TAPE READING (chat room cont.)
- Thread starter shortseller
- Start date
Maverick,
Great post, you definitely are spot on with your assessment. The hardest part (for me at least) is not necessarily identifying that there is a buyer or seller in a stock at any given time, its finding that right entry and gauging just how far he will let the stock trickle away from where he showed you the buyer or seller before he steps back in and then moves the stock where it wants to go.
Great post, you definitely are spot on with your assessment. The hardest part (for me at least) is not necessarily identifying that there is a buyer or seller in a stock at any given time, its finding that right entry and gauging just how far he will let the stock trickle away from where he showed you the buyer or seller before he steps back in and then moves the stock where it wants to go.
Steve,
When there is a buyer in the stock he usually has a level where he wants to buy the stock. As the day goes on and other buyers come into the stock, this level goes higher and higher, hence the bid stepping up. The key is to find these levels. They usually are NOT at round numbers and they are NOT at key support levels. It could be something like 100.57. You will notice there is a bid at .55 for 200 shares and you will see large prints going off at .57. You will never see the stock trade at the bid. This is your buyer. You would want to be buying the stock around this area. And since you know the buyer is resting at .57, as soon as the price trades, you know to get out.
Generally what I use to do is when the mkt opened, if I saw a strong stock, I would jump in with 500 shares just to get involved, start small. Then as I got to see the action and see where the buyer is, I would start to bid for the stock around where he was buying. When the BIG bids showed up, I would already have on most of my position and I would be looking to sell my stock into any spread.
Typically, he would show a size bid, the market would spread .50 or so, and I would immediately sell at the market and I would get part of that print up .50. Suddenly you see stock trade up .48 higher, huge blocks going off. I wouldn't sell all my stock.
I would now be looking to see if the buyer was still there. If he was, again I would find his levels and start to bid again for the stock and the process repeats itself. Same story on the downside. Patter recognition skills are VERY important. You need to find the pattern. Every specialist is different.
One of the things you will notice with very strong or very weak stocks is the charts are very smooth. If you are seeing a lot of volatility, there probably isn't a real buyer there, but rather a lot of momentum traders. You may be fooled by the size, but keep in mind, at my firm, we had huge size traders and many mooks would mistake them for large institutions. The difference was, traders may trade size, but there is nothing behind it, that is why the stocks drop so fast and go back and forth. If it were a real fund with hundreds of thousands of shares to buy or millions, they would be bid for that stock. You wouldn't see sharp drops. Being able to know the difference is paramount.
Maverick,
Thanks for the great posts. I actually know very well what you are describing. Currently I avg 9k-12k a month trading listed stocks and have gotten pretty good at reading the tape. Its just sometimes, especially in some of my thin pricey stocks (for instance ACL or AZO) the buyer or seller "walks away" for a bit and the price gets extended out of the range of what I am comfortable holding. I know deep down, when I have conviction, that I should actually sell a bit more (or buy depending on which side I am playing) with a tighter stop because I have seen these games before. But for now, I dont take the risk because I know I can always re-enter when the setup looks even better (unfortunately, at this point, there are usually not many shares to be had). But, when it really comes down to it, if I ever want to build a sizable position to really take advantage of the move that I believe will happen, I need to have a greater risk tolerance. I am sure as I get better and better, I will be able to do this w/o hesitation.
Thanks for the great posts. I actually know very well what you are describing. Currently I avg 9k-12k a month trading listed stocks and have gotten pretty good at reading the tape. Its just sometimes, especially in some of my thin pricey stocks (for instance ACL or AZO) the buyer or seller "walks away" for a bit and the price gets extended out of the range of what I am comfortable holding. I know deep down, when I have conviction, that I should actually sell a bit more (or buy depending on which side I am playing) with a tighter stop because I have seen these games before. But for now, I dont take the risk because I know I can always re-enter when the setup looks even better (unfortunately, at this point, there are usually not many shares to be had). But, when it really comes down to it, if I ever want to build a sizable position to really take advantage of the move that I believe will happen, I need to have a greater risk tolerance. I am sure as I get better and better, I will be able to do this w/o hesitation.
