Lesson Of The Day: Trading with Level 2
Enjoy this email: Lesson Of The Day: Trading with Level 2
All trading platforms have Level 2 Montage. MOJO preferred Level 2 Montage Looks like this: See Image Below of IBIO
Trading off the Level 2 is “old school” many traders say that. They say “what are you kidding me”, “the Level 2 is for LOSERS”. Well if Loser is the category for winning on 95% of your trades then I am really good with that label. See the Level 2 gives me an in-depth view of the demand and supply on the stock BEFORE it makes the correlating bars on the charts. I am able to see by the size of institutional orders which direction the stock is heading.
Let’s use this example – The stock is IBIO and it’s 10/20/2014 it’s 3:24pm and 30 minutes before the close. You see the high was $2.97 and the low $1.95 and it just came from $2.60 and stops here at $2.30 X $2.33
You say to yourself – look at that BID SIZE – there is 379,100 shares on the bid (represented by EDGX 2.30) and the ASK with 11,000 shares.
Now, if I buy at $2.33 I can sell on the run back up and make a cool $.05 to $.10 and if I am wrong I can just sell at $2.30 because there is so much size there I would only lose a penny or two. That thinking is 90% of all traders. MOST IMPORTANT – IT TOOK ME 3 YEARS TO REALIZE THE BID WIT SIZE IS BEARISH. Oh my that stock got crushed and you hesitated when the selling started at $2.30 and it closed at $1.97 you got crushed. Why? Because you didn’t recognize the signal in the level 2 before the stock fell $.30 cents and over 10%. Once you know how to read Level 2 and trade off the signals your trading probability of winning will go way up. There are many factors that relate to trading off level 2 which includes fake orders and rebate trading. I cover all these topics and give you the skills not only to recognize the signals but score nice profits from the trade plays.
This is all taught to MOJO Traders in MOJO University – the World’s Best Business Based Stock Trading System. The next class starts in 2 weeks Tuesday May 26th. Each class has 20 Students. This class is full so I extended it to 25 spots and 2 are left if you have an interest in the course – click here