCO
– Morgan Stanley = MSCO
– JP Morgan = JPMS
• These are just a few that represent
different areas
• NASD.Com and NASDAQ Trader.com
ECN’s
•Better Prices !
•Narrower
Spreads!
•Direct Access
Level I vs Level II
Who’s Buying…
How Much……
Now, Real-Time!
Level II
Now you “See”
Who’s Selling…
How Much……
Now, Real-Time!
Present Support &
Future Resistance
Or just the Bid & Ask
Level II – Scenarios
• Goldman Sachs is
Buying……Buying
Everything
• “OnLine” is merely
E-Mail to a Trade Desk