Real-Time Quotes - Explained
Real-Time Quotes is a new section. I put some detail in this section for you, especially this 1st page of the section, so you obtain necessary background information your mind requires to make sense of all this as one big picture. You will understand as you read on.
The next two topics under this Section are as follows:
• Level 2 Quotes
• Level 1 and 2 Quotes
Real-Time quotes, in contrast to delayed quotes, display bid and ask quotes for shares of a security within seconds or even live in the case of real-time streaming quotes.
Real-Time quotes for stocks traded on the Nasdaq, NYSE
and AMEX are displayed free by:
• many internet investment sites
• by your broker.
Real-Time streaming quotes are provided via a direct connection to any exchange, OTC or an electronic communications network (ECN) by means of direct access software (DAS) provided by a broker and participating financial websites. The quotes are posted very fast, within millionths of a second.
All this will be explained, including ECN's, as you continue reading this page.
Plain streaming real-time quotes of most US stocks is free from most brokers. The more complex (in depth) such quoting information is the more likely you will be charged a fee, For instance:
ECNs potentially provide the most depth and history of trading activity, but to see the greatest depth from such ECNs, you may have to pay a fee. This all depends on your broker, how active a trader you are and how much total capital you have in your broker account.
Level 1 and Level 2 quotes display real-time quotes for broker-dealer markets. In Broker-dealer markets, Market Makers (broker-dealers) trade securities completely on computer networks called dealer networks.
Broker-dealer networks are not centralized trading centers that you would find in an auction market like the NYSE and AMEX; rather, such dealer networks are composed of computer networks and computers in many locations.
Such networks are used by Market Makers to communicate with each other and to post as well as trade share lots of stocks that exist on dealer financial markets.
Dealer financial markets in the USA are the Nasdaq, OTC BB, and OTC markets. Many other dealer markets exist in internationally.
By actively trading shares of a stock amongst each other, and for the public, market makers make the market (set the price) for all buy and sell orders. . .
How does this happen? Because all individual buy and sell orders are processed and filled by market makers at the competing prices they quote. This is all accomplished by computer programs and happens within seconds.
This will all make more sense as you continue.
The dealer-markets in the US are:
• OTC BB and
• Pink Sheets.
Nasdaq is the only dealer-market in the USA that was granted stock exchange status by the Securities and Exchange Commission (SEC).
Since Nasdaq is a major dealer market, I will go into some detail to describe this exchange so you understand Level 2 quotes better, and why they differ from from just real-time quotes.
This is also good education on the evolution of the Nasdaq as a major broker dealer market and stock exchange.
The Nasdaq stock exchange provides:
• Level 1 quotes (real-time quotes) for anyone
• Level 2 access, (a specific type of real-time quotes) for brokers and traders to view market maker trading information and activity.
Level 2 shows best bids and best asks for market makers and market participant trading a financial security, size of each offer, and the identity of market makers and participants making the offers in real time).
The buying and selling functions of Market Makers provides trading activity/liquidity and greater equilibrium of buy and sell orders, thus helping to prevent inactivity or heavily buy or sell dominated stocks.
The following website offers a breakdown of how best to use Level 2 Quotes to trade securities:
Level 2 Tutorial
Beyond Level 2 Quotes on the dealer-market
• Level 3 access for brokers only, allows direct trading with market makers on all Nasdaq stocks.
• SuperMontage Total View is the newest trading tool offered by Nasdaq that goes beyond plain level 2 quotes. This tool is a giant leap above Level 2 Quotes providing the day-trader with full market depth and participation for a given financial security and is about twice as fast as Level 2 access.
Instead of just seeing the the best market maker quote and order, you will see every single quote and order at every price level. What you see in market depth using Total view is more than 20 times that observed on plain Level 2 quotes.
The history of trade activity with such market depth is just like that found on ECN's. Such depth is vital in following patterns of liquidity at various price levels over time. Such info is used to accurately understand trade activity and then plan trades accordingly.
Day Traders that use only Level 2 data are at a major disadvantage in today's high tech trading.
The Advantages of SuperMontage Total View - More Info
Total View possesses some rather major advantages over using just Level 2. Let's take a look at these advantages again with some additional information...
Firstly, just like Level 2 Quotes, Total View shows the identity of market participants and the best bid and best ask quotes for each market participant of a specific financial security trading on the Nasdaq.
NOTE on Market Participants: Market Participants include over 500 Market Makers, Order Entry Firms (Broker Firms), ECNs.
Appx 1000 Nasdaq Member Market Participants trade on the Nasdaq. Obviously only some will be trading one or more specific securities at a time, and others will be trading other securities.
Unlike Level 2, Total View shows not just one but all price activity of all market participant activity for each Nasdaq security and their volume of trading activity - this is called market depth and history information.
TotalView displays approximately 3 times more liquidity within .05 of the inside market as compared to NASDAQ’s Level II access and about 20 times the liquidity of level 2.
The benefits of such extra depth knowledge are as follows:
This extra depth knowledge can, for instance, help a day trader or block trader locate a top 5 price level ask or bid with the type of liquidity needed to plan a trade that can be filled successfully at that price, and without creating market-impact.
Market Impact is created when a huge order is placed at a price level that does not have the volume to handle the entire limit order causing the share price of that security to trend higher or lower.
The market impact goes further by potentially developing an emotional buy or sell response by other traders who view the huge order taking place and see the results in the charts.
SuperMontage Total View - intelligent routing of your trade orders
SuperMontage Total View gives individual traders direct access to the Nasdaq and to place trades directly to the Market Maker of their choice for a stock.
SuperMontage Total View is also a superior trading utility allowing an investor to place trades publicly or in total anonymity at multiple bid and ask quotes at one time with your choice of one or more market participants as you see it on Total View.
As usual with all Direct Access Trading (DAT), you need Direct Access Software (DAS) provided by your broker, and you always have access to streaming Real-Time quotes.
This combined feature of viewing market participant quotes, and volume of activity, at every price level and then being able to place orders on superior routing tool at the same time insures the investor that he can plan trades so as to obtain the best prices possible at the fastest speeds possible.
The extra depth and volume of information for a stock by each market participant at specific price levels as seen on Total View is also helpful in discerning the strength of a current trend.
Day Traders still at Disadvantage
Despite all its benefits, Supermontage Total View cannot tell a day trader the number and volume of secret trades made by market makers and other participants on Electronic Communications Networks (described in detail as you continue reading).
Anonymous trades are being made all the time by Market Makers on ECN's that cannot reliably be traced. In fact, that is why ECN's were originally created. This fact causes problems for day traders in discerning micro trends to trade and planning strategies.
Another trick that Market Makers play, is to create trade false trade orders that cause the trading programs of day traders to create losing trades.
Very few day-traders are successful beyond the level of mediocrity - about 3%.
SuperMontage - the Routing System
Behind Supermontage Total view is the Routing System called Supermontage.
Nasdaq SuperMontage now handles all Nasdaq orders that once was handled by several others individual routing systems. I will explain this shortly.
Supermontage, is an intelligent routing system that handles all your trading of Nasdaq securities. With Supermontage, a direct access trader using a direct access trading desk, can screen Nasdaq stocks for you to get the best price wherever they may be traded - whether on Nasdaq through one or more Market Makers, or on an ECN, or in a Black Pool (defined later), or on all at the same time.
To find out more information on SuperMontage and SuperMontage Total View please access the following website:
On the above linked website, you will also learn which brokers offer Supermontage Total View to its clients.
