TAPE READING (chat room cont.)

[eusdaiki]

Quote from Don Bright:

I think I have all the books on tape reading...and I agree with Maverick...not much help at all. There is a black book, written decades ago, that was pertinent at the time....but even the guy who wrote it says that things have changed so much that his own book lacks value.

Mav is right about watching the actual prints, all the while looking at the bid/offer spread and size...but the prints are the most telling.

Don

One good piece of advice from Wyckoff's day trading bible, is to save th tape to study it later.

The way I see it, if you study the tape long enough you're gonna start catching patterns [like a buyer or a seller for example; or particular ways in which the specilist for that market makes money] once you see the patterns you can test them, and then study your results at the end of the day and try to see patterns on the historic tape [a lot easier cause you know what happens next, kinna like watching the sixth sense for a second time, you see alll this things that give away bruce willis being dead...]

About the squad box, I think it's a great tool once you start listening to what's being said and you start using that information to your favor... It's a lot easier to spot a buyer/seller there, since you can hear "Bear is buying 200" or "Solly is seling 50"...

 

[Szeven]

After reading through, i have a few questions as well maybe maverick could answer.

In my trading, i have never seen such textbook examples. Am i wrong to think that things are never this obvious? I have never seen a small lot on the bid/offer buy or sell so obviuosly ever. I find if i do see buying or selling it happens in a small range on the bid/offer depending on the immediate direction of the futures.

AMD was a good example today as i saw a double print of about 10k at 27.40, so i started watching it. (this is just before 11am) The buyer (if there even was one) did not just hold 27.40 with a 1 lot or something like that, but they may have been buying for about a 4-5 cent range for around 20 minutes, at which point the stock broke out and ran 20 cents very quickly. Does this sound like a realistic example, or when you traded, were things as obvious as a 1 lot pushing a stock around and lifting offers and not being touched by market sells.

One other question, is when i see reserve size orders on the specialist, they seem to be hit more aggresively by the market than other orders around that time. Is this just because a big player has found liquidity and is taking the oppourtunity to just add or sell the amount of shares in the reserve order, or are they now considered a buyer/seller. Or, i guess, not enough info and it is merely a sign in a bigger puzzle?

Thanks

 

[Maverick74]

Quote from Szeven:

After reading through, i have a few questions as well maybe maverick could answer.

In my trading, i have never seen such textbook examples. Am i wrong to think that things are never this obvious? I have never seen a small lot on the bid/offer buy or sell so obviously ever. I find if i do see buying or selling it happens in a small range on the bid/offer depending on the immediate direction of the futures.

I see it all the time. How long have you been tape reading? I would say it happens a few hundred times a day at least per stock. You might not know what you should be looking for. Also, make sure you are watching news stocks or it's competitors and make sure you are watching stocks with avg daily volume of 1.5 mil or less, preferably 500k to a mil a day.

AMD was a good example today as i saw a double print of about 10k at 27.40, so i started watching it. (this is just before 11am) The buyer (if there even was one) did not just hold 27.40 with a 1 lot or something like that, but they may have been buying for about a 4-5 cent range for around 20 minutes, at which point the stock broke out and ran 20 cents very quickly. Does this sound like a realistic example, or when you traded, were things as obvious as a 1 lot pushing a stock around and lifting offers and not being touched by market sells.

Oh boy. You can't tape read stocks that trade 11 million shares a day! You need to be trading stocks that trade 500k a day to a 1.5 mil tops. You really should keep it under a mil. Another thing, you need to be watching these stocks open to close. You can't just start watching them at 10am. You need to see every single print, every print, 100%. Got it? It's like walking into the middle of a movie and trying to figure out what's going on.

One other question, is when i see reserve size orders on the specialist, they seem to be hit more aggressively by the market than other orders around that time. Is this just because a big player has found liquidity and is taking the opportunity to just add or sell the amount of shares in the reserve order, or are they now considered a buyer/seller. Or, i guess, not enough info and it is merely a sign in a bigger puzzle?

What is a reserve order? Usually when there is a size bid or ask, order flow will move towards it because of the liquidity.

