TAPE READING (chat room cont.)

[Bitstream]

Quote from belavia:

Then are you saying Mavs strategy is worthless or simply unconventional?

no it is not unconventional, this is the classic and true approach to tape readin' but it's dead now because of algos floodin' the mkt and evident lack of buyin' interests by big buyers [that's what u are after]. dont get me wrong it still works but u gotta get mad to find stocks that attract large buyers willin' to accumulate all day and therefore create trends...nothin' trends no more, no1 is willin' to stay in a stock from open till close, at least not as often as before. companies reportin' and upgrades usually do attract interest but they are also dumped fast; the hybrid system also makes it all more difficult to read. there are still patterns tho, big players are there and still at work, only in a different way.

and ya open book is totally worthless, everyone has access to it and no big buyer in his right mind would show his hand for all to see..hes gonna accumulate slowly in 2-3lots at a time, u are not seekin' big size orders, u are lookin' for a process of accumulation that last all day, sometimes weeks.

 

[belavia]

Thanks for your responses guys, it cleared a lot up for me.
I hope Maverick can contribute further.
Bitstream, do you think it will still be worthwhile to months dedicating oneself to learning to tape read? Maybe you think one should look for another edge as it is too late to get iexploit this particular one.

 

[Bitstream]

Quote from belavia:

Thanks for your responses guys, it cleared a lot up for me.
I hope Maverick can contribute further.
Bitstream, do you think it will still be worthwhile to months dedicating oneself to learning to tape read? Maybe you think one should look for another edge as it is too late to get iexploit this particular one.

in the conventional sense it is not worth it imo, nyse will go electronic and hegde funds cpus already control the mkt...those bastids trade baskets and dump every stock that rallies only to buy those that dip, then begin the process all over again..it's like a wall, difficult for any1 to get trough. u still can learn a lot by lookin' at L1: bid/ask/last is all u need to detect patterns; L2 is superfluous in this contest.

 

[belavia]

Do you suggest some variation on conventional tape reading. Perhaps starting to combine it with forms of technical analysis?

 

[Bitstream]

Quote from belavia:

Do you suggest some variation on conventional tape reading. Perhaps starting to combine it with forms of technical analysis?

i suggest u to look at all the factors that can influence mkt and price, wether it is patterns, news, correlations or t/a.

 

[belavia]

Thanks bitstream, your advice has been helpful.

 

[FastandFurious]

for scalping, openbook is useful. We are only looking at temporary short tem supply/demand imbalance and you can find sizes in the book where it will let you get some cents.

 

[Bitstream]

Quote from FastandFurious:

for scalping, openbook is useful. We are only looking at temporary short tem supply/demand imbalance and you can find sizes in the book where it will let you get some cents.

in the contest of tape readin' itself is not, maybe u find it of some use for other porpuses but everythin' that really matters is on L1.

 

[Maverick74]

Open book is garbage. Look, at my peak and my firm's peak, the orders on our floor alone were 90% of the open book. Those were all OUR orders! We pulled those orders as soon as a certain bid was hit. We had no interest in buying the stock.

Now, another thing. Orders in the open book that were not ours were stale orders. In other words, they were the same as that 10k bid you see at the figure that doesn't go anywhere. That bid is not an aggressive buyer. He is not going to push the stock up. Whether you are try to take a dollar out of the stock or 2 cents, doesn't matter, he isn't going anywhere!

In order to scalp profitably or catch a big move, you need to get in front of real bids, aggressive bids. Not stale bids! Institutions never post orders on open book. That's what the specialist is for! This is the difference between nasdaq and listed stocks. The specialist is going to work any large order for an institution, and he will never show that size, ever!

As for the other question about tape reading still being viable. I believe it is not. Or let me put it this way, there is not enough reward in it now to justify doing it. Anything can be profitable, but you have to ask yourself is it worth the risk, the stress, the effort for the reward? The ECN's and all the autobots are putting too much noise on the tape.

I think if there are any stocks left you can truly read the tape on, it would be the most illiquid, low volume stocks out there. Look for stocks that do 50k to 300k shares a day. I know some of you are saying what! LOL. I use to trade these stocks 5 years ago although most of my stocks were in the 500k to 1 million share a day range. My reason for going after these low volume stocks is no one is trading them! There are no stock baskets they are in probably, no ETF's at least not heavily arbitraged ETF's. They are not sexy, so you won't have anyone from ET in them. All you have is you and the institutional buyers and sellers.

Now let me caution you, to trade these stocks, you need to be able to read the tape very well because you don't have all those other traders to lean on when you miss a bid or an offer and it can be painful I assure you. But that is the last bastion of tape reading left. Good luck!

 

[FastandFurious]

Quote from Maverick74:

Open book is garbage. Look, at my peak and my firm's peak, the orders on our floor alone were 90% of the open book. Those were all OUR orders! We pulled those orders as soon as a certain bid was hit. We had no interest in buying the stock.

Now, another thing. Orders in the open book that were not ours were stale orders. In other words, they were the same as that 10k bid you see at the figure that doesn't go anywhere. That bid is not an aggressive buyer. He is not going to push the stock up. Whether you are try to take a dollar out of the stock or 2 cents, doesn't matter, he isn't going anywhere!

In order to scalp profitably or catch a big move, you need to get in front of real bids, aggressive bids. Not stale bids! Institutions never post orders on open book. That's what the specialist is for! This is the difference between nasdaq and listed stocks. The specialist is going to work any large order for an institution, and he will never show that size, ever!

As for the other question about tape reading still being viable. I believe it is not. Or let me put it this way, there is not enough reward in it now to justify doing it. Anything can be profitable, but you have to ask yourself is it worth the risk, the stress, the effort for the reward? The ECN's and all the autobots are putting too much noise on the tape.

I think if there are any stocks left you can truly read the tape on, it would be the most illiquid, low volume stocks out there. Look for stocks that do 50k to 300k shares a day. I know some of you are saying what! LOL. I use to trade these stocks 5 years ago although most of my stocks were in the 500k to 1 million share a day range. My reason for going after these low volume stocks is no one is trading them! There are no stock baskets they are in probably, no ETF's at least not heavily arbitraged ETF's. They are not sexy, so you won't have anyone from ET in them. All you have is you and the institutional buyers and sellers.

Now let me caution you, to trade these stocks, you need to be able to read the tape very well because you don't have all those other traders to lean on when you miss a bid or an offer and it can be painful I assure you. But that is the last bastion of tape reading left. Good luck!

i'm talking about market shorts in terms of size in the openbook where the seller is aggressively stepping down.