Nasdaq SuperMontage (the routing network) replaces several other Routing Tools
Nasdaq SuperMontage totally replaces SOES, SuperSOES, and SelectNet (SNET) since about 2002.
Supermontage is now the SEC approved Nasdaq order routing system that handles all trades for Nasdaq Securities.
Here are the order routing systems that were replaced by Nasdaq SuperMontage:
SOES/SuperSOES (Super Small Order Execution System) and the SNET (NASDAQ SelectNet System) were ECN like programs owned by NASDAQ used to route trade orders for its securities.
These two programs were SEC approved to allow individual traders direct access to the Nasdaq and place trades directly to the Market Maker or ECN of their choice for a stock just like Level 3 access brokers.
As usual with all Direct Access Trading (DAT), you needed Direct Access Software (DAS) provided by your broker, and you always have access to streaming Real-Time quotes.
Using SNET, you had the choice to broadcast your order to all market makers, or select one market maker to trade with, but you could not actually see your order placed on a level 2 screen like you could for SuperSOES.
SNET, by means of smart routing software, you were able to scour many ECN's and the exchanges at one time for the best quote price of the stock you are attempting to trade at that point in time, and then automatically fill your order at that best quote price.
Once you executed a trade through SNET, you could not undue or change the trade for 10 seconds. Much can happen in 10 seconds, which is why many day traders prefer not to use it.
SNET was not the only means by which smart order routing is available. Automated algorithmic intelligent programmable trading software also use smart order routing systems that are extremely fast and complex. And such software keeps improving, becoming more widely available, and the prices are becoming more affordable.
Online brokers could also use SuperSOES to place Nasdaq trades for their clients - stock traders like you and me.
Super SOES orders had to be honored by the market maker at the market maker's current advertised bid/ask prices as seen on the Level 2 screen.
Nasdaq Supermontage is now the only Nasdaq routing system for all Nasdaq security orders, and all rules and abilities of the other routing systems are now incorporated into Supermontage.
Supermontage handles orders far more efficiently, swiftly and intelligently than the individual programs did separately.
The small day traders typically will lose out to the high tech programs used by large trading firms.
Even if a day trader attempts to mimic the trading activity of the more successful large firms, the lag time may to be too great to capture the less than a second trading needed at the specific point in time to capture the tiny trend.
Even so, Supermontage Total View will help elevate the success level of day traders who use this intelligent trading system.
Level 2 quotes and SuperMontage Total View - more info
Level 2 quotes is a step up in detail from plain level 1 quotes showing the identities and trading activity of market makers and other market participants for the best bid and ask price of securities traded on the dealer-markets.
Level 2 information may be free for day-traders and other active traders, but not usually free for casual traders.
Supermontage Total View is a step up from Level 2 real-time quotes for the dealer-markets.
SuperMontage Total View provides dealer-market real-time quotes that are even more detail than Level 2 quotes - to infinite depth instead of just the one best bid and ask quotes you find on Level 2. You see all volume of trade action by market makers and other Nasdaq Member Participants for every bid and ask price.
SuperMontage Total View is also an intelligent routing system that will route your trade orders, through Supermontage, to the appropriate financial markets, even handling multiple orders for you at one time.
This extra depth and history of information coupled with a built-in routing system - the SuperMontage - will cost about $15 per month plus agency fees.
Supermontage Total View is offered free for active traders with a higher capital investment in their broker account. E-Trade is one of those brokers offering Total View for free to those traders meeting qualifications.
NYSE OPEN BOOK provides Auction-Market Real-Time Quotes for NYSE traded securities that is far more detailed than the plain real-time quotes. The Auction-Markets include NYSE, NYSE Euronex, and NYSE Amex.
NYSE OPEN BOOK is similar to Nasdaq Total View in that it offers traders the ability to see real-time quotes of detailed trading information coupled with an order routing system for a fee.
The difference is that unlike Nasdaq, NYSE is an auction style market offering real-time quotes for the auction type market rather than real-time quotes for market makers and other market participants.
Open Book opens the order book of trading activity for NYSE traded securities. Traders are able to see the limit-order volume at every bid and offer quote.
Earlier, you read about real-time quote and real-time streaming quotes. Another type of quote that is heard of less often are the "delayed quotes."
Delayed quotes, which use to be called streaming quotes (Not real-time streaming quotes), are not real-time quotes.
Delayed quotes show similar information to real-time quotes, but its not very fast. . . It displays quotes every 10 to 30 minutes depending on which financial market the security is trading. . .
For stocks traded on US stock exchanges the delayed quotes are displayed every 10 to 20 minutes depending on the exchange.
Delayed quotes are likely always free to view on any financial site, and are most frequently used to quote OTC BB and Pink Sheet stocks, and stocks from foreign financial markets.
Real-Time Quotes - Revisited
Free Real-Time quotes are commonly seen for stocks that are traded on the NYSE, Amex (NYSE MKT) and Nasdaq on many financial websites.
These Real-Time quotes displayed for free typically only give you the lowest ask and the highest bid available at the time for a financial security traded on a the Nasdaq, NYSE and AMEX (NYSE MKT).
Real-time quoting is also provided for after hours trading of a security. After hours trading does not occur on the stock exchanges themselves; rather, such trading of stocks and other financial securities takes place on Electronic Communications Networks (ECN's). ECN's will be described later on this page.
Other common helpful data displayed along with the real-time quotes on free financial websites are:
• Last Trade
• Trade Time
• Percentage change from the previous trading day
• Open Bid Price
• Day's Range
• 52 week Range
• Avg Volume
• Real-time charts (may have to press refresh on your browser to update)
• Real-time and SEC reports (press refresh on your browser for updates)
This is easy to see and understand by typing in a stock symbol in finance.yahoo.com or other financial site offering stock quote search and see the results of quote data displayed.
Level 1 quotes are real-time quotes - exactly the same information as real-time quotes. The difference is that the term Level 1 Quotes is used for Real-Time quotes of stocks traded specifically on the Nasdaq, OTC BB and Pink Sheets or any other electronic dealer market globally.
For instance, the Toronto Stock Exchange is an electronic dealer market. Many more electronic dealer markets exist in foreign financial markets.
All Level 1 quotes are real-time quotes They look the same. Both have best bid and ask quotes, but not all real-time quotes are called Level 1 quotes.
In other words . . .
The term, Real-Time quotes, is frequently used to refer to live quoting of all securities traded on any exchange or any ECN globally or on the OTC BB and Pink Sheets.
But Level 1 quotes specifically refers to basic live quote data of securities traded on an electronic dealer market such as the Nasdaq and OTC markets.
Reminder Note: Level 2 quotes will be discussed later, but in summary, level 2 quotes are more specialized dealer-market quote than Level 1 quotes. Yes, they are also real-time quotes, but the term "Level 2" designates these real-time quotes as dealer-Market quotes.
Level 2 quotes are more detailed than Level 1 quotes in that such quotes actually track the identity and trading activity of dealer-brokers and other market participants in an electronic dealer market for the best bid and ask prices.
Beyond Level 2 quotes, there is the SuperMontage Total View, which was already discussed.
Tracking and viewing share prices of a target stock within seconds, or live, can be quite helpful and even essential to conduct extraordinary trades.
Compare Real-Time quotes with time-delayed quotes that displays every 10 to 20 minutes for a US stock and you will understand why real-time quotes are in such high demand by investors.
Question: Wouldn't you rather see quotes within seconds or live for a stock you are tracking rather than having to wait to see a delayed quote of 10 to 20 minutes?
