When you hear a stock quote on the news, or you look it up online after work you are typically getting the closing price of that stock for that day. While this information is useful when you are investing in this market, it doesn't tell the whole picture. If you are an investor who buys stock and holds onto it for the long-term this type of quote is probably fine, but if you want to trade stocks this type of quote won't be nearly enough for you to be successful.
Level I
Level I quotes are similar to what you see on the news or what you can find in the paper, only they are in real time. They provide you with the current highest bid as well as the lowest ask price. This type of quote is easy to find and it doesn't require any special software, tools or registration.
Level II
Level II quotes offer a little more detail. They include order size, time of transaction as well as the market maker. This can help because if you know a specific market maker always seems to be successful with a stock you've been watching you can sort by this market maker's buying and selling activity. You can also see where they are setting limits. You can find this type of information via the Internet.
Level III
As you may guess, level III quotes include everything you find in level I or II quotes, but they also allow you to execute orders and send the notice that a trade has been executed. Level III is the data that goes straight to the market makers, brokers and the exchanges. Level I and level II are filtered from this data. Consistent access to level III quotes can make a world of difference if you are day trading or trading penny stocks. For the average person who is investing in the stock market it will be information overload.
So Which Is Best?
The best quoting system will vary depending on your goals and what you are trading. If you are trading volatile or short-term stocks you will want as much information as quickly as possible. In this case level III or at least level II quotes are needed. If, however, you are holding on to stocks for the long-term you probably only need quick checks on the closing price for the day.
While it may seem like more information is better, this isn't always the case. Consider your goals and how long you plan to hold onto the stock before you decide to overload yourself with information that may or may not be beneficial to you.
Was It An Anti-Obama Mini-Stock Market Crash, Individual Stocks Down 1 to 2% Across The Board
0 comments:
Post a Comment