Before jumping into the level 2 action, let's start by examining the chart setup and my mindset going into the day:
PTOG had a very strong day the previous day, mostly due to a sketchy PR about this oil company entering the marijuana sector. However, I don't care about the news, just the price action. PTOG managed to close up on the day almost 200%, breaking out past the morning high late in the day. I liked this strong closing price action, so I decided to take an overnight position. I slowly bought into a position at the end of the day, and I bought 500,000 shares to hold overnight from an average of $0.0215. The stock closed at $0.0234.
When starting a fresh day, you don't have a whole lot of chart action to play off of. Going into a new morning, there is really only one price point that I typically consider to be key, which is the previous closing price. If the stock can stay green on the day, or in other words stay above the previous closing price, it is a sign of strength and a positive indicator for the stock. However, if the stock goes g/r (green to red) or, in other words, drops below the previous closing price, that shows a huge shift in momentum and the odds of a large pullback increase.
The video below will show the level 2 action from the morning of February 20, 2014, as well as a real time chart developing. Please pay attention to how I analyze the level 2 in combination with the chart as it is developing.
Hope everyone finds this video useful, and please contact me with questions if you're having trouble!
Note: Video cuts off at the end - sorry about that!