Level 2 data services are a prime money generator for the data services arms of the exchanges, however, as consumers of that data, we anticipate, expect and presume there is an advantage to knowing more about the current price than just what Level 1 data services provides. Another competitor to individual traders, namely your prime competition, are the algos and users of algos, as well as the larger firms. The most common terms used are running the stops or clearing out the retail traders. It is important to know and have some concept of who are the other consumers of the pizza pie, that you are eating. IOW, it is important to have some concept of why other persons or entities are participating in the exact same market and symbol and contract you are targeting or trading.
Now that we have set the ground work for this short discussion, one need realize that a number of trading groups, commentators as well as firms have had these discussions and conclusions and willing share these same conclusions that simply put the advantages for Dome trading, which usually requires Level 2 data services has lost its edge primarily due to the factor that there are more auto traders called algos that participate in the trading paradigm. Whether these algos are fully automated and operate during a time window or otherwise, they are some of the prime components of these co-location servers, where one pays for server / desktop hosting in physical buildings very near to the exchange servers. Some exchanges have arrangements and some companies have services at or near these locations solely to gain a fractional time advantage of order submission over other traders originating their orders from their locations. These factors of distance, courier services (cellular, fiber, cable, high speed ISP services, microwave and other methods) and means all play a factor on who's order gets "enqueue" sooner, than the majority of other orders. Retail traders really can't compete in these factors, however, one manner is to keep your funds in your pocket as the advantages of knowing full book sizes have been countered by the impact of these algos.
Another (rather nasty) feature of these auto traders or algos are their ungentlemanly conduct of spoofing. The term connotates a very negative deceptive practice of entering orders in size with the sole intention of deceiving those observing the dome of their true intent, true orders or true direction. The other factor is those orders are intended to be cancelled or pulled while leaving the real intent, real order, original order in place, on book for execution.
In short, this thread is giving voice to the notion that Level 2 data services have lost a significant value proposition for the retail trader as well as significant monthly fixed expense to their trading accounts and can be, should be reconsidered in one's review of services, value and features used. IOW, save your money.
Now that we have set the ground work for this short discussion, one need realize that a number of trading groups, commentators as well as firms have had these discussions and conclusions and willing share these same conclusions that simply put the advantages for Dome trading, which usually requires Level 2 data services has lost its edge primarily due to the factor that there are more auto traders called algos that participate in the trading paradigm. Whether these algos are fully automated and operate during a time window or otherwise, they are some of the prime components of these co-location servers, where one pays for server / desktop hosting in physical buildings very near to the exchange servers. Some exchanges have arrangements and some companies have services at or near these locations solely to gain a fractional time advantage of order submission over other traders originating their orders from their locations. These factors of distance, courier services (cellular, fiber, cable, high speed ISP services, microwave and other methods) and means all play a factor on who's order gets "enqueue" sooner, than the majority of other orders. Retail traders really can't compete in these factors, however, one manner is to keep your funds in your pocket as the advantages of knowing full book sizes have been countered by the impact of these algos.
Another (rather nasty) feature of these auto traders or algos are their ungentlemanly conduct of spoofing. The term connotates a very negative deceptive practice of entering orders in size with the sole intention of deceiving those observing the dome of their true intent, true orders or true direction. The other factor is those orders are intended to be cancelled or pulled while leaving the real intent, real order, original order in place, on book for execution.
In short, this thread is giving voice to the notion that Level 2 data services have lost a significant value proposition for the retail trader as well as significant monthly fixed expense to their trading accounts and can be, should be reconsidered in one's review of services, value and features used. IOW, save your money.
