TAPE READING (chat room cont.)

[Maverick74]

Be careful about putting too much emphasis on whether or not the specialist is buying or where he is buying. Usually the specialist will take positions on cleanup prints. These are usually on gaps up and down on a large block of stock and it usually comes at the end of the buying or the selling. The specialist normally doesn't hold the stock a long time, it's just a quick trade. The specialist is also usually involved on opening and closing prints too.

But he is not that active in daytrading the stock during the day like some might have you believe. The key is to spot the aggressive buyers or sellers, not the specialist. The specialist cannot move a stock up or down.

 

[chiefraven]

hey spxdes, how can you get a price improvement by going market order? Could you explain this to me perhaps? For example, in what situation would you use market order in purpose?

Also, Maverick, so to spot an aggressive buyer/seller, basically the first thing that sets off the alarm are the bigger prints right? like 2000, 30000 basically something mroe than a thoudsand. And if more big prints starts to follow then there most likely is a aggressive buyer/seller? What are indicators do you look for?

But most of the time, dont most big buyers dont want to show you the amount they want to buy, so they'll just keep buying small amount throughout the day, like 500 , 500, 500, 400, 300, 1000, and just keep it like this for a long time? So sometimes when we're seeing the little prints it could actually be the big buyer chipping away the stocks. So how do you figured out if these small buys are by individual traders or from the same big institution gathering shares?

 

[chiefraven]

anyone care to comment?

 

[Maverick74]

Quote from chiefraven:

hey spxdes, how can you get a price improvement by going market order? Could you explain this to me perhaps? For example, in what situation would you use market order in purpose?

Also, Maverick, so to spot an aggressive buyer/seller, basically the first thing that sets off the alarm are the bigger prints right? like 2000, 30000 basically something mroe than a thousand. And if more big prints starts to follow then there most likely is a aggressive buyer/seller? What are indicators do you look for?

But most of the time, dont most big buyers dont want to show you the amount they want to buy, so they'll just keep buying small amount throughout the day, like 500 , 500, 500, 400, 300, 1000, and just keep it like this for a long time? So sometimes when we're seeing the little prints it could actually be the big buyer chipping away the stocks. So how do you figured out if these small buys are by individual traders or from the same big institution gathering shares?

OK, with market orders, when you go to the market, the specialist many times will match your order with another buyer or seller and give you the same print. Usually you will get filled at a better price. Why does he do this? Because it makes his job 100 times easier. He has to match all the buys and sells as fast as he can and it's easier for him to do that when he can group them together.

Let me give you an example. Stock has a strong buyer in it. I am long the stock, finally the buyer shows his size which is usually the end of the line. What will happen now is the stock will usually spread up. I will immediately go to market and sell at market. He might be 50.00 bid at 50.50 offer 12,700 x 100. I sell at market. Nothing will print for a while. This is because the specialist is now matching orders. He will make one print now. All of a sudden you will 45,000 shares print at 50.46. Guess what? I got that sale there. That is price improvement. I made a very good living getting those fills.

Now, on to your question about how to detect the buyer. Size is completely irrelevant. What you want to see is a buyer stepping up. It takes a lot of size to move a stock. You can't just move IBM with 100 shares. Not going to happen. If someone is stepping up in IBM and pushing the stock higher, that's a real buyer. All I care about is a buyer that is stepping up or a seller that is stepping down. That's it. I don't care if he has 10 million shares to buy or 1000 and quite frankly, I have no way of knowing. That is why you have to read the tape. You need to know when he is stepping up, when he is done, and when he steps away. That is tape reading!

 

[Imagine]

I would appreciate if someone could explain the concept of what a mirror trade is, specifically in reference to a MM. MM not filling your entire order but keeping half for himself and filling half of your order. I also read that a mirror trade does not have to be the same amount of shares 100/100 but could be 100/60,40


I ask as I have read that when mirror trades are noticed on the time and sales - it is a positive sign and that someone is most likely accummulating shares.

How does someone spot that mirror trades are happening? Specifically, that another trader didn't by chance just place the exact same trade as another trader?


I posted the above in a separate topic but got no response

appreciate any info

 

[Don Bright]

Quote from chiefraven:

hey spxdes, how can you get a price improvement by going market order? Could you explain this to me perhaps? For example, in what situation would you use market order in purpose?

Also, Maverick, so to spot an aggressive buyer/seller, basically the first thing that sets off the alarm are the bigger prints right? like 2000, 30000 basically something mroe than a thoudsand. And if more big prints starts to follow then there most likely is a aggressive buyer/seller? What are indicators do you look for?