BATS EXCHANGE and FREE REAL-TIME QUOTES
Fortunately free access to Real-Time quotes and charting, is available for listed stocks on the NYSE, AMEX (NYSE MKT), and NASDAQ on many financial sites thanks to the BATS Exchange (Described shortly).
OTC BB stocks and Pink Sheet stocks are also quoted in real-time on many financial websites, but such real time quoting is rarely free online except possibly by your broker. You will understand why as you read on.
The benefits of Real-Time quotes are obvious:
• Since penny stocks can easily trade up or down 20% or more within seconds to several minutes on exciting or depressing news, you will not likely see the drastic explosive trend in share trading until 10 to 20 minutes after it happens with time-delayed quotes.
• You can more precisely and effectively plan and time a trade to buy or sell when you see a stock quoting in seconds of time (or live) rather than 10 or 20 minutes after the fact.
• While an extraordinary investor can make extraordinary trades with high consistent profits using only time-delayed quotes, such investor will likely lose out on some exceptional short-term trades.
My personal experience trading with time-delayed quotes:
My best trades in the first few years of successful trading, after building and testing the investment strategies as taught on this site, were accomplished using only time-delayed quotes. At the time, I had not used Real-Time quoting before; So, I did not think I needed such quotes to make extraordinary trades and profits.
Part of the reason for my success using only delayed quotes is that I devote far more time to screening and researching for high potential sleeper stocks to invest in that are most likely to explode at a future time. . .
• I mostly invest for longer term, purchasing and holding onto sleeper stocks at least a week to as much as 3 months before an explosive trend begins. I also may pre-set a Good-Till-Canceled limit order to sell the shares of a stock at a realistically far higher price in anticipation that such a price could be reached with a rocket-stock trend on exciting news.
• This strategy of penny stock investing provides for me the lowest risk and stress, and the highest consistent rewards of all other trading strategies.
• With such trading goals, the need for real-time quotes, or live quoting, is not essential, but it sure is convenient, because anything can happen in the near term for a good stock sooner than you think! Besides that, seeing your target stock trading in seconds is more interesting and exciting - comparable to watching a moving rather than observing snapshots of the movie.
• Despite my past success with only time-delayed quotes, any trader is obviously better off being updated in seconds with Real-Time data so as to avoid a potential surprise trend change. You avoid more potential risks that way. You also position yourself for success with a variety of trades - whether very short term or longer term.
Regarding very short term trades, real-time quotes are essential to me. Within the past two years, I have really cut back on investing to work on this website and other hobbies, so now my investment goals have temporarily changed to accommodate more range-trading on cyclic trends of stocks I am already knowledgeable about.
I find real-time quotes to be essential for range-trading. Continuous quotes in seconds (or live) allows me to fine-tune such trades by the current quotes listed for that stock and also to buy or sell on a moments notice.
Ever since I started using real-time quotes and real-time streaming quotes (live quotes) several years back, I now am addicted to the instant quoting results. I now feel that such information is essential for serious trading and investing, even though most of my trades are longer term - within 1 to 3 months.
While using live quoting, I notice spikes in trading volume and prices as they occur along with live news updates and live charts. All of this real-time data is very helpful in planning and tracking trades with more accuracy.
I think you will agree that seeing quotes, charts and news of stocks you are following in seconds of time, or live, is something you will not desire to give up once used, just as I do.
Real-Time quotes can easily be accessed in two major ways:
1) Real-time quotes provided on many free financial websites
2) Streaming Real-time quotes, or live, provided via Direct Access Software (DAS), or web based service, as supplied by your broker or from a participating online financial service.
DAS allows the trader to view real time streaming quotes for any or all participating stock exchanges or ECN's and other financial markets. Such DA (Direct Access) quoting includes the ability to trade directly with some or all of these financial markets depending on your DA trading platform and intelligent routing available.
For auction type financial markets such as the NYSE and AMEX, the live quoting is simply called real-time quotes or real-time streaming quotes or the more detailed NYSE Open Book. Auction type financial markets can be found globally, but most such trading is done electronically or by phone and is routed to a specialist who matches trader buy and sell orders.
For electronic dealer markets, such live quoting or real-time quotes is specifically called Level 1 quotes, Level 2 quotes and SuperMontage Total View.
Level 1 and 2 quotes will be explained in greater detail as you read this page and the following two pages. SuperMontage Total View will be discussed again on this page.
Other information that is usually included with streaming Real-Time quotes...
• Real-Time streaming charts, news updates.
• for ECN's, actual individual buy and sell entries and trades and numbers of shares traded at specific times throughout the trading day via direct access, and includes a history of trading activity over a period of time. The identities of the traders are not revealed (anonymous) by most ECN's.
BATS and Free Real-time Quotes
How are free Real-Time quotes made possible?
Free real-time US stock quotes for the NYSE, Amex, and Nasdaq are made possible via a second generation Electronic Communications Network (ECN) called the Better Alternative Trading System (BATS).
Such quoting of stocks, as provded by BATS, is available on good free investment sites like yahoo finance, google finance, vantagewire and on many other trade and financial related websites.
You can find many such financial sites by searching for them on any good web browser.
• The charts on such free sites also update frequently, or in real-time, to reflect the changing quote prices, but I find that I have to press the refresh browser icon to update the charts to reflect real-time quotes.
• Any news updates on such free sites are posted quickly, but not live, and you have to refresh your browser to view the updated news if any.
What is an ECN and BATS?
I go into some detail describing ECN's so you gain an understanding of how this all works together with real-time quotes. In this way, you will not be left in the dark when you read all this stuff about ECN's, DAT, DAS, etc., as you get more involved in trading stocks. Better to get some understanding now rather than be confused later.
In addition, you will notice that I repeat and explain terms on this site and build upon information provided earlier. In this way, your mind will develop a better understanding of the terms as they are used in different examples.
ECN (Electronic Communications Network) are Alternative Trading Systems designed to automatically match trade orders.
Other Alternative Trading Systems (ATS) can operate partially or wholly automatic to match and fill orders from bid and ask prices of traders on stocks that belong to a stock exchange or the OTC or other financial markets such as derivatives, FOREX, and Commodities.
Besides ECN's, other Alternative Trading Systems include call markets, matching systems and crossing networks (a routing system for Black Pools - discussed shortly).
Instinet, which originate in 1969, is recognized as the first ECN. Nasdaq is considered by some to actually be the first ECN when it was still an electronic BB quotation system, and has now developed into a major electronic stock exchange.
Since this site deals with penny stock trading, this site will refer to ECN's within their roll as the trading of stocks on a stock exchange or on the OTC Market.
Each ECN has its own venue of financial securities offered to trade on their networks. Most ECN's offer trading of a number of financial securities originating from the NYSE, Amex, and Nasdaq.
Some ECN's wholly or partially specialize in OTC securities. These ECN are as follows: ARCA, ATD, DOMS, FANC, HDSN, LAMP, NITE, OTCBB, VERT, and SBSH.
Most ECN's are not advertised much; so, you will find little to no recent information about most of them by doing a web search for ECN's.
If you desire to find more about individual ECN's and their fee structure, you best do a search for "direct access brokers" and search the broker site under "fees" or "commissions." If you do this, then you will see a list of ECN's available to trade on through one or more of the broker offered direct access trade stations.
Partially automatic ECN's are referred to as Alternative Trading Networks when they are integrated into an exchange or OTC market that incorporates the human intervention of middlemen brokers such as online brokers, dealer-brokers (market makers) and specialists that take part in facilitating the trading of securities. More on these types of middlemen soon.
