Description

My basic trading philosophy can be summed up by one simple quote:

"Trade the ticker, not the company" - Nate Michaud


Thursday, February 13, 2014

Level 2 - The Very Basics

I get quite a few questions about reading level 2 for OTC stocks. Below I'm going to post some old videos I made about the very basics of reading level 2 that will, hopefully, clear up some confusion for everyone. There are a few points that I may not have sufficiently covered in the videos:

1. Level 2 is most useful to me in times of volatility (spikes or panics)
2. Level 2 is more useful to me for OTC stocks than for listed stocks
3. When I trade during volatility (for OTC stocks) I base my decisions more off of level 2 than the chart
4. During consolidation, key points on the chart matter more to me than random level 2 movement






It's possible, if not likely, that I'm unclear at certain points in some of these videos.  Feel free to email me if you need anything clarified. In the future, I will post additional level 2 videos and get a bit more in depth. Until then, review these and memorize the basics, because the basics are key to understanding the next round of concepts!

42 comments:

  1. Hi Tim - thanks for the videos, great content. Would you also be willing to post a similar video (or a few notes) showing how you use the Level 2 data in action? e.g. What you typically look for that would indicate a good opportunity to go long/short, or would indicate a trap/bad opportunity to avoid?

    Regards,
    -Eric

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    1. That post is coming soon! I just needed to get videos out with the very basics first, because level 2 in action and my commentary will make no sense if I don't establish these concepts!

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  2. Thank you for posting the basics! I had been meaning to ask about how you read L2. As Eric stated it would be extremely helpful to also see examples of it in action for the most basic "tells" so to speak. What a good entry/exit looks like via L2+Time and sales in OTC stocks.

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  3. Tim, thanks so much for sharing much of your wisdom about the markets, you truly are an inspiration to us all! Your story is just mind blowing and I hope to one day have success like yourself because you make me believe that its all possible! Anyways I was just wondering which one of Sykes' DVD's would you say has helped/benefitted you the most which still applies to your trading today? Thanks again for all of your help!

    Ben

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    1. I've only seen Pennystocking Part Deux, a lot of people say that's the best DVD of his. I recommend it more for beginners than someone who knows the patterns already.

      I also highly recommend Nate's DVD. I'll probably do a blog post soon about this as well

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    2. What is Nate's DVD called Tim?

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    3. Investors Live: Textbook Trading DVD
      http://www.investimonials.com/dvds/reviews-investors-live-textbook-trading-dvd.aspx

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    4. When you enrolled as Tim Sykes student didn't you get all the material as far as DVDs? Did you only watch the one or how did it work for you and how did you learn?

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  4. Tim - Thank you very much for the videos! Keep it coming especially regarding advanced level 2 - love learning from the master. Congrats on your success - hope you have much more success. If I can only learn to cut losses. I have good Winning%:- 65.1% Avg Gain:7.56 - but not getting the results I want as I let losers run.

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  5. Hi Tim Thanks a million for your info. I also cannot wait to see your next video on level 2 since I think understanding how to use it is paramount when trading

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  6. Thank you for the basics video. Still a newbie but have been trading live for about 4 months and didn't know the simple level 2 concept that a market maker can only show up once on BID or ASK. When a big order went away I thought the person cancelled it or it was gone. Didn't know could have just been an order closer to actual price of stock from same market maker. BIG HELP - Thank you!

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  7. do you have the private link to view those two video in high resolution like the other you posted recently ?

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  8. Awesome Videos Tim, you are the best!!!

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  9. Gosh Tim, watching L2 on ERBB today from 10:15 was just poetry in motion. I was watching for the crack of 0.1050, which it did and the price just ran with MM's just loading on the best ASK as it fell and fell. By 10:30 I saw as the ASK dried up, and the BID started stacking - we now had the bounce in play. This is pure Tim Grittani Trade The Ticker knowledge learned right here in this post.

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  10. Tim,

    Is there a link to a better quality for these 2 videos?
    Thanks again for the vids. Humbly appreciated!

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  11. For ultimate beginners like myself who can't grasp the data from Tim's videos above, I found the link below which helped me. I have no affiliation with investorshub, I just wanted an undercut to Tim's explanation. Now to re-watch Tims videos!

    http://ih.advfn.com/education/what-you-need-to-know-about-level-2-stock-market-quotes

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    1. Now every word of Tim's post makes sense to me. Thanks Tim for the valuable information!

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  12. Tim
    Thanks so much for taking your time to help us out. Its very nice to ask questions and get honest, straight forward answers that we newbies need to get better. Sometimes when the long term , experienced traders explain something it's in terms and on their years experience level and sometimes hard to understand. Thanks for taking the time to get back down to our level and remember where you've been. That will only help us get to your level some day and talk smack across the table.

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  13. Tim
    So i notice by watching your videos on youtube that you usually base your actions on what level 2 is doing correct?
    If so, when do you go long or short? when level 2 is doing?

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  14. For the first time since 2011 I am able to understand just a little bit of level 2 and time and sales. You are an asset!

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  17. I have a question.... What really are pink prints and what does it mean when you mentioned something of a panic?

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  19. Hi Tim G,

    Thanks for all you do - in the first video; when someone is soaking up size - should it be viewed as positive or negative?

    I guess it depends on your position (long or short) but can you give a quick example on two scenarios? Or do you cover this in a video?

    Thanks!

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    1. When buyers are soaking up size, if you're short, it's a bad thing and a sign maybe it's time to cover. If you're looking to long though and play the bounce, that's maybe a sign that it's time to give it a shot. Sorry I don't have more videos of this!

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  20. Hey Tim just want let you know that none of level two videos work except for one. Btw I really appreciate all the info in this blog. I have seen everything except for the level two videos. Thanks a ton.

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  22. Where are the level 2 videos?

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  23. Hey Tim,

    I was just trying to view the level 2 basic video and I couldn't find it. Could you repost please?

    Just trying to learn so that I can trade independently and smart.

    Thanks

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  24. Will the videos be back up soon? Thanks

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  25. OMG! I have so much to learn : )
    Received an Inheritance and cannot let it go to waist!
    Thanks Tim for videos and help! Tammy

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  26. Hi Tim,
    Learning a lot from your blog. Thanks a lot. My question is since you base more off of level 2 than the chart could you further explain when do you buy/sell based on what you see filling bid/ask?

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    1. Hello Blessed, Tim mainly uses Level 2 with OTC stocks. You use the level 2 so that you can try to figure out when the stock is turning from gr/red or red/gr... most of the time you will see the level 2 hold at a certain price a couple times, this is your support.. so if the stock goes up a lil then it comes back down to your support level, you can buy at the point and watch the stock go up a lil bit. While watching level 2, you can see when the stock is gonna turn again and when you see the signs in level 2 you can then sell.

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    2. What you also want to look for is higher lows and higher highs. Once a higher low sets, that should be your new support if its high enough, if that higher low holds a 2nd time you may want to look at buying because as stated above that support shows that it can hold and you can watch the price go up a bit.

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  27. Hey Tim, I'm interested in learning level 2 however I work a 9 to 5 and im unable to read the tape during the day. Any suggestions on how I can practice?

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  28. I love you Tim for this info! Super useful

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  29. Hi Tim!!!

    Finished reading everything!!! Super helpful!!! I have a few questions though:

    1. If you are trading base on level 2 and the ticker, it seems that you don't need the fundamentals of the company as long as it has a good volume. The history charts won't matter anymore as well. Am I making sense?

    2. And I might sound like I haven't read your blog or penny stocking 101. But just to clarify... OTC markets are also penny stocks, Right?

    Thank again, Tim!!!

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