But most of the time, dont most big buyers dont want to show you the amount they want to buy, so they'll just keep buying small amount throughout the day, like 500 , 500, 500, 400, 300, 1000, and just keep it like this for a long time? So sometimes when we're seeing the little prints it could actually be the big buyer chipping away the stocks. So how do you figured out if these small buys are by individual traders or from the same big institution gathering shares?

You're not actually getting price improvement with market orders, you're getting a "fair" price. It works like this. Limit orders can be filled by the assistant or clerk, and they can give the best price available, with price improvement often times...and they do it quickly. Only the Specialist can set the price for market orders, and they usually keep them for a minute or so and then "batch" them at the current price. For "quick exits" we teach to place limit orders through the bid or offer, thus getting the offer or better in a much quicker time frame.

The "reserve" or "iceburg" orders come to light quickly with a good tape reader...that's why we watch volume, not bid ask size alone, to see what is really trading.

Don

 

[FaderTrader]

Don-

I couldn't agree more. There are few setups more clear than seeing reserve size showing with incongruent prints going off. When such is the case (taking into account where the stock just traded off from), I almost always load up. The only problem is - so does everyone else. So, you've gotta be quick otherwise you'll end up having to go too far through the market in order to get filled and if he drops (lifts) then you have no safety.

 

[chiefraven]

TO ALL OF PEOPLE WHO HAS RESPONDED TO MY POST, AND WHOEVER CARE TO HELP CLARIFY SOME KEY POINTS FOR ME. =)

OK, with market orders, when you go to the market, the specialist many times will match your order with another buyer or seller and give you the same print. Usually you will get filled at a better price. Why does he do this? Because it makes his job 100 times easier. He has to match all the buys and sells as fast as he can and it's easier for him to do
that when he can group them together.

So let's say there aren't a lot of bids or offers showing on the tape for people to nx in or out of their trade, so a lot of people decide to go market... now, you said, the specialist usually matches your order with another buyer or seller, are you talking about another person who is going market? or just any seller or buyer... like if i try to sell 100 shares with a market order, how would my order get matched to? does the specialist just find a buyer for me, regardless whether the buyer is buying with market order, limit order, or nx?

** also, how could i tell what prints are market orders on the tape? i know that people can only nx up to 1000 shares... so i guess any prints above 1000 shares have to be either limit orders OR market orders? and if the print is above 1000 but wasn't shown on the tape OR the openbook, then it's got to be a market order? is this correct? or is there another way to better identify market order prints? And, let's say there is a market print showing on the tape at price #$&#% with 2500 shares, and it's showing the green tick, what does this represent really? that he has succesfully matched 2500 shares for all the buyers who just sent out a market buy order? and vice versa, if it's 2500 shares with a red tick, does this mean that the specialist has matched 2500 shares for the sellers?
==========================

Let me give you an example. Stock has a strong buyer in it. I am long the stock, finally the buyer shows his size which is usually the end of the line. What will happen now is the stock will usually spread up. I will immediately go to market and sell at market. He might be 50.00 bid at 50.50 offer 12,700 x 100. I sell at market. Nothing will print for a while. This is because the specialist is now matching orders. He will make one print now. All of a sudden you will 45,000 shares print at 50.46. Guess what? I got that sale there. That is price improvement. I made a very good living getting those fills.

Could someone explain to me how the spreads works so i can better anticipate whether or not at a given time a spread might be happening? Like in what type of situation would a specialist spread the prices.... and what kind of spread, 1)lowers OR increases both the bid and the offer, 2) lowers or increases ONLY the Bid price, OR only the offer price..... what's the meaning of all these and what are the reactions from people upon seeing this?

Now back to the quote.... you said you were longing the stock and it gets spreaded up.... and you immediately sell at the market? why? if you're longing and the stock spreads up, isn't this good for you since you get more money out of it? like if you buy 100 shares at price 13, and it gets spreaded to 15, wouldn't this be good for you 'cuz you got 2 more dollars out of the stock? Or are you afraid of what is going to happen after the spread? If so, could you explain how to anticipate a certain spread, and the reaction that might come thereafter? Finally, i am not too clear on the "all of a sudden you will see 45,000 shares print at 50.46" for the price improvement. Now, usually people sell market when there aren't enough size on the bid for them to nx sell out of their position.... so when a whole lot of people go market sell, wouldn't this drive the price even lower? so how do people get a price improvement? and in the situation you described here, that 45,000 shares, (does this have a green or red tick next to it) i'm guessing it's green, because most of the people are still looking to buy (which is why you gave the ex. of 12,700 x100) but you acted the opposite since you think the market is going south pretty soon, so you go sell market, and so you're matched with a buyer in this market order, and you basically gave your shares to 1 of the many hungry people still looking to buy? is that it?

and if this is true, the only time you can get a price improvement is when you are performing an action that is the opposite of the general public at a given time, given that you made the right assumption and the stock and the specialist immediately spreads or goes the way you predicted?

