TAPE READING (chat room cont.)

[Don Bright]

Quote from Imagine:

Not clear on what a double print is - please comment if I am correct in thinking that a double print is:

two exact same size trades, at the exact same time ( down to the seconds ), with one trade being at the ask and one being at the bid?

thanks

Most of the time "double prints" reflect a "go along buyer/seller" which simply means that they are matching the number of shares traded, but not initiating trades at the moment. The Specialist will do this at times as well. These prints are generally the same number of shares and executed at the same price.

Don

 

[Dogballoon]

I'm never sure about double prints indicating a go-along buyer following someone on the floor, because I see them occasionally when I print a few upticks/downticks. If a daytrader can cause a double print then how meaningful can it be?

 

[Don Bright]

Quote from Dogballoon:

I'm never sure about double prints indicating a go-along buyer following someone on the floor, because I see them occasionally when I print a few upticks/downticks. If a daytrader can cause a double print then how meaningful can it be?

Anyone can cause a double print, which is no big thing except that it give you an idea of additonal shares available at certain price levels. Whether it's 500 or 5000 doesn't really matter, but it's good information.

Don

 

[Dogballoon]

Quote from Don Bright:

Anyone can cause a double print, which is no big thing except that it give you an idea of additonal shares available at certain price levels. Whether it's 500 or 5000 doesn't really matter, but it's good information.

Don

This is an interesting point. I had assumed only that double prints mean there's someone on the floor notifying the specialist that he wants to buy every time another particular trader buys, who is assumed to be hiding larger size, not whenever any uptick/downtick occurs. Didn't realize it was broader than that.

 

[Infidel1]

Mav. , or anyone, what do you all suggest to be a good program to keep track of the tape throughout the day. My software only keeps track of the present quotes. Where can I find one with past quotes?

Thanks

 

[FastandFurious]

Quote from Spxdes:

We basically do the same stuff that Maverick talks about on this thread. Seriously, Steve told me to read through this thread when I started almost a year ago so what Mav says is right on.
We pay a lot of attention to the futures or the index in which our stock is in. For example, if you're trading an oil stock then you would focus more on the $OIX or $OSX. We are constantly watching our stocks react to significant moves in the market. A lot of it is common sense. If the futures are ripping and your stock is just sitting in a base, what does that tell you? You look on the tape and you see a lot of buying and the stock does not go up or it goes up 10 cents and then quickly comes back in. There is a seller there. Whats gonna happen when the market reverses and starts to sell off? Every monkey that just got long against the seller is gonna panic and dump their shares. We feel that panic, that momentum. Honestly I think its more of an intuition that you develop over time. You see the same stuff every single day for so long and eventually you start to figure out how to make money. You make a trade, lose money, you repeat this hundreds of times until you start to see what you're doing wrong.
A few things that we do that Maverick has said that he doesn't are: using the NYSE Openbook and looking at charts. I think I remember Mav saying that he would beat up anyone using the openbook . We use it but we don't put a lot of emphasis on it. We might look at where a stale bid or offer is at or look for bids/offers crossing the market. Also the openbook is good at determining the specialist's bid/offer. As for the charts, I could never trade without them. There is just so much to gain from glancing at a chart. You see everything that it has done that day and at what prices that it got hung up on. Charts are great because we dont focus on just one stock. We look at dozens so the charts help us keep track of them quickly.
Hope that helped.....

Spxdes

Hey Spxdes,

I have just started trading NYSE listed and currently I am scalping....well I should say I am beginning to learn how to scalp

-From my training classes, we were taught to look for "chasers" (fast, short-lived, downward movements of a stock where we would short the stock and lean on the size on the offer.) It is believed that a chaser roots from a market order or a limit market order where the price of a stock repeatedly drop for a few cents. Can this be classified as an aggressive seller? It seems to look like the end of an aggressive seller since size shows up in the open book. We were to taught to look for huge size on the offer ( our lean/exit strategy), and if the stock is dropping, we would short the stock and get out by taking the lean. I never understood how chasers happen or why they happen or what clues to look for. But it seems it's the meat and potatoes of scalping. What do you think?

-what other basic techniques are there to profit from scalping? Chasers seems to be one of them, are there panic buying (reverse) though I know that a buyer is stronger than a seller as they can always walk away. What other well known techniques are there in profiting from scalping?

-I also use charts. I use esignal and if I'm looking at cvx/xom, I would have the 1 minute chart, the XLE sector chart, SPY chart, and the $OIH index chart. I agree that it does sum the stock up in a picture, though it has been known that knowing how to tape read is putting that chart/picture into words. ( for example, when there's a seller/buyer present during consolidation, it may look sideways on the chart but on tape, it would have size on the bid and the offer).

-can you take a look at these "specs" and elaborate on their significance? I can't see a clear picture yet and maybe you can help to clear the fog and help me see the motive, the situation of these common tape reading setups:

1. Show bid- prints the middle-never hits the bid- prints the offer -and offer become bid .......GO LONG (fill an institutional order?)

2. Show offer- prints the middle- never prints the offer- prints the bid- and bid becomes the offer.......GO SHORT (does that mean it is close to getting to the end of an institutional buyer, and a reversal is going to take place?)

3. prints the bid again and again but does not go away- prints the offer and offer becomes bid...GO LONG (is this filling a sell order, and after the order has been filled, it prints, and a reversal takes place? )

4. stock shows a very large offer and a very small bid. Eventhough the bid it hit, the bid does not go away. The offer starts to print and then the offer becomes bid....GO LONG

5. stock shows a very large bid and a very small offer. Even though the bid is hit, the offer starts with the same small size. The bid starts to print and becomes the offer...GO SHORT.

