Day Trading LEVEL 2 EXPLAINED! SIMPLE!


what is level 2 and how can you use it
when you’re day trading talking about level 2 order book and how it works
breaking it down in the most simplest easiest to understand terms in this
video so stay tuned what’s going on guys so I’m getting a lot of questions people
asking about level 2 it ok can you explain level 2 I don’t understand level
2 how do you read level 2 it’s very simple for me and it’s hard sometimes
really kind of think about like oh maybe somebody doesn’t understand what level 2
is what it means to read level 2 now one thing I want you guys understand is
level 2 can’t be your friend and level 2 can also be your enemy
level 2 can be highly manipulated the level 2 order book can show orders that
really don’t exist so you need to be careful you need to understand that
sometimes people are manipulating the price by using level 2 and what they do
is they’ll help flash a large sell order or they’ll flash a large bid and then
take that bit away and crash the price and I see this happen a lot a lot of
times in the small caps people will do this with level 2 they’ll manipulate the
price and they’ll try to move the price around by flashing these fake orders so
right now we’re looking here at BDR you can see this chart over here you can
see the time and sales and you can see the level 2 here now when I say level 2
basically it’s showing me the order book there’s a level 1 level 1 is basically
showing the bid and the ask and you can see here level 1 it’s showing 125 is the
bid and 126 is the ask the bid is what somebody is willing to pay the ask is
what somebody is wanting to be paid for to sell their shares right now you can
see it’s showing arca and then the edge network and these are gonna be different
routes for different brokers and stuff like that people will use different
brokers and different routes so you’ll see the different routes here on the
side is gonna be these four letters they’re showing 121 it’s showing one
there that one is showing the amount of shares they’re willing to pay for that
price now let’s say I don’t want to show my size let’s say I want to sell and I
want to sell it 123 but I only want to show that I’m only selling 100 but I’m
actually selling 1000 I can adjust that in
my montage so that only shows that I have 100 shares for sale when someone’s
trying to buy they’re gonna be like something’s weird here I’m trying to buy
and it’s not moving people will use level 2 to move the price up and down
I’ve seen it happen over and over where someone’s flashing a big bid on the buy
side so let’s say someone’s putting a big order out there for 120 and what
happens is then people jump above that big buyer trying to get in front of them
trying to front run them and then you start to get the price movement because
people are trying to push the price up because they’re trying to buy in because
they see that big buyer sitting then they think oh there’s a big buyer so
that must mean the price is gonna go higher and now the same thing happens on
the sell side let’s say somebody wants manipulate the price they might flash a
big sell order they’re at 128 and what happens Oh everybody who’s trying to
sell starts to move their price down because they see that big sell order
that doesn’t mean that the actual sell order is gonna go through doesn’t even
mean that’s a real sell order it’s just somebody spoofing the price and just
trying to manipulate the price by using level 2 and we see this happen all the
time so you need to be careful it’s not always gonna be exact if you see ok
there’s somebody selling 100 shares they’re at 124 that doesn’t actually
mean there’s only 100 shares sitting there a lot of times people like I said
will hide their size so you can see right now level 2 is showing that
there’s only 100 shares there well people are buying the ask and it’s not
moving the amount of shares so again it’s very simple on the left side is
gonna be the buyers on the right side is gonna be the sellers when you put your
order out there with a limit order you will be on the left side now if you want
to buy with a market order that means you’re gonna get filled on the ask so
right now if I want to get a fill out a thousand shares boom I would buy there
with a market order and that would fill me at a dollar 24 it would not show my
order I’m basically just buying the market the markets gonna be the ask to
sell at 124 and someone’s willing to buy at 124 that’s the market and so I’m
gonna get filled at now if I want to get filled at 122 I need to use a limit
order because that means I don’t want to pay the market price which is gonna be
124 I don’t want to pay that so I need to put a limit order out there at 122
right below that trying to get filled on a little bit of a dip or a little bit of
a pullback because I don’t want to pay the full market price and you
right now okay 120 is showing a lot of selling pressure someone’s buying there
okay it gets eaten out now we’re going down again you’re seeing level 2 then
you’re seeing the time of sales as this is crashing you can see people removing
their orders and then adjusting the price there and doing stuff with the
price as it was pulling down he saw that big buyer sitting there at 118 well then
all of a sudden he was gone again now you see 122 we have a lot of selling
pressure they’re showing you know 3,000 shares for sale they’re at $1 22 and
that’s pushing the price down because people are sitting there $1 21 and
that’s kind of just like right in the middle there battling okay who’s gonna
jump above this 121 and buy those shares at $1 22 level 2 is just showing the
orders that are out there limit orders that are on the market on the order book
right now on $1.00 21 someone’s trying to sell at $1 22 it’s that simple and
that easy there’s really nothing more to it but
there is like I said a lot of little weird things going on with level 2 we
can see this a lot so you need to understand that just because the level 2
looks like there’s not much selling pressure doesn’t mean there’s not a
hidden seller doesn’t mean that there’s not gonna be a big or just pop up out of
nowhere you got to remember everybody else is
also looking at level 2 and people are basing their trades off of that and
they’re also trying to manipulate the price and you know they’re trying to
sell or trying to get out I’m trying to show their size if someone’s trying to
push the price up they might be showing more size and they’re actually willing
to buy so you need to understand that this isn’t always correct there’s gonna
be some weird things going on level 2 it’s an art form there’s people that are
really really good at reading level 2 they’re very fast to interpret what’s
going on and also over time you’ll start to realize hey this guy is not a real
seller he’s just trying to spoof he’s trying to move the price down or the
same thing vice versa if there’s a big bid popping up it’s kind of just sitting
there large size if it’s not really moving that’s someone trying to
manipulate the price there it is level to make sure you’re using it you need to
see what’s going on level to the order book and see kind of what is going on
with the market and where people are buying or people are selling out there
it is Oh