Steve,
Something else I might add here, I only traded news stocks. This was very very important. Because when there is news in a stock, we know we are going to get institutional flow. I would usually trade earnings, earnings revisions, upgrades/downgrades, and any event that would significantly impact earnings.
Now, I kept a few stocks in my back pocket that I liked to trade. I would do this especially during slow times. But it was these stocks that many times I would experience what you refer to as the buyer walking away. He's not really walking away per se, he simply is just not an aggressive buyer because there is no news in the stock. When there is news in a stock, say BBY lowers their earnings estimates for next quarter, I guarantee you there will be big institutions involved in this stock and they will NOT walk away. They need to buy or sell stock and time is of the essence. They simply have too much size to fool around and take their time. They need to get in or out and they need it now!
So keep that in mind. If you choose to trade your favorite stocks every day and there is no news in them, you may not really have any big buyers or sellers. That can be very frustrating. This is why I focused the majority of my attention on news stocks.
Something else I might add here, I only traded news stocks. This was very very important. Because when there is news in a stock, we know we are going to get institutional flow. I would usually trade earnings, earnings revisions, upgrades/downgrades, and any event that would significantly impact earnings.
Now, I kept a few stocks in my back pocket that I liked to trade. I would do this especially during slow times. But it was these stocks that many times I would experience what you refer to as the buyer walking away. He's not really walking away per se, he simply is just not an aggressive buyer because there is no news in the stock. When there is news in a stock, say BBY lowers their earnings estimates for next quarter, I guarantee you there will be big institutions involved in this stock and they will NOT walk away. They need to buy or sell stock and time is of the essence. They simply have too much size to fool around and take their time. They need to get in or out and they need it now!
So keep that in mind. If you choose to trade your favorite stocks every day and there is no news in them, you may not really have any big buyers or sellers. That can be very frustrating. This is why I focused the majority of my attention on news stocks.
I agree 100%, I am referring to my core list of stocks where there may not be any news but there is definitely a buyer or seller at any given time during the day. Now, he doesnt have to be aggressive and he can step away for a bit because he isnt competing with any other buyers or sellers. This makes it tough because the stock can squeeze quite a bit before he steps back in (same goes for the specialist bidding or offering when I have a good idea that his actions are real).
I guess what really concerns me is that I will hold that one time and the buyer or seller never comes back and I'm losing a point on a few thousand shares which I really dont want to do.
I guess what really concerns me is that I will hold that one time and the buyer or seller never comes back and I'm losing a point on a few thousand shares which I really dont want to do.
Maverick74
Thank you very much for commenting and everyone else for that matter, While what you are saying may have some validity(in some cases), BUT In the case you said it in, (ie the chat room) you were wrong and wrong for many reasons. The provided example with the 56k was an oversimplification to make a point the actual stock and numbers were 20K bid size in GE.. not a huge massive head fake the size was real, and the TRADE was a loser. being that I watch GE and have for many years that is not EXTREME size, but large enough to give a heads up. (the exact 180) from what your suggesting. My intentions of leaving many of these factors void was so the bias was not brought into the discussion. Considering as you said "I don't trade listed stocks anymore" might have a lot to do with the disconnect we are having .. 20k buying isn't the level in which you - to use your own words "Think about it, a real buyer is not going to say to the world, look at me" at least not in ge.. 30,000 prints are not uncommon. What was more offensive is the FACT that the trade was a loser, not only invalidating anything your attempting to say as far as your understanding of what was going on in the market at that time, but really putting your ability to read the tape at a questionable level at best. Thank you for commenting and in extreme situations you are correct - but in the case we were discussing you will be nothing more then a BUG on the windshield thinking you can move into size like you suggested. But again Thank you and everyone that added to this thread already = ) .