Some fully automated ECN's called Electronic Communications Network Alternative Trading Systems (ECN ATS) are owned by stock exchanges.
For instance here are some major ECN's owned by Exchanges:
ArcaEx is owned by NYSE and is called NYSE ArcaEx. Arca was the ECN Archipelago Exchange before NYSE purchased it. NYSE Arca trades securities listed on the NYSE, AMEX, Nasdaq and Pacific Exchange.
INET, owned by Nasdaq, use to be an ECN, but is now incorporated into Nasdaq's own routing system called Supermontage.
INET or INET ATS was created when, in 2003, Instinet ECN split its broker business from its ECN called "Island". The resulting brokerage business retained the name of Instinet, and the ECN half was named INET ATS or INET ECN.
INET ATS was acquired by Nasdaq in 2005. INET now offers securities on the Nasdaq through SuperMontage and provides routing to securities from other exchanges and financial markets globally.
The intelligent routing provided through Nasdaq Supermontage is extremely fast and reveals the pools of liquidity available or not available at many quote prices.
INET does not offer securities from the OTC markets.
Other ECN's are independent, or owned by other stock exchanges or are broker-dealer owned. A list of recent ECN's and their commission structures can be found on direct access broker websites under "commissions". For instance, see:
Note: InteractiveBrokers has one of the best intelligent routing systems offered by any direct access broker for individual traders. The routing system is very fast, efficient, accurate, flexible and intelligent.
InteractiveBrokers' top offered trade station for stock trading gives you access to all ECN's offered including Black Pools, and also direct trading to the major stock exchanges.
The routing system of InteractiveBrokers' top trade station is able to search all the offered ECN's and stock exchanges at one time repeatedly searching for the best prices for your trades at extremely fast speeds.
This routing system also allows the trader to choose only one or several of these financial markets to trade in for each order.
Such trade stations are not very important for you as an extraordinary investor, but to day traders, such trading desks are extremely important for high speed complex day trades.
All ECN's are alternative trading networks (ATN's) or off-exchange networks. In other words, ECN's are another (alternate) means, besides the traditional stock exchanges and OTC market, by which shares of stock and other securities can be traded.
The ECN's themselves are not the originator of stocks; rather, ECN's are used to trade stocks and other securities that originate from a non-ECN stock exchange or an OTC. Such stocks still retain the name of the stock exchange or OTC they originated.
Most ECN's are fully automatic alternative trading systems (ATS. In fact this is how the SEC (Securities and Exchange Commission) defines ECN ATS. If the ECN is not fully automated, then it is either called a routing system or an ATS.
The only exception is the BATS (A SEC approved ECN Stock Exchange), which dose have market makers for its IPO or primary listings of stocks called the BATS CLP program (Competitive Liquidity Provider program). This unique arrangement between ECN and Registered Market Makers was filed on 12-19-2011 and was approved by the Securities & Exchange Commission (SEC) in 02-06-2012. . .
So, ECN's themselves automatically facilitate trades except in that novel BATS CLP program. The traders themselves using the ECN's make the market.
ECN's allow traders - via DAT software provided by direct access brokers - to directly post buy and sell orders with each other, and to actually see your real-time quotes and others quotes being displayed on a screen.
No middleman broker-dealers or specialists facilitate trading on these ECN's; rather, all trades are facilitated by the ECN itself - 100% automated. Therefore, the ECN itself becomes the Market Specialist of all securities traded on its network.
ECN's allow all users to view streaming real-time quotes and other trading data within the ECN all in real time.
In review so far, most ECN's are fully automated ATN's. That is how the SEC defines ECN ATN's. They are ATS (Alternative Trading Systems) that simply provide the electronic networks by which traders, by means of DAT software provided by their brokers, can find each other and trade stocks or other securities with each other anonymously and in real time.
These stocks and securities originate from a stock exchange and/or from the OTC market and/or other financial market such as FOREX, Derivatives, and Commodities.
An ECN acts as a Master Auction Specialist automatically matching these trader's buy and sell orders. Real-time quotes and other in depth data are supplied on ECN's that are not normally available from exchanges unless paying a huge fee.
NYSE Open Book does provide the same kind of unlimited full depth history of trading that ECN's do on limit orders.
Although I am providing a great deal of information here about real-time quoting, ECN's, DAT, Level 1, Level 2 access et cetra, you certainly do not have to memorize it.
Knowing all this information is not necessary to be an extraordinary investor or make super successful trades. But such information can prevent you from being duped into believing you do need certain information.
This information will also help you to be creative in adapting trading tools to fit your needs or that could be beneficial to your present and future trading goals.
Your mind is being given the information it requires to make sense of how real-time quotes are possible and how ECN's and DAT software are able to provide streaming real-time quotes and other data. This information is giving your mind what it requires to make wise investment/trading choices for your future.
All of these terms that you are learning about on this page will continue to be repeated and reviewed in a variety of ways on this page so that you may better recollect and understand. Please study the rest of this information in this light.
Traders connect to ECN's via direct access software (DAS) provided by Direct Access Brokers. This type of access to ECN's allows stock traders Direct Access Trading (DAT) and offers the following benefits over full-service brokers and online brokers. . .
• lightning fast executions (millionths of a second)
• view trading data and charts in streaming real-time (live) - all quotes that you and others post are displayed instantaneously for users to see (streaming real-time quotes).
• view far more data (history) on quoted bids, asks (buy and sell orders) than on other sources - much more than just the lowest ask and highest bid available at the time as in Level 1 quotes. ECN's provide more depth and history of trading action then found on Level 2 or even SuperMontage Total View.
• provides the ability to trade after hours - after the market closes and before the market opens on regular stock exchanges all with real-time quotes. ECN ATN's never need rest. They can manage trades day and night.
• All trading on ECN's are real time, as it happens. Bids and asks, therefore, are as accurate as the trading that occurs in real time.
NOTE: Unlike Level 2 quotes, the identities of market makers, or any other trader, making trade orders are not visible - the trader remains anonymous on ECN's.
ECN's function to trade financial securities as do the stock exchanges. And some ECN's are SEC approved stock exchanges, and some are global stock exchanges.
The US SEC approved ECN stock exchanges are
• BATS (trades NYSE, Amex (NYSE MKT), Nasdaq and European securities).
• Direct Edge (EDGX) and EDGA Exchange trades NYSE, Amex (NYSE MKT) and Nasdaq securites.)
• On January 31, 2014, BATS Global Markets and Direct Edge completed a merger, with the combined company using the BATS Global Markets name
• NYSE Euronext owned: Euronext trades US and European equities and derivitives. NYSE Arca (US stocks and options). NYSE Euronext is a global or international stock exchange.
• Nasdaq OMX (semi-automatic ECN) includes its NASDAQ Options Market, NASDAQ OMX Philadelphia, NASDAQ OMX Boston.
Nasdaq also has growing operations in foreign markets.
• Intercontinental Exchange, Inc. (ICE) Trades derivatives and futures/commodities concentrated mostly in the energy sector.
I list and explain some major ECN's below, including Dark Pools:
More detail on the Other previously listed ECN type SEC approved stock exchanges.
BATS (Better Alternative Trading Exchange). BATS is an ECN ATE (Electronic Communications Network Alternative Trading Stock Exchange) that allows broker firms to post and trade blocks of shares with each other anonymously at extremely fast speeds - faster than all others as of this writing.
