Not the way I read the tape. It doesn't matter to me if it is electronic or specialist. I define tape reading different than your definition of recognizing the patterns of one person the specialist, however, that may not be the only way you define the tape so if it isn't please elaborate. Thanks.
TAPE READING (chat room cont.)
- Thread starter shortseller
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How do you 'read the tape'? I am fairly new to trading but I am pretty sure that Maverick is right. You read the tape or time and sales to get an idea of the supply and demand imbalances. That can be done by figuring out how the specialist is letting the stock print. As for tape reading becoming extinct when the new hybrid system comes out, who knows...it will definately change but we will just have to adapt! As my mentor once told me, the cream will always rise to the top....or something like that.
-spxdes
If Maverick is saying what I think he is saying then ONLY NYSE stocks can be tape read. What about Nasdaq stocks with all the MM's and what about futures? Does he mean to say that those can't be tape read? I would like to see what he says first before I indicate how I tape read any stock or futures regardless of exchange it is on or who is "making the market".Quote from Spxdes:
How do you 'read the tape'? I am fairly new to trading but I am pretty sure that Maverick is right. You read the tape or time and sales to get an idea of the supply and demand imbalances. That can be done by figuring out how the specialist is letting the stock print. As for tape reading becoming extinct when the new hybrid system comes out, who knows...it will definately change but we will just have to adapt! As my mentor once told me, the cream will always rise to the top....or something like that.
-spxdes
The classic form of tape reading is reading the actual tape ala Jesse Livermore. You can't read a daily tape or weekly tape. The idea is to spot specific prints. It's not about reading volume, or ECN's or MM's or all that crap.
I'm not saying you can't create your own system where you look for strength or patterns in stocks. People do this all the time. But it's not pure tape reading. Pure tape reading is very specific, you are actually seeing the cards of your opponent. Nothing I am aware of in this world can duplicate that edge. Imagine if you could play poker with x-ray glasses and see all your opponents hands. It would be pretty easy to win right? Well, when done right tape reading is absolutely unbeatable! When I was in my prime, I NEVER lost money. I'm not saying that to brag, as this could be said for most of the guys in my group. But I made money every day on almost every stock I traded.
I have never seen another man,woman or child ever duplicate that feat. You can't read ECN's because there is nothing to read. You can't read the dome on the spoos to see where they are going. Christ they trade over a million contracts a day.
Again, I cannot say this enough, I am not trying to tell people they are not good at what they do or their method. To each their own. Some people have very loose definitions of what tape reading is. That's fine, you can call your method whatever you want to call it. I see all these books out with the title tape reading and I browse through them and not one of them actually talk about tape reading!
So I hope you guys understand now. When done right, tape reading is absolutely lethal and unbeatable. I can't say that enough.
Not time and sales. It's reading the bid/ask, the size on the bid and ask, last price, and size of last print.
Maverick,
I've been trying to tape read for almost a year but it is frustrating. How did it take you to do it and was the realization gradual or almost immediate?
I've been trying to tape read for almost a year but it is frustrating. How did it take you to do it and was the realization gradual or almost immediate?
Have you read his book "Reminiscences of a Stock Operator"? He actually goes into pretty good detail of what he did. Keep in mind this was during a different era and trading was much different then. But from what I remember in his book, the guy would have a ticker tape machine in his office and he would simply watch the prints. He could tell if someone on the floor was accumulating or distributing stock. He would stay in the stock for hours, days or weeks as long as he saw buyers accumulating stock. As soon as he saw distribution, he would get out.
Now this was much easier to do then this way because there was very little volume compared to today so these single prints would stand out a lot more. Plus when a large buyer or seller came in, they were much more easily spotted. But the same principles apply today. It's just today we have futures and options and options on futures and ETF's and daytraders and everything else that create noise around what's really going on. It means you have to focus that much harder then you needed to then.
BTW, one of his fav tricks he use to do was also one of mine as well. He would send out market orders for small amounts to see the exact price he got filled out to spot the real buyer or seller. I use to do this all the time with just 100 shares. I would send in a market order to buy 100 shares and notice exactly where it prints. amazing, over 100 years and that technique still works wonders.