Friday, August 28, 2009

Day Trader Tools – Level II - Your GPS To Trading Smarter

Day Trader Tools – Level II - Your GPS To Trading Smarter

If you remember flying a kite as a youngster, you certainly remember the thrill of watching the wind magically take control and push your kite skyward.

Now what if you could have a gadget that could tell you exactly where the wind was and wasn’t. Your kite would then stay up there for a lot longer and you would have so much more fun.

Maybe a GPS Wind Meter, a device that could easily tell you to move your kite more to the east or west, capturing the full power of the available wind. Now that would be a tool wouldn’t it?

If you are an experienced day trader you are well aware of where I’m going here. But if you are new to day trading, and want that GPS Wind Meter for trading stocks, it’s called Level II.

You see Level II, doesn’t just show you what the bidders and sellers are thinking, it can actually show you the direction they are going, in real time.

Without Level II you only see the top line bid and ask, or what people are willing to buy and or sell for. Without Level II you simply can not see the depth of the buyers and sellers.

With Level II you can tell if the bidders out number the sellers, if you want to buy, that’s very important. If you are trying to sell and Level II shows you that sellers outnumber buyers, that’s very helpful also.

Here, let me draw you an even better picture. Let’s say you bought a stock at .20 because it has had great volume lately, obviously there is lots of interest.

Then looking deeper into your Level II you notice that there is a very large amount of shares available for sale at .28 , meaning the stock is unlikely to get past .28 without a very large support of buyers. But why all the sellers at .28? Why aren’t they all letting it just letting it go higher.

A little more due diligence and you check to see that 3 months ago the same stock surged to .32 on a huge volume of shares traded. Meaning there are a lot of old buyers still holding shares at that level and now, they simply want out at .28

Just by seeing that on your Level II you can decide to sell comfortably at .27 and just move on and thus, not get caught in that mess at .28 where the stock could easily stall and drift back down into the lower .20’s

Level II is your stock GPS Wind Meter. It tells you in real time which way the buyers and sellers are blowing. Let’s face it, we are never going to always get in and out of a stock at the right price, but knowing which way the wind is blowing allows us to play the game to our advantage, and avoid the many traps out there.

Now, if they only made a Level II type of contraption for flying that kite. It would be the hottest new thing to put under the Christmas tree.

I am a firm believer that Level II will make you a smarter trader. And when I need to look a little deeper into the mining, oil and gas stocks I like, I always use the Stock Research Portal.

The site is free with an email subscription. The depth of information available will make you a smarter investor. If used properly, smarter, healthier and in the end, wealthier as well.

About The Author: Mike Perras is a former media executive and faculty of business professor. Today he is a freelance writer and also manages the Canadian Stock Alerts blog. It is updated weekdays in real time, and the primary focus is to find stocks with higher than usual trading volume. Mr. Perras doesn't advocate buying the stocks he mentions. Nothing in this article is either designed to meet readers personal financial situations, or intended or taken to be investment advice.

3 comments:

  1. Day trading for beginners is like lion taming, except more expensive. It's a risky and challenging pursuit: buying stocks and selling them again in the same day, making money off tiny fluctuations in the price of a stock over a twelve hour period. For many years the tools of day trading were not available to the average investor: real time stock results, analysis tools and access to instant trades.
    http://www.livetraders.net/

    ReplyDelete
  2. Day trading for beginners is like lion taming, except more expensive. It's a risky and challenging pursuit: buying stocks and selling them again in the same day, making money off tiny fluctuations in the price of a stock over a twelve hour period. For many years the tools of day trading were not available to the average investor: real time stock results, analysis tools and access to instant trades.
    http://www.livetraders.net/

    ReplyDelete
  3. Day trading for beginners is like lion taming, except more expensive. It's a risky and challenging pursuit: buying stocks and selling them again in the same day, making money off tiny fluctuations in the price of a stock over a twelve hour period. For many years the tools of day trading were not available to the average investor: real time stock results, analysis tools and access to instant trades.
    http://www.livetraders.net/

    ReplyDelete