===========================
now from our last conversation about how to spot buyers and sellers, i can see why you would look for the bids stepping up and offers stepping down...but these things happen all the time though.... for example, i might see the bids step up twice, and then stops, so how do you know if this is a good buy? if it steps up continuesly? AND with big sizes?

I know you said you dont really care about the sizes, but to make money, we're not really looking for small buyers and sellers like the daytraders out there, we are looking for the institutions and the BIG boys.... now i'm a beginner, so correct me if i'm wrong, usually when i try to look for a big buyer or seller, i generally look for bids or offer stepping up or down, at least a bunch of times, and i'll look for big prints being printed one after another, like a 1000 here, 2000 there, 4000 , 1000...etc But is this a good way to find these opportunities? since a institutions could probably just buy 100 shares throughout the length of a day or even a week, so how do you exactly distinguish whether a stock really has potentials or not?
=========================

The "reserve" or "iceburg" orders come to light quickly with a good tape reader...that's why we watch volume, not bid ask size alone, to see what is really trading.

what do you mean by reserve or iceburg orders? like cushions OR stale bids and offer? if so, what about them? And what do you mean by watching the "volume" what volume?
==========================
----------------------------------------------
==========================

Right now, i'm primarily using NX, MARKET, and SLIP orders to get in and out of trades ... long and short.

I was wondering if anyone could share some expertise on when they use certain order, like when would someone use limit orders? market orders, ecns? etc.....

DON, you said you try to teach the newbies at your firm to relie on limit order more than the nx orders, simply because the reason that when you place a limit order there is the possibility for you to get a price improvement right? like if you set a price to buy at 13, and all of a sudden the prints drops to 12.99, then you get a price improvement of 1 cent, eventhough the offer showing on the tape at the time might not be better than the price you got from the most recent print? (with nx you take and give from the offer and bids showing on the tape, but with limit, you're simply getting the shares at the printed price right? how does it actually work? and how would you utilize limit orders to benefit in certain situations? i've heard people using them sometimes so the limit order they place will get sweep up along with the big bid or offer?!?!?! could you clarify on this?

==========================

lastly, if anyone could share some tape reading tricks they picked up, or how to read certain scenarios I would greatly appreciate it!!!!


Hope to hear from you all soon, and happy trading! January is coming soon... thank god.

 

[Maverick74]

Quote from chiefraven:

TO ALL OF PEOPLE WHO HAS RESPONDED TO MY POST, AND WHOEVER CARE TO HELP CLARIFY SOME KEY POINTS FOR ME. =)



So let's say there aren't a lot of bids or offers showing on the tape for people to nx in or out of their trade, so a lot of people decide to go market... now, you said, the specialist usually matches your order with another buyer or seller, are you talking about another person who is going market? or just any seller or buyer... like if i try to sell 100 shares with a market order, how would my order get matched to? does the specialist just find a buyer for me, regardless whether the buyer is buying with market order, limit order, or nx?

** also, how could i tell what prints are market orders on the tape? i know that people can only nx up to 1000 shares... so i guess any prints above 1000 shares have to be either limit orders OR market orders? and if the print is above 1000 but wasn't shown on the tape OR the openbook, then it's got to be a market order? is this correct? or is there another way to better identify market order prints? And, let's say there is a market print showing on the tape at price #$&#% with 2500 shares, and it's showing the green tick, what does this represent really? that he has successfully matched 2500 shares for all the buyers who just sent out a market buy order? and vice versa, if it's 2500 shares with a red tick, does this mean that the specialist has matched 2500 shares for the sellers?
==========================



Could someone explain to me how the spreads works so i can better anticipate whether or not at a given time a spread might be happening? Like in what type of situation would a specialist spread the prices.... and what kind of spread, 1)lowers OR increases both the bid and the offer, 2) lowers or increases ONLY the Bid price, OR only the offer price..... what's the meaning of all these and what are the reactions from people upon seeing this?

