Silver Status Nice, but Level II Quotes Not That Big a Deal

Level II Quotes
Level II Quotes let you see the depth of the market. Invaluable for traders, ho-hum for investors.

HERE IS AN ARTICLE I WROTE OVER A YEAR AGO, BUT FOR SOME REASON NEVER PUBLISHED. (UNTIL NOW, OBVIOUSLY.)

One of the benefits of becoming more experienced in the investing game is that it usually leads to higher balances.  My user account recently passed the threshold to where I am now a silver-level member of the 5-Star program at InvestorLine.  With this new status, I have been given access to Level II Quotes and a few other perks.  I will be breathing this rarefied air at least until next quarter, when my standing will be re-evaluated.  Acquiring access to Level II Quotes, I have to say, is a goal I have had my eyes on for quite some time.  Apart from the cachet of having attained the balance required for acceptance into this ever-so-exclusive club and the Level II Quotes, what perks do I get for passing muster, and how beneficial are they?

Apart from the Level II Quotes, there are three principal benefits:

  • Discounted margin rates: Never say never, but at this point, I have absolutely no intention of ever investing on margin. I’m not against borrowing to invest, and will be doing so when our house in completely paid off, but borrowing on margin can lead to margin calls, and that can lead to the poorhouse. Borrowing against a secured line of credit may also result in losses in the market, but I know that I will be able to make the decision if and when to sell.  Meanwhile, I can continue to collect my dividends.
  • Discounted rates when trading through an agent: Seriously, does anybody trade with an agent anymore? I guess people who don’t have to worry about money in the first place, but I certainly don’t fall into that category.
  • No annual administration fees: Since I maintain the required minimum balances to avoid paying fees anyway, this is a non-issue for me.

The only perk that may actually do me some good is the Level II Quotes.  With Level II Quotes (or L2, or LII), you can see the depth of the market.  This means that you know how many people are lining up to buy or sell a certain stock, and at what price they’re prepared to do so (at least until the SOB’s pull their bid). While this is good information to have, it’s meant for, and mostly used by, traders, as opposed to long-term investors.  To be sure, Level II Quotes allow you to go into a trade with your eyes a bit more open, but it’s not as though the access to this information is hugely valuable to a buy and hold investor.

So, here I am, the morning after getting the biggest Christmas present I’ve received in quite a while (the fact that it’s March notwithstanding). The honest truth is, I’m more than a little let down.  Having attained this goal and status, it doesn’t seem so special now. Since the perks are of limited use to me, I guess I’ll have to get by on the knowledge that my newfound status lends me, as does my Tilly hat, “a subtle air of insouciance and élan which has hitherto eluded me.”

 

IN THE MONTHS since I first wrote this article, I have found that in fact, I have taken an increased interest in Level II quotes. With a bit of time and careful consideration of Level II quotes, I find that I am less surprised by swings in stock prices. I have also developed a deeper appreciation for the fact that thinly traded stocks can really bite you in the ass if you try to trade at the wrong time. Luckily, I was able to develop this appreciation as an observer, rather than as a participant in their pronounced price swings.

Oh, and the subtle air of insouciance and élan seems to have worn off.

Leave a Reply

Your email address will not be published. Required fields are marked *