20 thoughts on “Day Trading LEVEL 2 EXPLAINED! SIMPLE!

  1. Love the way u just explained level 2, I honestly have listened to well over 100 hours of videos on trading and I find yours to be so much more informative and too the point , I needed to hear how to know if there a possibility someone is just trying to push price with a fake order , finally thanks to you I got it !!! ❤️

  2. Also if I could ask , do u use stock scanner provided by sure trader ? Or do u prefer another ? I’m going to start a sure trader account as soon as I get more confidence trading , seeing u use it made me feel more comfortable trusting that broker:)

  3. Watch list $AMD $SPY $JDST $DRIP, AMD is primed and ready to go! With 30% potential from current price! Inverse Head n Shoulders on the SnP great time to buy for a swing.

  4. Good learning for me, thanks. When you talk about the spoofing/manupilating of level 2, do these people place and remove orders they don't intend to execute or do they have some other way to get their phony bid/ask data into level 2? If it's by placing orders, I guess sometimes they get executed before they can retract?

  5. Hi Patrick, good day. I'm using metatrader 4, I've been searching where is level 2 chart but I can not find it, or it really does not have a level 2 chart. Tried installing a plug-in but still it did not work. Maybe you know someone or that can help me find a way to have a level 2 that works with mt4.

    Thank you.
    Karl

  6. and what he forgot its times 100 so 23 means 2300 10 means 1000 and so on

  7. Market orders can be filled anywhere between the level 1 bid and ask; but market orders are usually filled at the price midway between the bid/ask… If your broker is always filling your market orders at the ask then they suck.

  8. hey great video but I got a question what do the colors mean on level 2? like whats the yellow green red blue an light blue represent

  9. Then how can orders be executed? Because the price numbers on the right side are always higher than those on the left side, meaning the sellers want more money for their shares than the buyers are willing to pay, so how can there still be trades happening?

  10. Soo my question is.. WHERE is that book xD i try to search for it but can't find it :/

  11. Level 2 is so corrupter and manipulated. Level 2 is useless, this is the only thing you should know about that thing. Big traders with millions of dollars will not show their trades on Level 2, what do you think about that?

  12. It's not neccessarily manipulation. Some institutions have pair-orders, where they try to sell out of an instrument at a price, if the other instrument is at that price as well. This could account for the flashing of the order on the level 2. Tape spoofing is illegal, and if you suspect it you should report it.

Leave a Reply

Your email address will not be published. Required fields are marked *