Automated algorithmic trading on this site is high due to the great speeds available on the BATS and the many stocks available to trade on it. The stocks traded on BATS are from stocks listed on the Nasdaq, NYSE and Amex. Orders are processed without middleman market makers or specialists.
Individual traders may trade on BATS via DAT software provided by their direct access broker all with streaming real-time quotes and other data that is far more detailed than just level 2 data supplied on the NASDAQ, just as explained earlier.
Direct Edge(EDGX) and EDGA Exchange both work almost exactly like BATS EX to view history and depth real-time quotes and to trade securities, except BATS also trades on the European Markets. Both possess about equal US market share. Presently, BATS is slightly ahead at 12% market share as of September 2011, and Direct Edge at about 11.9%
NYSE Arca Exchange is owned by NYSE Euronext, and is the 2nd largest US ECN next to the Nasdaq.
NYSE Euronext owned Euronext is a global financial exchange dealing in derivatives, stocks and options.
Dark Pools act as stock exchanges:
Dark Pools are fully anonymous alternative trading networks (ATN's) and are ECN's - they are closed or private markets for trading securities.
The term, "Dark Pool" illustrates the nature of Dark Pools, in that the public cannot see the traders or trades taking place inside of them - zero transparency. No Real-Time quotes and no identities or volume of trades are seen or openly accessible to the public financial markets.
The public does not know which stocks are traded in dark pools. Only the traders privately within the Dark Pool are aware of the trades, but not the identity of the traders unless they know each other previously and plan a particular trade in a dark pool.
Some dark pools are owned by stock exchanges. Even so, all dark pools operate off-exchange and in closed systems in that no public exchange or financial market is aware of the trades being made in the dark pools. No real-time quotes are made available for such trades to the public.
Dark Pools are used mostly by large institutions (example: mutual funds, broker-dealers, wealthy independent traders) to trade large blocks of shares with others privately and anonymously.
Dark pools allow traders to match large orders with each other while concealing their identities, the price and volume of their trades, and the trades themselves from the public on the open markets.
Increasingly, Dark Pools are now available to individual traders trading ever smaller blocks of shares. This adds to the liquidity of Dark Pools. However the Securities and Exchange Commission is developing rules that will restrict, or put regulations on, small block trader use in Dark Pools.
As with all ECN's, real-time quotes and other live data is provided through a DAT connection to a Dark Pool via your broker. Ever more direct access brokers are offering Dark Pool access to their clients.
The benefits of dark pool trading is to provide a means by which large investors can prevent such large blocks of buy and sell orders from being traded on the public exchanges and from revealing that such trades are happening at all.
Such huge trades on public exchanges, or just knowing that such huge trades are occurring, would cause the stock or other security to quickly trend up or down as other traders, or the market in general, react to the information (market impact).
No huge orders to see on the public exchanges from Dark Pool trading; therefore, no or little market impact from such trades.
Therefore, dark pools create liquidity for block orders of securities at stable quote prices only within the dark pools while also creating more price stability for such stocks on the open market.
This is a more advantageous method of trading for large block traders than having to fragment such huge orders into many smaller orders over a long period of time as on the open market or an ECN ATN.
In this way such block traders can be assured that their block orders will be filled much faster with less risk than on the open market, and at the best price for the entire trade - all in total anonymity.
Another benefit of Dark Pools is that such trades are less costly because:
• lower fees for block trades than to the stock exchanges or publicly traded ECN's.
• no fragmenting of large orders into many small orders filled over many days - saves on commissions.
• less risk of losing out on the best bid and ask prices by having large orders filled at one moment in time in Dark Pools. Fragmenting large orders into small orders over many days (as on the open financial markets) creates greater risk that favorable quotes will not be achieved.
• Avoid the risk of market impact on share prices by trading huge orders in dark pools instead of public markets.
• large block trades can be filled much more quickly, which allows many other favorable large block trades to be made in the time it would have took just to fill the fragmented orders over many days.
One other major benefit of Dark Pools, is that mutual funds are able to keep their trading goals and strategies private from other companies that could otherwise see the identities and real-time quotes and other data of such huge trades and then use the trading activity of mutual funds for corrupt purposes, or in an attempt to copy the trades of successful mutual funds.
Real-time quotes of black pool trading is non-existent outside of the black pools. Even if someone were to access a dark pool to try to find information on trading activity, they would not find any identities of traders involved, because all trading is done anonymously.
Disadvantages of Dark Pools: Dark Pools continue to take away market share from the exchanges and other ECN's. About 15% to 20% of US shares are now traded in dark pools.
If this trend of black pool trading continues upward, then:
• Black Pool trading will take away increasingly more trading activity and thus create less liquidity for trading stocks on the open exchanges.
• Share prices of stocks will not reflect the true value of the securities.
Even now, stock prices for many stocks on the open exchanges do not fully reflect the value of stocks - This could create problems. . .
One example: Stock prices on a public exchange are moving more powerfully after periods of low volatility in share prices...
Why? Because when low volatility exists, those who normally trade large blocks of shares feel that their huge orders on the open exchange will not have much market impact if traded for that stock. But many times they are wrong, and the share prices explode or implode. At times, the desired affect is market impact to gain a trading advantage on artificially produced trends on public exchanges.
Another example: Some firms trading in black pools are legally granted access to vital information about a stock before the public becomes aware of it through the news. Large blocks of shares are sold or bought in black pools before the news is publicized.
NOTE: Open ECN's are used for this purpose as well. Broker-dealers (Nasdaq Market-Makers) commonly hide their important trading intentions from Level 2 traders by fragmenting their large orders into smaller ones and selling the shares anonymously on an ECN rather than on the Nasdaq Exchange.
Whether selling large blocks of shares in dark pools or smaller blocks of shares on open ECN's the results are the same - other traders are not aware of the identities of those making the trades.
NOTE: Broker-dealers have access to pre-publicized information legally.
Public real-time quotes and trader identities of such VIP trading in dark pools or even on open ECN's could have for-warned open exchange traders. Whether this is a disadvantage or an advantage may depend on the circumstances.
Regulatory interventions will likely be implemented to prevent dark pool growth and to provide strict regulation of their use.
True Dark Pools are from the following sources:
Independent such as:
• Investment Technology Group (ITG) - Posit/MatchNow
• Liquidnet Inc
• NYFIX Millennium
• ITG POSIT/MatchNow
• Pipeline Trading Systems
• Pulse Trading BlockCross
Broker-dealer (market-maker firms) such as:
• Citi Markets and Banking
• Credit Suisse Group AG
• Fidelity Capital Maarkets Services
• Goldman Sachs Execution and Clearing
• Knight Capital Group
• Morgan Stanley
• UBS Investment Bank
Consortium such as:
• BIDS Trading
• eBX LLC
Exchange owned Dark Pools:
• BATS Dark Scan
• International Stock Exchange (ISE Midpoint Match)
• NASDAQ Crossing Network
• NYSE MatchPoint
Dark pool aggregators
Dark pool aggregators are those firms that provide a portal to dark pools
• BASOR – Quod Financial
• Crossfire – Credit Agricole Cheuvreux
• ONEPIPE – Weeden & Co. & Pragma Financial
• Progress Apama
• SuperX – Deutsche Bank
• Xasax Corporation
How many ECN's:
Over 50 public ECN's use to exist in the early 1990's. Major mergers took place since then, and some ECN's were bought by the major stock exchanges. The number of ECN's had decreased to about 37.
