Is Level 2 that important?

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BuySellSideTrader2020

If you look at the 'price ladder' along with the 'time and sales', do you really need to have level 2 on your screen?

if so, what are the reasons why you would level 2 with the price ladder?
 
To get a feel for the market, to get clues what is happening.

I have 4 major information components for my trading: DOM, chart, TnS and news service/ squawk. All have their place, each of these sources of information might give you the right clue in the right moment. Why would you want to miss one of them ?
You can also drive a car without a rear mirror. Is it really necessary ? Probably not. Does it give you additional information and therefore security for your decisions when driving ? I would say yes.

I also give you the advice to not look at a chart or DOM in an isolated way, but much more to look at the bigger picture, the relations between the different sources of information that you have. What happens on the DOM when the price reaches a certain point on the chart ? How does the DOM react on certain trades on the TnS ? Stuff like that...
Pay attention to the details, but dont forget to see the forest for all those trees. This trading thing is no rocket science !
 
CALLumbus said:
Yes, but you could also use your price ladder with only Level 1 data/ inside quote.
More...


The price ladder still shows the depth, but level 1 at different levels.
Whereas Level 2 shows the MMID, Bid/Ask, and Bid/Ask Size, but as maxinger said, "it's worthless unless you are a heavy scalper." For a Day Trader that might only place 3-5 trades I don't really see the point. When I traded in the past I only focused on my Price Ladder, TS, and chart. Only thing I can see Level 2 to be useful for is futures.
 

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CALLumbus said:
To get a feel for the market, to get clues what is happening.

I have 4 major information components for my trading: DOM, chart, TnS and news service/ squawk. All have their place, each of these sources of information might give you the right clue in the right moment. Why would you want to miss one of them ?
You can also drive a car without a rear mirror. Is it really necessary ? Probably not. Does it give you additional information and therefore security for your decisions when driving ? I would say yes.

I also give you the advice to not look at a chart or DOM in an isolated way, but much more to look at the bigger picture, the relations between the different sources of information that you have. What happens on the DOM when the price reaches a certain point on the chart ? How does the DOM react on certain trades on the TnS ? Stuff like that...
Pay attention to the details, but dont forget to see the forest for all those trees. This trading thing is no rocket science !
More...
Beautiful analogy...and I actually had a car with the same condition...and was very risky and dangerous to drive, so goes with the necessity for Level II. What is DOM?..thanks
 
If you are looking to buy or sell your position, it is valuable because you see where the price levels are. Now, if your position is going against you, you would probably, just hit the bid price and exit. The stockchart should dictate where you get in or get out. Market makers can widen the spread between bid and ask and if you see they are so wide to get your order filled, cancel your order. When the market makers bring down the share prices by continuously, bidding the prices down, they will bid it higher the next day to sell those same shares or contracts in case of options! Just wait the next day if you do not need to get out in a hurry!
 
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