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Nothing can take away the need to be a good trader, much less Level II.
Here's a hypothetical situation: your tried-and-true TS system fires off a buy
signal on a stock that's quoted 43 1/4 x 5/16. There are 500 shares offered at
5/16. Level II shows 1 market maker at 5/16 offering the 500, and 2 mm's
bidding 1500 shares total at 1/4. There are 10 mm's offering 25000 shares at
3/8, a fact that's invisible to Level I quotes. Do you buy at 5/16 according
to your system, or wait to see if the buying will clear the shares at 3/8?
Your answer will probably tell you if you'd benefit from Level II quotes.
In a message dated 11/4/98 6:20:43 PM, robertwc@xxxxxxxxxxxxxxxxxx writes:
> I'm incline to initially agree with Brian here but I still do not know
> enough to disagree with Shawn.
> The obvious negative would be the cost of level 2 verses level 1.
> Commissions are ruffly twice for level 2 and the quote system fees not
> depending on locking yourself in to x amount of trades to get the free
> services is more than twice that of level 1. So you start out with a higher
> fix overhead which demands more trades which presents more opportunity for
> loss. The thinking of the public and what is advertised is the advantage of
> level 2 because of seeing the inside MM. I would agree if this takes away
> the need to be a good trader and depend only on your advantage like a pit
> broker can in the futures pits. If trading ability is required then I would
> say level 1 is the better way to go. Any comments from those you have done
> both might put some more input on this discussion.
>
> Robert
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