A number of ECN developed since then. Today about 48 ECN's exist by which dealer-brokers and large and small investors anonymously trade stocks and other securities originating from a stock exchange or other financial market, such as: OTC BB, Pink Sheets, other OTC, and commodities.
The original purpose/function for ECN's
ECN's originally were created to accommodate the anonymous trading of dealer-brokers. Such earlier ECN's offered brokers direct access and real-time quotes and other depth data by which they could better communicate and exercise their trades in a secretive manner.
The benefits to dealer-brokers of trading on ECN's
were particularly helpful in cloaking some of their more important trades from day-traders and other market-makers on Level 2 so as to gain an advantage in trading strategies over such traders. They still exist for that major function - and such function is now commonly employed.
Such secretive trading by dealer-brokers create trading problems and losses for day-traders.
ECN's may cater more to specific markets
Some ECN's function to specifically handle trading of institutional investors and algorithmic automated trading programs, along with dealer-brokers.
ECN's for Individual Traders
Most ECN's are available to many traders, including individual small traders, through DAT software provided by a direct access broker. This is all beneficial to the liquidity of stocks trading on ECN's. DAT platforms always provide streaming Real-Time quotes (live) from ECN trade data.
ECN ATN's allow regular traders to have level 3 type access, but the real-time quotes on wholly automated ECN's do not include the identities of the traders.
Level 3 type trading access made possible by ECN's to the average trader.
ECN's make possible the execution and posting of trade orders and direct trading with other traders without any middlemen involved. The ECN itself is the entity that facilitates the trading of individual traders with each other - all done automatically. This trading power is similar to that which brokers assume with level 3 access.
On most ECN's no Market Makers function to 'Make a Market' for a stock. The traders themselves 'Make the Market' within an ECN.
The individual investors, in effect, become like mini market makers, posting bids and asks and buying and selling directly with market-makers, brokers, and other traders on equal terms. All of this activity is visible to the ECN market participants, all with streaming real-time quotes. Such trading is anonymous in that traders' identities are not revealed, only their trade orders.
The Placing, Posting and Execution of trades on ECN's via DAT is conducted ultra-fast, within millionths of a second to several seconds, which is why ultra-fast and complex fully automated algorithmic day-trading program/platforms with Smart Trade Routing programs are used by large firms to make many trades per day via DAT.
Individual day-traders have a difficult time trading against the larger highly technical and expensive algorithmic trading platforms with fully automated trading software.
Viewing the Real-Time quotes on DAT trading desks in a fast moving stock can make a person dizzy or hypnotized. The trades are like flashes displayed across the screen.
Manual trading, semi-automated trading systems, and most retail automatic algorithmic programs are many times not fast enough to capture the best quote prices against the fully automated sophisticated programmable intelligent trading systems of huge trading firms such as mutual funds and broker-dealer firms.
ECN's originally created for and by dealer-brokers to make anonymous trades with other traders with real-time quotes.
Increasing numbers of dealer-brokers and institutional investors find that breaking up large blocks of shares and selling the smaller lots on ECN's anonymously to other traders on ECN's is advantageous for the following reasons:
• Stock prices remain more stable, preventing large price moves for that stock
• Allow large block orders to be broken up into pieces and filled at better prices than if trades are submitted as one large block of shares.
• Generate strategies that create more profitable trades for the dealer-brokers at the expense of day-traders. Such trading gives the dealer-brokers a technical advantage over other traders who do not know who, when, how much, or at what price these key players are making their trades.
The disadvantages to broker-dealers and other large block traders and day-traders for utilizing ECN's for this type of trading are:
• its becoming ever more difficult overall to buy and sell large blocks of shares at one time on pubic exchanges, ECN's or Level 3, since fewer such blocks are now available to trade. This is especially inconvenient for institutional investors such as mutual funds.
• Sophisticated automated trading programs were developed to break up large lots of shares and sell them in bits over an extended time period according to programmed parameters imputed by brokers and large firms. The only problem with this type of trading is that quote prices for a stock can change over the long period of time it takes to fill an order broken up into many small pieces. The cost for the total trade is also higher.
NOTE: This difficulty selling large blocks of shares on the public markets is why ECN Dark Pools were formed - to trade large blocks of shares privately with other like-minded parties, such as mutual funds and broker firms, at current prices within that moment of time).
• generate strategies that create more profitable trades for the dealer-brokers at the expense of day-traders. Day-traders experience greater difficulty planning their trades, since an ever greater percentage of trading by large investors and market makers is unaccounted for especially when using Level 2 access software.
Although broker-dealers (market makers) are the main traders on an ECN, that is quickly changing.
Increasingly, ECN's are catering equally to institutions, small business, small brokers, and individual traders (mostly day-traders) to trade securities via DAT software provided by brokers.
All this trading on ECN's is creating ever greater liquidity for market makers to trade their share lots. Great popularity and trading on ECN's will mean healthy access to many more stocks to trade on ECN's.
Any individual trader can now trade on an ECN or directly with an exchange via DAT (Direct Access Trading) software provided by a participating direct access broker at reasonable rates even in comparison to online discount brokers.
A trader benefits from DAT by:
• the greater amount of information available for share lots being traded and all trading activity on a stock all live, which includes Streaming Real-Time quotes.
• through automated trading software and smart routing programs, the ability to automatically screen several to many ECN's and exchanges for the best quote price and then trade directly on them at the best price for a stock all within seconds of time, and automatically according to parameters the trader programs into them.
• the ability to choose the market maker, such as on the NASDAQ, to fill your order that has the best quote price - either done manually by you, or automatically by the DAT trading platform.
• the ability to execute each trade within millionths of a second to several minutes as compared to within seconds to a few minutes for online broker trades.
• the ability to trade stocks after the market closes and before it opens the next day.
ECN per share routing fees, although low, are not advantageous to Penny Stock Traders and Investors despite all the many amazing choices and benefits offered by DAT. But ways to avoid ECN fees are possible:
As reasonable as the rates are using a direct access broker, and despite all the amazing benefits including detailed real-time quotes of trading activity, DAT trading is most likely quite expensive for the extraordinary penny stock trader/investor who typically trades over 15,000 shares at time.
For one, the more complex the DAT trading platforms, the greater the monthly usage fees. The Complexity of DAT platforms involves the number of exchanges and ECN's available to trade on, including the ability - using SMART order execution type software - to scan many ECN's and exchanges and even dark pools all at once for the best bid and ask prices within extremely fast speeds. Many of these ECN's have access fees. The depth of information that your DAT trading desk is capable of handling may also factor in the cost.
Secondly, most ECN's charge a commission or routing fee per share traded of between .01 to as low as .0008 cents or even free. The average for the top ECN's is about .004 cents routing fees per share for orders that are filled immediately. Huge firms work out deals with ECN management for far lower fees then what is available retail.
I firmly believe per share charges will get lower over time as ECN's become ever more popular to trade on.
In addition, most direct access brokers pass on any other fees assessed per share trade rather than a flat rate for unlimited shares traded by good online discount brokers.
While this fee structure is beneficial for trading a few hundred to a few thousand shares at a time resulting in lower costs than even a discount broker, this is not a good deal for the penny stock trader. . .
No matter how low the fee is per share you can obtain using DAT software, there is no way to compensate for an accumulated per share fee of $200 or more to purchase over 50,000 shares under 20 cents when you can pay a flat rate of as little as $4 for an unlimited number of shares and with a far easier and less complex form of trading. The lower the share price and the higher the number of shares purchased, the more outrageous the total accumulated fee will be.