- Do you have any books, ebooks, etc... that would enhance my learning curve? Do you have any stocks that would be good for a beginner to trade to learn how to scalp? I was told to trade XOM/CVX/X , etc... but these stocks have huge momentum and it definitely doesnot not look smooth on the chart as a stock that would normally have an institutional buyer/seller activity does.

- I have noticed that the institutional buyers/seller takes breaks after they have finished a part of their order, and sometimes they will be back to continue. Is this how scalping is based off of? The continuous interval of buying/selling activity of an institutional buyer/seller? It is not easy to spot them as usually when large size comes on the openbook, it usually represents the end of their order...

- I have watched a couple of successful scalpers trade and they would trade the openning....8:30am-10:30am central time, and would trade the closing.... 1:30pm-3:00pm, and that's it. These are also the times where volume is highest...but wouldn't they be missing out on the continuous feed of buy/sell orders from institutional buyers, seller during the "dead zone"? though volume and volitility isn't there, the moves continue to shape the charts...

- do you know a software that would log prints so I can examine them after market closes?

-I have noticed that in this game, it is comprised of three types of groups, and two sides.

Groups:
-institutional buyer/seller
-day trader
-investor (etrade, scott trade, fedelity, etc...)

Two sides:
1. institutional buyer/seller
2. day trader/investor

and I realize that the institutional buyer/seller affects us day traders and creates situations such as chasers that are based off their activities. It seems that scalping is just in and out and not really identifying the institutional buyer/seller in full.

I understand that some concepts may be hard to explain or put into words, and I thank you in advance for your help and effort.

-Cage

 

[KenLay]

All of this sounds like useful information but if Maverick is correct, it's all for nothing if tape reading is already or soon to be rendered totally ineffective. What exactly makes you think this is so? Automated trading? Introduction of ECN's?

Do you still daytrade at all? If so, is it beneficial to read tape? How have you adjusted?

 

[Spxdes]

fastandfurious,

You wrote so much I dont know where to begin....
The situations that you described sounds like bidding on the plus or offering on the minus. That's a very aggressive buyer/seller and from my experience, is very rare. I think the chasers that you talk about are just market shorts. Easiest money in trading. You see a market short, keep selling! If its real then the offer has to be one penny above the last print.

Again, read Mav's posts. He describes the basics of tape reading. And also, like I mentioned before, I really feel that most of it is just an intuition that one gains over time. Eventually to start to "feel" the momentum change in a stock. You know what everyone in the stock is doing. It's not just reading an institutional buyer/seller, its also reading what other day traders are doing. When I first started trading, they told me to front run big bids/offers. Now I almost do the opposite.

As for specific setups, its hard for me to put in words. I honestly don't think about my trades anymore, I just react to something that I see. IMO I think you should stick to low volume stocks. Try stocks with an avg volume of a million or less. I do much better in thin stocks that make faster and larger moves. There is less noise. You are correct about time of day being a factor. The first and last hour are the most active. Certain setups work much better in the morning. I tend to slow down by 11 and pick up the pace around 2:30.

Steve and other traders suggest reading "Trading in the Zone" by Mark Douglass. I am lazy and still haven't finished it.

Ok, it's late and I am semi drunk. Hope I answered your questions.

-spxdes

 

[Maverick74]

Quote from KenLay:

All of this sounds like useful information but if Maverick is correct, it's all for nothing if tape reading is already or soon to be rendered totally ineffective. What exactly makes you think this is so? Automated trading? Introduction of ECN's?

Do you still daytrade at all? If so, is it beneficial to read tape? How have you adjusted?

The idea of of tape reading is very similar to a pit trader at the CBOT or Merc trading off of flow. In other words, the best floor traders made their money front running large orders, getting good flow from brokers, and reading the flow in the pit. Once that flow went to the screen and became fragmented, the bond floors became ghost towns. The front month Euro Dollar futures are so empty now you could sell rugs down there.

The edge was in having single listed markets. Where all the paper and flow came to you. You know what everyone was doing and when they were doing it. This applies to options as well. The equity option floors are a ghost town.

The only viable pit left is the SPX pit at the CBOE. Know why? Because all the paper still goes to the floor. They are the only exchange that trades that product.

Once you start splitting up and fragmenting order flow, the game of trading off of it is over. That's the bottom line.

With the ECN's getting more and more of the volume for listed stocks and the new trade through rules going into effect in October, the market is going to become very fragmented. What does this mean?

It means now the buyers and sellers are going to be harder and harder to find. They might be bidding for stock at the NYSE and offering it out on the ECN's. Now instead of watching one tape for a stock you will have to follow all the tapes. This will make trading a lot of stocks near impossible. The writing is on the wall.

There is a reason why most of the equity only shops have folded. It's not because of the penny spreads or the low volatility. In fact, we actually have a great trading market now. They folded because the most consistent day traders were tape readers and most of them are leaving the equity shops. That leaves you with all the bottom and top pickers that inevitably blow out within months. Why do you think Don Bright is pushing what's left of his daytraders into pair trading?

No, I do not daytrade anymore. I left the game when they took away bullets. That was awhile ago. I also left because you can't build a long term career daytrading. At least not in the money management business.

 

[FastandFurious]

I think the chasers that you talk about are just market shorts. Easiest money in trading. You see a market short, keep selling! If its real then the offer has to be one penny above the last print.

can you explain a little more of the market shorts in terms of how they happen and why they happen, and how do you know when it happens? Who does market shorts? What do you mean by if it's real that it has to be one penny above the last print? You mean the uptick rule? I assume you mean the uptick rule and the short seller has to offer a penny above the last print on that exchange?