Now back to the quote.... you said you were longing the stock and it gets spreaded up.... and you immediately sell at the market? why? if you're longing and the stock spreads up, isn't this good for you since you get more money out of it? like if you buy 100 shares at price 13, and it gets spreaded to 15, wouldn't this be good for you 'cuz you got 2 more dollars out of the stock? Or are you afraid of what is going to happen after the spread? If so, could you explain how to anticipate a certain spread, and the reaction that might come thereafter? Finally, i am not too clear on the "all of a sudden you will see 45,000 shares print at 50.46" for the price improvement. Now, usually people sell market when there aren't enough size on the bid for them to nx sell out of their position.... so when a whole lot of people go market sell, wouldn't this drive the price even lower? so how do people get a price improvement? and in the situation you described here, that 45,000 shares, (does this have a green or red tick next to it) i'm guessing it's green, because most of the people are still looking to buy (which is why you gave the ex. of 12,700 x100) but you acted the opposite since you think the market is going south pretty soon, so you go sell market, and so you're matched with a buyer in this market order, and you basically gave your shares to 1 of the many hungry people still looking to buy? is that it?

and if this is true, the only time you can get a price improvement is when you are performing an action that is the opposite of the general public at a given time, given that you made the right assumption and the stock and the specialist immediately spreads or goes the way you predicted?

===========================
now from our last conversation about how to spot buyers and sellers, i can see why you would look for the bids stepping up and offers stepping down...but these things happen all the time though.... for example, i might see the bids step up twice, and then stops, so how do you know if this is a good buy? if it steps up continuesly? AND with big sizes?

I know you said you dont really care about the sizes, but to make money, we're not really looking for small buyers and sellers like the daytraders out there, we are looking for the institutions and the BIG boys.... now i'm a beginner, so correct me if i'm wrong, usually when i try to look for a big buyer or seller, i generally look for bids or offer stepping up or down, at least a bunch of times, and i'll look for big prints being printed one after another, like a 1000 here, 2000 there, 4000 , 1000...etc But is this a good way to find these opportunities? since a institutions could probably just buy 100 shares throughout the length of a day or even a week, so how do you exactly distinguish whether a stock really has potentials or not?
=========================


what do you mean by reserve or iceburg orders? like cushions OR stale bids and offer? if so, what about them? And what do you mean by watching the "volume" what volume?
==========================
----------------------------------------------
==========================

Right now, i'm primarily using NX, MARKET, and SLIP orders to get in and out of trades ... long and short.

I was wondering if anyone could share some expertise on when they use certain order, like when would someone use limit orders? market orders, ecns? etc.....

DON, you said you try to teach the newbies at your firm to relie on limit order more than the nx orders, simply because the reason that when you place a limit order there is the possibility for you to get a price improvement right? like if you set a price to buy at 13, and all of a sudden the prints drops to 12.99, then you get a price improvement of 1 cent, eventhough the offer showing on the tape at the time might not be better than the price you got from the most recent print? (with nx you take and give from the offer and bids showing on the tape, but with limit, you're simply getting the shares at the printed price right? how does it actually work? and how would you utilize limit orders to benefit in certain situations? i've heard people using them sometimes so the limit order they place will get sweep up along with the big bid or offer?!?!?! could you clarify on this?

==========================

lastly, if anyone could share some tape reading tricks they picked up, or how to read certain scenarios I would greatly appreciate it!!!!


Hope to hear from you all soon, and happy trading! January is coming soon... thank god.

Jesus man, you have to shorten these posts. Half way through reading it, I decide to go back to watching football. LOL.

I'll try to simply this for you. You should not worry what is a market order or a limit order, makes no difference. A specialist's job is to match orders period! That is what he does. When you go to market, he is matching your order against other market orders and any limit orders in his book, usually everyone's order will print at one price. To some, this will be a price improvement, to others, it will be the price they had their limit at.

Listen, I don't mind sharing info here about tape reading, but if it's going to require me to write a book, I'm going to start charging. Seriously.

I don't know where you guys trade, but whatever firm you are at, someone should be teaching you how to trade and how to read the tape. They are being compensated in some form for doing that. It's much easier for you guys to learn this stuff in person sitting next to someone then trying to post on here.

I'm trying to be as helpful as I can, but when it takes all of Sunday evening for me to respond, it takes the fun out of ET! LOL.

 

[FaderTrader]

Quote from Maverick74:

I'll try to simply this for you. You should not worry what is a market order or a limit order, makes no difference.

Yea right! LOL