Example: Let say you desired to buy 200,000 shares of an exceptionally high potential stock trading for 2 cents per share - which is not uncommon. While you only invest $4000 to own the entire 200,000 shares at 2 cent, you also must pay an additional per trade charge of .004 for each of those 200,000 shares, which equals an additional $800 over your initial $4000 investment. That is 20% over your cost for the trade. Quite a hefty price to pay in potential profits just to pay in fees!
Compare the ECN routing fees with a flat $2.50 to $9 per round trip trade for shares traded on discount broker sites and you see the great savings by using discount brokers over direct access brokers.
Some direct access brokers do charge only a flat rate fee for unlimited shares traded. Consider the other hidden fees per share from the exchanges and ECN's, just as I gave you an example for. Consider also the monthly cost of use for the DAT trading desk.
As well, since you do not trade near as actively as day-traders or swing traders, you will likely pay the maximum usage fees for the DAT trading system and all other fees.
Ways to avoid fees on ECN's are possible.
Many ECN's offer lower fees or even free access for trade orders that add liquidity to that stock. To "add liquidity" means that your order is not priced to be filled immediately; rather, you are placing a limit order to buy or sell at a price that is not currently available for that stock. So, to add liquidity, your buy or sell order will be priced outside of the current ask or bid prices.
To place such an order, you are looking for certain price parameters to be met before your order is filled. By placing such orders, you are likely to avoid all or most ECN fees. You save yourself potentially hundreds of dollars per trade by placing orders that add liquidity.
The only major fees will still be charged are simply the broker fees and the trade desk fees. These fees are very small in comparison to ECN fees when trading a huge number of shares. And if you meet minimum trade activity established by that broker, you will even pay less fees or even free for using the direct access trade desk.
To view ECN fees, which includes the adding or taking away of liquidity fees, I list links to three direct access brokers that offer direct access to a very good number of ECN's. Click on the following links of these direct access brokers:
NobleTrading ECN's and Routing Fees
InteractiveBrokers ECN's and Routing Fees
SpeedTrader ECN's and Routing Fees
Do a further search on each of these three broker sites and others to locate broker commissions and other fees charged by direct access brokers including fees on their trade desk options.
You may want to also do a search on each of these brokers by typing in a search engine the name of the broker followed by the word "reviews." You will then gain access to websites offering commentary on advantages and disadvantages of the broker in question in comparison to other brokers. This is how you search for a broker that best fits your needs and investment style.
Regarding the quick executing of trades of DAT and smart direct access order routing systems, these are definitely not an issue for the extraordinary penny stock investor. The successful penny stock investor is in no rush to make a trade in millionths of seconds. That is not how extraordinary investing works. No savings there. Such information is not useful for such trades.
The only traders that actually require direct access trading (DAT) are day traders, scalpers, momentum traders, and swing traders.
These types of traders compete for the fastest speeds, the most sophisticated automated algorithmic trading software, the most information available for trades, and a direct access connection to the markets to capture the best quote prices within seconds of time in order to gain a fraction of a percent to a couple percent profit off a trade.
What is cool about DAT is all the information it provides about trading activity in real-time quotes, including news and charts all in streaming real-time. If direct access streaming real-time quotes and charts are offered free by your broker than that is all you need and more.
Free real-time quotes and news on stocks are provided on many financial websites. The extraordinary investor does not require a DAT trading platform or DA streaming real-time quotes, but if it's offered free by your broker than why not?
But if you are thinking of trading on the DAT trading platform/desk, consider the fees per share for direct access trading, if any, and how to avoid the fees just as I shared earlier.
How are ECN's similar and dis-similar to Level 2 access?
Similar to Level 2 access, other ECN's also display in Real-Time quotes - the best bid and ask. They provide the actual orders - the quantity of each bid and ask order, and time each order was sold or bought as it happens.
Dis-similar to Level 2, Most ECN's
• do not display identity of the traders.
• ECN's will allow you to actively trade that stock and to publicly post your bid/ask orders for all to see.
• ECN's typically provide more than just the best bid and ask prices for a stock. They can provide all the bids and asks, and buys and sells, including volumes of each, and record a history of them over period of time.
• Identities of all traders using ECN's are anonymous.
All of these features of an ECN make it quite different than just level 2 access. In actuality, ECN access through DAT most resembles Level 3 access.
BATS (Better Alternative Trading Exchange)
BATS is an ECN alternative stock exchange located in Lenexa, Kansas, with additional offices in New York and London. BATS was founded in June 2005 by Dave Cummings when he was just 36 years old.
Through his expertise, Mr. Cummings created an efficient, practical, fast (80% of trades made within 250 microseconds), and effective ECN software that trades shares of stock automatically, stocks that are normally traded on major stock exchanges. BATS has expanding operations in Europe too.
• BATS began operating to trade listed stocks on January 2006.
• BATS won SEC approval as a stock exchange Mon Aug 18, 2008 6:01pm EDT
• BATS facilitates anonymous trading between Broker Dealers in the United States - must be a registered broker to trade stocks using the BATS Exchange or possess broker access through DAT software.
• Most volume of BATS trading is accomplished by means of fully automated algorithmic trading software that are able to make trades within fractions of a second.
• Unlike other stock exchanges, BATS offers free real-time quotes on about 8000 listed stocks originating from stock exchanges in this country. BATS also trades stock form the European Stock Exchange.
• On the BATS website, the free real-time quotes are accompanied by real-time display of orders (number of shares, time traded, at what price), but does not identify the traders.
• In the USA, BATS automatically matches and executes listed trades by its broker members for NASDAQ, NYSE, and AMEX stocks and other securities. All this is done anonymously.
NOTE: This anonymity of trades by broker-dealers using BATS and other ECN's allows them to hide their trades. This mean that investors, such as day-traders, are unable to track all trades made by market makers (broker-dealers) leading to great risk and difficulty calculating successful trades... this will be explained later under "Level 2 quoting."
• BATS Exchange provides free real-time quotes of the listed securities traded on its exchange - securities that originate from the NYSE, AMEX and NASDAQ. About 8000 listed securities are now traded on BATS.
• BATS only trades listed securities. No OTC stocks.
• Since BATS does not trade OTC stocks, then no free OTC real-time quotes are provided by BATS.
• BATS will always provide a composite delayed quote in case a real-time quote is unavailable - this happens mostly on thinly traded stocks.
• In 2009 the BATS Exchange became the third largest stock exchange in the world behind NYSE and the NASDAQ and now handles over 11% of trades for US listed stocks and about 6% of all trades in Europe. After hours trading is done through BATS as well.
Now that I have explained what ECN and BATS are and why free real-time quotes are possible for stocks traded on the NYSE, AMEX and NASDAQ - and not for OTC stocks - I will continue to show how this service is used to provide the investor / trader free quotes online.
How is BATS responsible for free quoting of listed stocks on many free websites?
Unlike other stock exchanges, BATS chooses to provide real-time quoting for free for all listed stocks(US or foreign) traded on BATS. And that is why many financial websites are able to offer free real-time quotes for listed stocks on the following US stock exchanges:
Are BATS stock quotes accurate?
The quotes of stocks provided for free by BATS may not be exactly the same prices quoted if you obtained quotes directly from the exchange on which the stock originated. . .
Why not the exact same quotes? BATS is an ECN, and also a stock exchange, trading stocks originating from other stock exchanges. In other words, a stock traded on, let's say, the NYSE is not traded at exactly the same prices as the same NYSE stock traded on the BATS even though all trading on BATS for that stock is based on the quotes of current trading activity on the originating stock exchange.
