Tape Reading Book Recommendation
- Thread starter carltonp
- Start date
Quite possibly the more pertinent question:
has "tape reading" and "trading order flow" been outmoded by the the bots and the black boxes and the "shake" algorithms ?
The fact of the matter is; the more dominant algos are:
quote stuffing, order queue gaming, flipping, order crossing to falsely simulate "liquidity takers", etc. etc. etc. etc.
In other words, why get fucked ?
has "tape reading" and "trading order flow" been outmoded by the the bots and the black boxes and the "shake" algorithms ?
The fact of the matter is; the more dominant algos are:
quote stuffing, order queue gaming, flipping, order crossing to falsely simulate "liquidity takers", etc. etc. etc. etc.
In other words, why get fucked ?
Is that so? That's disappointing. While I don't use it for my strategy, I like to look at volume profiles to get a feel for how well price is holding above/below certain levels. Time and volume have often corresponded, but I wouldn't be too surprised if the latter was gamed.
How so, if I may ask?
Worth a look.
Why not trust it? Volume-by-price distributions correspond with price-by-time. I highly doubt any entity can artificially manipulate a liquid futures instrument within a particular price range for an extended period of time. If they can, then your own ability to read price is just as susceptible to being gamed.
In a balanced market, price tests extremes then pulls back where lower risk transactions are executed. When demand changes, price moves. ES's volume profile on 9/01 is a prime example of how volume follows suit: fits the market profile pattern of price moving from balance to imbalance to a "T".
It's not in my playbook, it's just a tool for reference. And as long as I've been watching them, they've resembled the same patterns those market profile folks described way back in the day.