Combining Tape Reading with Charts

murray t turtle · Nov 20, 2013

Quote from vinc:

yeah, yeah..

entries... what about EXITS ?? this is what real trading is all about.. I can give you thousands of entries where you would seem profitable - but exits, that's what actually verifies them !

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Trader Vic;

Well its a bull market you know, assume that chart is in a bull market, much , much, much different than a bear market.....;;
exits are not very important at all, unless you are trading/investing too big + most youngsters do

I did ,2,LOL

Also exits on weekly charts + monthlies matter more.

Also ''its a bull market you know'' probably will not really mean much, to you ;
till you have been in a bear market /bear trend, measured in months, weeks, 200 dma.

Wisdom is profitable to direct

kmgilroy89 · Nov 22, 2013

Quote from wrbtrader:

I would assume he must show statistics about it considering I remember someone here at ET saying such was the case for all the most "commonly known" patterns, events and other stuff.

The stats he keeps shows the bad stuff and good stuff.

Here are others I found posted by other ET members after doing a search...

http://www.priceactionlab.com/

http://www.seasonalysis.com/

No links for this one @ Ben Jacobsen and Cherry Y. Zhang from Massey University (New Zealand) wrote: Are Monthly Seasonal Real? A Three Century Perspective (74 pages) and The Halloween Indicator: Everywhere and all the time (55 pages)

The priceactionlab raises question marks. While the PFs in the examples are high, the examples use data with less than 500 trades. This could easily be curve fitting no?

wrbtrader · Nov 23, 2013

Quote from kmgilroy89:

The priceactionlab raises question marks. While the PFs in the examples are high, the examples use data with less than 500 trades. This could easily be curve fitting no?

Use ET search because there's lots of threads here at ET by users of priceactionlab. You should re-open those threads or start a new one with any questions about them.

http://www.elitetrader.com/vb/search.php?s=

ElonMusketeer · Nov 23, 2013

Quote from NoDoji:

This is my #1 pattern for entry using a 1-min chart. I trade it only when it occurs in the context of key S/R on the 5-min chart. I generally enter early using a stop order to catch the turn following the test (the Step 2 test):

http://thepatternsite.com/123tc.html

A KYM kind of set up, ascending or descending support/resistance, a breakout,a retest as opposite: entry.

Powerful and great rrr

Sergio77 · Dec 5, 2013

Quote from kmgilroy89:

The priceactionlab raises question marks. While the PFs in the examples are high, the examples use data with less than 500 trades. This could easily be curve fitting no?

They use portfolio backtests to increase the trade sample size. This is also one of their cross-validation methods. It is a very interesting concept that I'm studying. Price patterns do not generate many historical trades but you can test them across many markets more easily than chart patterns.This is an example from the website. T. Bulkowski has done something similar with chart patterns, It is hard to find many of the same formations in the history of one stock.

In the case of systems with price patterns you get many trades when you combine them into one big system. This is an example. I am researching for methods of combining these price (micro) patterns in ways that maximize entry probabilities. This is an interesting subject and also mathematical.

ronblack · Dec 5, 2013

Quote from kmgilroy89:

I primarily trade using tape reading in highly liquid stocks for small amounts of money. However, I would like to start to learn how to transition my strategy where I can combine tape reading with chart patterns in order to make longer intraday trades. I was wondering if any successful traders have insight as to what are the most powerful chart patterns that occur on a daily basis. Perhaps next time I see them I can try to incorporate my knowledge from tape reading with this information to get good entries and exits. Thank you.

I have heard about this "tape reading" thing many times in the past but haven't seen any convincing definition for it. Are you implying subjective interpretation of price action by looking at a quote screen?

kmgilroy89 · Dec 5, 2013

Quote from ronblack:

I have heard about this "tape reading" thing many times in the past but haven't seen any convincing definition for it. Are you implying subjective interpretation of price action by looking at a quote screen?

I read the L2 and T&S. There is some level of subjectivity which makes tape reading very hard to automate. I traded Sprint today. The tape looked about the same every time it dropped a few cents. I pretty much hit the bid in that all day with 2000-5000 shares at a time. When the book started to lean the other way and it started printing the offer I quickly got out.

dbphoenix · Dec 5, 2013

Quote from kmgilroy89:

I primarily trade using tape reading in highly liquid stocks for small amounts of money. However, I would like to start to learn how to transition my strategy where I can combine tape reading with chart patterns in order to make longer intraday trades. I was wondering if any successful traders have insight as to what are the most powerful chart patterns that occur on a daily basis. Perhaps next time I see them I can try to incorporate my knowledge from tape reading with this information to get good entries and exits. Thank you.

If by "pattern" you mean what is usually meant by pattern, it's unlikely that they will do you any good. However, if you're accustomed to tape reading and know how to read the cascades that lead to climactic action, you can see these in a chart quite easily. Trading them in either direction and/or the lower-high/higher-low tests that generally occur thereafter will put you in a better position than most, who are generally paralyzed while trying to figure out (a) what's going on and (b) what if anything they ought to be doing about it.

DR.BOUYE · Dec 13, 2013

Quote from kmgilroy89:

I primarily trade using tape reading in highly liquid stocks for small amounts of money. However, I would like to start to learn how to transition my strategy where I can combine tape reading with chart patterns in order to make longer intraday trades. I was wondering if any successful traders have insight as to what are the most powerful chart patterns that occur on a daily basis. Perhaps next time I see them I can try to incorporate my knowledge from tape reading with this information to get good entries and exits. Thank you.

A chart alone can only represent a simplistic view of historical volatility.

Further studies may include:

1. Volume

2. Options

murray t turtle · Jan 22, 2014

tiddlywinks said:
What kind of "axioms" are you looking for?

Bulkowski includes Identification Guidelines, performance stats, and other information for almost every pattern listed on the site. My personal gripe is that his bent is all about swing trading and/or investing. Day-trading the chart patterns is an ugly stepdaughter with no published stats.

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Probably a good reason for that ''bent''

I assume original poster had discerned the difference between uptrend[bull market] + downtrend [bear market]

;
old uptrend + young...........................................................................................................................

Those could be figured out on tape alone;
but a picture[ candle chart] is worth 2 thousand words. Believe it or not a picture[candle chart] is a fast way of handling lots , huge amounts of data,LOL.Balance that with Bright Trading warning every ship wreck has a wet chart,LOL