Thank you very much for commenting and everyone else for that matter, While what you are saying may have some validity(in some cases), BUT In the case you said it in, (ie the chat room) you were wrong and wrong for many reasons. The provided example with the 56k was an oversimplification to make a point the actual stock and numbers were 20K bid size in GE.. not a huge massive head fake the size was real, and the TRADE was a loser. being that I watch GE and have for many years that is not EXTREME size, but large enough to give a heads up. (the exact 180) from what your suggesting. My intentions of leaving many of these factors void was so the bias was not brought into the discussion. Considering as you said "I don't trade listed stocks anymore" might have a lot to do with the disconnect we are having .. 20k buying isn't the level in which you - to use your own words "Think about it, a real buyer is not going to say to the world, look at me" at least not in ge.. 30,000 prints are not uncommon. What was more offensive is the FACT that the trade was a loser, not only invalidating anything your attempting to say as far as your understanding of what was going on in the market at that time, but really putting your ability to read the tape at a questionable level at best. Thank you for commenting and in extreme situations you are correct - but in the case we were discussing you will be nothing more then a BUG on the windshield thinking you can move into size like you suggested. But again Thank you and everyone that added to this thread already = ) .
Shortseller,
Do me a favor, you said you worked for Bright Trading. Get Don in here and have him comment on your post. I think he would be ashamed to read what you said about tape reading when in fact he teaches tape reading at Bright Trading. I don't think he wants the rest of this board to think you are representative of that training. But if I am so full of shit, have Don come in here, if you don't ask him, I will, and let him comment on your idea of tape reading.
I can argue with you all day long but you just don't get it. Just because I don't trade listed stocks anymore does not mean the game has changed. I assure you it has not. Tape reading has not changed in a 100 years.
The bottom line is, real institutional buyers and sellers NEVER show their size EVER EVER EVER until they are done. Do you know what the role of the specialist is on the floor. He knows that the buyer has size to buy and he is going to help him work the order. The specialist knows who the size players are. He knows who the buyers and sellers are and how much stock they have to buy an sell. That is his job. The specialist is also interesting in making money and if he has a big buyer at his post, he is going to want to buy as much stock as he can right? Now how do you think he is going to accomplish that if he is showing the full size of the buyer. The specialist cannot get long on an uptick and cannot get short on a downtick. He needs to buy on downticks. He needs YOU to sell your stock to him. He will NEVER show you the size of the buyer. He will do everything he can to make the stock look weak. He will step up on 100 or 200 shares.
You need to go back to Don and either A, ask for a refund if you went to his boot camp, or B, go to his boot camp if you haven't already. I am having a very hard time believing that Don Bright is teaching the crap you spew. I will PM him and ask him to comment on your training there at Bright. This should be very interesting.
You can talk all the trash you want, it seems to be something you take pride in... to bad there is a greater determinate in this situation. THE MARKET..
IF YOU LOSE MONEY (YOU WERE WRONG)
IF YOU MAKE MONEY (YOU WERE RIGHT)
case closed.
Why you want to drag "Don" into this is beyond me. People can read the tread in its entirety. and conclude what they want. I am after "Reasonable Dialogue" I don't have anything to prove, IF expecting that from you was asking too much, or if you are incapable of such. FINE. But the arrogant bullheadedness exhibited by you in your above post does not make you correct. Discussing things like adults and everyone on looking benefits. I have never claimed to know it all,.. but i would like a rational discussion.
My 2 Cents.
R.D.
IF YOU LOSE MONEY (YOU WERE WRONG)
IF YOU MAKE MONEY (YOU WERE RIGHT)
case closed.
Why you want to drag "Don" into this is beyond me. People can read the tread in its entirety. and conclude what they want. I am after "Reasonable Dialogue" I don't have anything to prove, IF expecting that from you was asking too much, or if you are incapable of such. FINE. But the arrogant bullheadedness exhibited by you in your above post does not make you correct. Discussing things like adults and everyone on looking benefits. I have never claimed to know it all,.. but i would like a rational discussion.
My 2 Cents.
R.D.
Maverick,
Your posts have been spot on, dont let lesser minds get to you. It doesnt matter if you havent traded listed for awhile, your insight into tape reading and institutional order working is exactly how i see it everyday.
Your posts have been spot on, dont let lesser minds get to you. It doesnt matter if you havent traded listed for awhile, your insight into tape reading and institutional order working is exactly how i see it everyday.