Using level 2 for stock trading

12th Dec '13 by wjjward

6 comments 7147 reads

I am interested to get the views of anybody (Paul Scott perhaps?) out there that uses, or is thinking of using level 2 for their stock trading. This is something that I have thought about doing for a while but I have generally baulked at the price and the fact that there isn't really a way to see what it does without paying for a year's sub.

However, as I have started to trade a bit more frequently I am debating taking the plunge once more. If you read Robbie Burns's material he swears by it and says that he could not trade without it as it gives him an edge on getting a better buy/ sell price by being able to see the behind the bid offer prices into the order book.

Would anybody like to chip in with their thoughts?

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Wjjward

Premium Member

6 comments

DJLJ23

12th Dec '13

Hi WJJ
He also says it takes a great deal of practice to understand it.
I tried it for a couple of weeks, you can do a two week free trial with a number of providers, and did not feel I got a lot of benefit.
But that may be a reflection on my style of investing

wjjward

12th Dec '13

Thanks for that, I didn't realise that trials were available. I guess practice is essential as I gather that it is not the most intuitive concept to hoist on board.

seasons

12th Dec '13

I subscribed to one as my broker (on a CFD account) said the order in the magnitude I wanted cannot be executed (not that it was THAT high though). It turned out that it simply meant that there wasn't enough stocks to be bought/sold for the price they quoted and thus my order would needed to be completed from 'down' the order book -- where the price could _signficantly_ differ to the quoted one. Therefore I can quickly check if I am happy with the average price I am about to get -- this is especially important for stocks with lesser liquidity.

Having said that when I tried to sell and the subsequent prices weren't that good but I was itchy to sell so I took the plunge regardless, the resulting average price turned out to be much better than I would have expected looking at the book -- some buyers seem to have appeared miraculously? Or did the broker jump in to buy some of my shares for a better price? I don't know..

The same issue does not seem to affect ISA/SIPP accounts as the broker will come up with a price offer (which is usually into the 2-4 decimal digits, so must be an average..) which I either can accept in 15 seconds or just let it expire..

Apart from this I don't see much use of it -- when I want to buy or sell I will do that at the current market level, I don't work with limit/stop orders.

Daniel Rudd

10th Mar '16

Can anyone recommend a decent level 2 provider?

eiresorpio

11th Mar '16

I use ADVFN - they do level 2 but I cancelled after a while. Like most it seems I don't really understand it fully to make the most of it. I only use it for live prices on mobile app. Useful for checking every now and then during the day along with reading the RNS.

imranawan

11th Mar '16

I use Digital Look for level 2 data. It's only really of use on small cap stocks where there are market makers buying and selling stock.

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Using level 2 for stock trading

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Wjjward

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