Quality, accurate, descriptive, and real-time data provides a huge advantage when trading the in the financial markets. This data, or level 2 data, or level 2 futures data (in the context of the futures market) as it’s typically known, can be an important part of a trader’s arsenal. Typically, a good proprietary trading firm provides its partner traders such information so that they can be more successful. Let us learn more about how traders can leverage such information.
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While level 1 data gives us basic, important information, level 2 data gives us a comprehensive insight into an asset, in the context of an active financial market. Level 1 data would tell us the price at which the asset was last trader or the bid-ask spread. Level 2 data would give us more insights such as various price levels, quantities of orders placed at different levels etc.
Detailed information includes:
Bid prices: Prices at which Buy orders are waiting to be executed.
Ask prices: Prices at which Sell orders are waiting to be executed.
Quantities: The quantities in which orders are being placed at different price levels.
Order Book Depth: Multiple levels of Bids and Asks, indicating the amount of Supply and Demand at different price points.
1. Advanced Market Insight: Provides a more comprehensive insight into the market, particularly market sentiment (temperament of other traders participating in the market)
2. Improved Order Execution: The more comprehensive and insightful information allows traders to improve their order execution. Information such as liquidity at various price levels helps in this particular case. Additionally, data concerning slippage can be used to ensure the best orders are placed and executed at the desired price levels.
3. Complex Trading Strategies: The added layer of information could help traders formulate more complicated trading strategies that could be implemented in the market.
4. Real-Time Market Reaction: Since such data is relayed as fast and as comprehensively as possible, traders can use these insights to make strategic and profitable decisions when trading in the market. More importantly, this can be done as fast as possible. This could be readily apparent in times of high volatility or when the market is reacting to breaking geopolitical and/or market news
5. Competitive Advantage: In order for one to profit, another must incur a loss. Level 2 data provides proprietary trading firms like Axe Trader, and its traders, a competitive edge in the markets.
In summation, level 2 data has changed the game for top firms and traders. Such information is quickly relayed, highly detailed, and accurate. This enables traders to improve their strategy and execute at a higher level of efficiency. Such data can be leveraged to ensure there is no business loss during order execution (example: slippage). Level 2 data can be used to craft a comprehensive strategy with a high win rate, and also be used to streamline order execution, thus being an important resource for a trader looking to make sizable profits consistently.
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Axe Trader Ltd. offers fee-based assessment services and facilitates connections with third parties for Potential Traders who meet specific criteria defined by Axe Trader (“Eligible Traders”). Our services involve evaluating the simulated trading performance and results of Potential Traders in certain virtual off-exchange foreign currency instrument pairs (“Forex”) and/or selected virtual contracts for differences (“CFDs”). We conduct data analysis based on simulated trading activities in demo accounts traded by Potential Traders through Axe Trader’s platform, utilizing data provided by a third-party broker. Our methods and techniques are established and maintained by Eligible Traders.
Axe Trader grants access to a third-party’s simulated trading platform, related demo accounts, and simulated trading information for the purpose of conducting data analysis and assessment services. This third-party offers Eligible Traders a simulated trading environment and an opportunity to earn a share of virtual trading gains generated in demo accounts, as specified in their agreement with the Eligible Trader.
Additionally, Eligible Traders acknowledge and agree, as outlined in their agreement, that the third party has the right to collect and use the data obtained from Axe Trader for their own benefit, including the option to replicate trading activities based on this data. The third party also retains the right to incorporate any information received from Axe Trader regarding Eligible Traders into actual live market trading, which they will conduct for their own account and at their own risk.
Theoretical performance outcomes should not be considered as reflective of real trading experiences and are typically formulated with the advantage of historical knowledge, which may either overstate or understate the influence of specific market factors such as limited liquidity and price fluctuations. Moreover, since theoretical trading does not carry financial risk, it cannot fully encompass the impact of various risk-related elements, including an individual’s or advisor’s capacity to manage losses or adhere to a specific trading strategy when confronted with trading setbacks.