Really though, the Real-Time quotes are quite close enough for calculating penny stock trades by the Extraordinary Investor.
The Free real-time quotes and charts that you get through websites, although quoted in seconds of time or less, are not as fast and smooth operating as live real-time streaming quotes and charts from direct access trading (DAT) platforms provided by a broker or other financial service online. . .
Such speed is not near as important for the Extraordinary Investor as for the Day Trader.
If you have a broker account, you may still enjoy doing stock research on the free websites and web browsers.
Since I am familiar with Yahoo.com and Google.com financial sites, I like using those to scan for stocks. I also do most of my research, and look up real-time quotes and charts before ever accessing my broker account. I feel this is the most effective way to prepare for trades in what I target as exceptional sleeper stocks. Your tastes may differ. Everyone is different.
FREE Real-Time OTC quotes
NOTE: VantageWire.com is the only free real-time quotes for OTC stock and Canadian stocks that I can find that seems to be of good quality. They probably absorb the cost of this service to you through advertising on its site. I am sure more good free sites exist that offer free OTC quotes if you do a search - but not many.
OTC real-time streaming quotes are provided for free on your account with any good broker.
Your broker should supply streaming real-time quotes and charts for all stocks traded via broker DAS or through the broker DAT trading platforms made available to individual traders - this includes quoting for OTC stocks.
Real-time quotes for OTC stocks may still be slow
Nano-cap penny stocks, especially those on the OTC, are usually thinly traded; so, such stocks may not trade that often in a trading day. You may see a small to even a huge lapse in time before the next quote of a trade is visible for such thinly traded stocks even though you have streaming real-time quotes access.
Researching Stocks on different online sources can be fun and provide missing data that is important. . .
Whether using your online broker account or other free financial websites or both, you always have a free and efficient means of researching, following and investing in any stock of your choice, including OTC stocks.
As a possible strategy, you could actually use Yahoo Finance or/and Google Finance, and a good web browser like Google.com, and your broker account to track stocks, get stock quotes, obtain charts with technical indicators and look up good fundamental data for all stocks you are targeting and watching for possible future trades.
Although real-time quotes for OTC stocks are not available for free on yahoo, google or most financial websites, you can still easily track sleeper OTC stocks using such free websites using time-delayed quoting, or view OTC Real-Time quotes for free using the VantageWire website.
When you are ready to make a trade, you must then connect to your online broker account. You will see real-time streaming quotes of the OTC stock you are about to trade on your broker account after entering the trade data into the trading bill.
NOTE: You should only make a trade based on all the fundamental and technical data you are relying on to purchase that stock at the price you feel is best at that time.
This site is revealing to your mind the extraordinary investment strategies necessary to make this all work for you to accurately screen, target and study those super penny stocks with the greatest potential to explode in value soon for consistently low risk, low stress, huge profits.
You really will not require paid services providing Level 1 type quotes on OTC stocks to make extraordinary trades as an extraordinary investor. All you need is provided free by either combining free financial services with your broker services or just use your broker software if that is what you prefer.
Remember, penny stock investing is not day trading or swing trading in that you are not trading in seconds of time to capture tiny fractions of a percent moves in prices in fractions of a second for profit.
You do not require the use of automated trading software or complicated technical charting or algorithmic trading programs. You are after far larger percent moves in share prices that occur over a period of hours to months to unfold. Most of your time is in research to locate stocks that will explode in value in the future and invest in them well before the major moves take place. And, unlike day-trading and swing-trading, most of your trades will be very successful.
Real-time Quotes - addiction
Once you start using real-time quotes to track and trade stocks with real-time charts, you will rightly be addicted to the convenience of seeing stock quotes and charting in real-time, or better yet, streaming real-time quotes and charting for all types of financial markets in the USA and even Canada.
Once again, your broker should supply free streaming real-time quotes, charts, news and other data for you. But, if not, or if the software provided by your broker seems too difficult to use or far more complex than you require, then I would go with the services offered by: investorshub at:
Why go there? Because I believe you get more services for the money than any other financial site.
On the investorshub website, you can. . .
• Do a free full analysis of a stock on the major exchanges and on the OTC BB. As a penny stock investor, there is no sense in purchasing information that does not include the OTC BB.
Although in-depth research is required from all other available sources, investorshub is a good start.
• Purchase investorshub "Level 1 Starter" for only $9.99 per month. This starter kit provides live real-time quotes and charts for the Amex, NYS, Nasdaq, and OTCBB, including real-time Time and Sales of all trades, Portfolio Tracker, Live Streaming News updates, EDGAR, Professional Commentary and analysis, and even a message board for each stock.
The only reason the Level 1 Starter package is called a Level 1 "Starter" is because it doesn't contain any Level 2 quotes or real time pink sheets. As you will find out, however, you absolutely do not need level 2. Only day-traders and swing-traders may benefit from level 2 quoting.
Pink Sheets you should rarely ever trade, and even if you do, such stocks usually trade so thinly that you will not see trading taking place in seconds, or even hours. So, real-time quoting for Pink Sheets, in my opinion, is not necessary.
Following Pink Sheets on investorshub is convenient if you want to pay the extra money per month - only $7 more. Once you start making money in your investments, that $7 will be nothing to pay. You never know if a super pink sheet stock comes along that is worth researching, watching and investing in.
The InvestorsHub "The Small Cap Basic" package ($16.99) has everything in the "Level 1 Starter" plus Pink Sheets Real Time quotes. So, if you are dead set on Pink Sheets, you will pay $7 more per month for Pink Sheet streaming real-time quotes. Still a small price to pay monthly - about 51 cents day for the total package.
I especially like the real-time quotes and live news updates in the Level 1 Starter, or by my broker DAT trading platform, as essential to know what is happening before many other traders get the news.
I will be able to make informed trades with the help of vip news before many others do. A subscription to Real Time Edgar Sec filings alone cost $229 annually; yet, you get this free with these real-time streaming quote packages, including investorshub.
Penny Stock Friendly Brokers and Trading Desk
In all likeliness, you will not find many brokers that have a trading platform (trading desk) that is specifically designed to work well with penny stock trading the extraordinary way.
All you need is a basic trading station. Most other research can be conducted before ever connecting to your online broker acct.
A basic trading station or platform allows you to follow all your stocks with streaming real-time quotes and other data, including SEC reports and other news, within your broker account. You can include further research using your browser to find other information sources.
I will discuss the best penny stock friendly discount brokers in a future topic.
The only reason I include so much information on combining free website services with the services your broker account provides, is to promote in you creativity and to show you how real-time quotes work by example.
Be adaptable and skillful at using and combining different services when searching for and studying stocks to invest in. In this way, you may catch important data that would have been missed using traditional sources.
Granted that most news on a stock you see on one service is repeated on the other financial services as well, but not always.
You have now completed this 1st page of the topic:
Real-Time Quotes - Explained.
When you are ready, please continue with a brief study of Level 2 quoting. I specifically made this brief but informative sub-topic, just in case you are curious.
As you accumulate wealth rather quickly, you may want to make some day-trades or very short-term trades. If this is your future thinking, then, this page on Level 2 will provide solid warnings and info before jumping into something you might regret.
You never know when this knowledge could become valuable. So, just keep this knowledge in the back of your mind for future reference.
when you are ready then, please click on:
Level 2 Quotes - Do You Need it to Succeed?