• Learn how to more accurately predict the movement of stocks through technical analysis and level II quotes.stock chart with a pencil mark image by Dmitriy Lesnyak from Fotolia.com
  
  Since the the recent use of electronic communication networks (ECNs), online trading has rapidly grown. There are numerous online brokerage firms that charge low commissions and offer free stock charts and other services. Trading online is relatively easy; however, profiting from online trading is quite difficult. There are many tools and techniques that can make trading more predictable.
  
  

Level I Quotes

• Level I quotes are essential for online stock trading. Level I quotes provide real time stock quotes. Although many online services such as Google and Yahoo offer free quotes, the majority of them are delayed by 20 minutes. Level I quotes show the best bid and the best ask of a stock. The bid is the highest price at which a trader is willing to buy a stock. In contrast, the ask is the lowest price at which a trader is willing to sell a stock. Having level I quotes is essential to keeping tracking of your stocks. Also, most online brokers offer level I quotes for free.
  
  

Level II Quotes

• Level II quotes provide all the information level I quotes provide. In addition, level II quotes provide every bid and ask offer of a stock, the name of the market maker placing the order and the amount of shares. A market maker is a company or firm that is obligated to hold a certain number of shares of a stock. The market maker is supposed to help smoothly facilitate price movements. Traders are able to view the amount of shares behind every bid and ask to analyze price barriers. For example, if a market maker has an order to buy 200,000 shares at $3, and the stock is currently trading at $3.50, then the stock is likely to bounce once if the order of 200,000 shares at $3 is filled.
  
  

Technical Analysis

• Nearly all online brokers provide free charts with a brokerage account. Traders are able to speculate on future price movements based on technical analysis of the chart. Technical analysis is done through inspecting the changes in price and volume of a stock. Assess the general movement of the stock. If the stock has an upward trend, it is likely to continue moving upward. Likewise, if a stock has a downward trend, it is likely to continue downward. In addition, look for price barriers in the stock. If a stock chart shows that the stock has not been able to go beyond or below a specific price for months, then that price is a price barrier. After the stock goes beyond or below the price barrier, the stock is likely to move in that same direction for a short while. For example, if a stock has not been able to go beyond $50 for years, after it finally goes above $50, the stock is likely to increase rapidly.
  
  

Trading Platform

• Online brokers feature various different trading platforms. Become thoroughly acquainted with the utilities and services your broker provides. In addition, inquire about your broker's policy on how to short sell stocks. Short selling is the act of borrowing shares from your broker to sell then buy back at a later date to reimburse your broker. Different brokers have different policies regarding short selling. Some brokers do not allow users to short sell, whereas some only allow users to short sell if they call the trading desk. Furthermore, ask your broker if there are any restrictions on volatile stocks. Volatility is measured by the price fluctuation of a security. Some brokerage firms do not allow users to trade stocks which are volatile.