Thanks [/B]

 

[Maverick74]

Quote from eusdaiki:

One good piece of advice from Wyckoff's day trading bible, is to save th tape to study it later.

The way I see it, if you study the tape long enough you're gonna start catching patterns [like a buyer or a seller for example; or particular ways in which the specilist for that market makes money] once you see the patterns you can test them, and then study your results at the end of the day and try to see patterns on the historic tape [a lot easier cause you know what happens next, kinna like watching the sixth sense for a second time, you see alll this things that give away bruce willis being dead...]

About the squad box, I think it's a great tool once you start listening to what's being said and you start using that information to your favor... It's a lot easier to spot a buyer/seller there, since you can hear "Bear is buying 200" or "Solly is seling 50"...

Squawk box is worthless in my opinion. Over 90% of the spoos trade on the screen. Squawk was great in the 80's and 90's.

 

[Maverick74]

Quote from Spxdes:

How do you see the bids and offers on the spoos?? I just look at the chart to see if it is moving but I have never seen a quote window for it.

-spxdes

You need access to CME data. If you have it, you will the bid x ask, size, and last trade info.

 

[Maverick74]

Quote from bellman:

hey guys, thx for the excellent thread. i'm not actively trading right now and still relatively green, so i've been reading and studying just as much as i can, and i've spent the morning enjoying all the informative posts.

Today around 2 PM est, I signed on to my e-trade pro account, and just figured i'd watch the level 2 quotes on a few stocks (even though i know don has said they are basically worthless). Newmont Mng Corp (symbol NEM) was breaking out big time with tons of upward momentum trading a little over $48 (i'm not sure on the exact times or prices). The stock was basically taking a breath, and I noticed an ask size of 20k show up 1 cent higher than the lowest ask, which was relatively speaking a lot of shares. The 20k did not get filled and then someone flashed an ask of 78k shares, again 1 cent above the lowest ask. I thought it looked very suspicious in light of what I'd been reading on this thread, and for a little bit i thought about buying 500 shares market, but instead i just watched. well, shortly afterwards the price jumped, then kept on rising all the way up to $48.70.

Is this mere coincidence or might it be related to the discussion of this thread? Was the 78K ask a fake-out? Is it possible that someone entered the 78K ask knowing it would generate buying interest? Would this type of market manipulation be illegal? I don't know. I've definitely got a lot to learn and think about.

I will tell you what I just told another gentleman, you need to be watching these stocks from open to close. You can't just log in at 2pm and take a quick looksy and think you are going to know what's going on. When I traded in NY, if got into the office 15 minutes late after the open, I wouldn't even trade that day. It's too important to see the open. I know this is very tough for some of you to understand and this is why very few people really can read the tape. But it requires a lot of sacrifice and concentration. You need to watch every single print in every stock for 6 1/2 hours. I know it's a shitty deal but that is the hand you are dealt.

I'll leave you with one of my favorite quotes from Winston Churchill. "Sometimes it's not good enough to do your best, you have to do what's required."

 

[Szeven]

Maverick74.

I have never tape read so that is why i have no idea about these situations. I was merely intrigued by how articulatly you could type the basics, and make it sound so obvious and easy.

 

[Maverick74]

Quote from Szeven:

Maverick74.

I have never tape read so that is why i have no idea about these situations. I was merely intrigued by how articulatly you could type the basics, and make it sound so obvious and easy.

No, it certainly is not obvious or easy. Very few people can do it. Thousands have tried. It is incredibly difficult.

 

[Don Bright]

Quote from eusdaiki:

One good piece of advice from Wyckoff's day trading bible, is to save th tape to study it later.

..

The problem is that you would have to save so many things...it's not just a "tape" anymore....sure, Time & Sales is part of it, but quote size, pricing trends, PREM of futures to FV, TICKS, RS of peers, price of GLD, price of oil....all this is critical to good decision making.

I do agree that keeping a journal is very important...and you can take "screen shots" for review at a later point. We use "cheat sheets" for favorable entries and exits (during days of higher momentum).

Don

 

[Spxdes]

Maverick and Don,

What are your opinions on SHO stocks and tape reading them. How are they different and do you suggest attempting to trade them? Thanks.

-spxdes