Frank: here's an incomplete explanation of the Level 2 screen printouts that get posted from time to time.
I'll post the URL from the printout from yesterday at 10;08 a.m. (post #35374) so you can refer to it while reading the explanation below.
First, some comments:
The way Market Makers work on the NASDAQ must be understood before the Level 2 screen makes much sense. Find out about them here:
invest-faq.com
Secondly, that site, and a lot of others, can be found without leaving SI. Bookmark the following thread and refer to it for any word you don't understand. There is not much you won't find here:
Subject 18891
Thirdly, there really is no reason to be paying a lot of attention to the Level 2 screen unless you are day trading. The MMs are interesting, but they change so fast that you'll see the price move on a real time basis way before you see the screen posted up. If you are, (day trading),the screens that are being posted on the thread are old news. There are places that use the Level 2 feed to help the traders, and they are open to "ordinary" investors.
OK! Here is the screen from yesterday (I can't get the screen to reproduce without screwing up this post, so you'll have to either open a second browser on half your screen or click back and forth between this and the other post):
Message 3472916
In the upper left-hand corner, by "ASND" you'll see 3 rows of numbers. These are the totals for the price and size of order at that very moment for the best bids and asks. Let's take the best Bid. Look just below on the left and you'll see the top three Bids at 34.4. Their total "bid size" is 10+5+1=16. The MMs on the ask are on the right of the bids. The total "ask size" (you must find them on the right side of the screen, the top 5 are all at the same "ask" price), is 21+10+10+10+2, and the total is 53. The "3X5" is the number of MMs on the best Bid and Ask; there are 3 MMs on the best Bid and 5 on the best Ask, so you see 3X5. The next best Bid and Ask and the number of MMs on that Bid and Ask is the second line, (next to the "=====")
Confused yet? OK, let's take the first line below the totals. On the left side of the first line is the best Bid, MLCO (Merrill Lynch in this case...everyone has a four letter symbol). To the right side, on the Ask, is ISLD (which we will look at in a second).
MLCO is bidding 34.4. (Don't worry about the MDCO "Ask" right now, I'll get to that). "Size" is the number of shares that Merrill is committed to buying or selling, in this case, they are bidding (committed to buy) for a minimum of 1000 shares (you have to multiply the 10 by 100) and they are asking(committed to sell) 1000 shares, so we see 10X10. (Remember, Merrill is NOT the best Ask, or they would be at the top on the right side as well as the left.)
On the right side of the first line is the best Ask. The best ask at this particular moment is ISLD, (Island, which is another long story that we don't need to get into here). ISLD is on the Ask for a minimum of 2100 shares and they are asking "34: 9". (You see their bid also, but they are not the best bid, so their bid is way down on the bid side of the screen, just below SBSH.)
(Important Note: some of the prices show a decimal point, (34.6) and some show a colon, (34:9). Gary will have to explain this because my Level 2 is set up in fractions, not decimals, and on Gary's screen the colon is not the same as the decimal point. It's confusing, because it appears that, for example, there are "askers" below ISLD that will sell for less, but this is not in fact the case.ISLD is in fact the "low", or best Ask.)
The "time" is the last time the MM changed his market; that is: something changed, he increased or decreased his size or he changed his bid or ask. It is not significant for you, you don't need to pay attention to it.
Can a MM go "off the bid" without actually buying what he said he would? Yes, if he loses the order he had from his customer.
Who is the "big boy" on the Level 2? Whoever has the order! At this point the "big boy" on the Bid is MLCO and the "big boy" on the Ask is ISLD.
The Market Makers and their symbols is another long story. Aside from the "regular" firms, like Merrill, or Goldman, etc., there are other MMs that a day trader can trade through, and other systems that someone can execute a trade through. It's pretty sophisticated, and I'm not going to get into it. Also, trades can occur outside this system and you would never see the trade except to see the "print" (record of the transaction) because it occurred outside of regular market hours. Institutions may trade big orders outside the action you see on Level 2.
Anyone else that's interested: this is it, I'm done. :o) pete |
