Tape Reading in practice

J

JustStarted

Hello,

I just started practicing the art of tape reading. but the thing that most puzzles me is how you differentiate between trades that have a 'meaning' and those that are just random. for example, today(Sep 10) how could you figure out that GE was bottoming out at around 9:58 at 28.78?or that it was topping at 29.60 around 10:40? let's start this thread using practical examples hoping that new traders and seasoned ones will be able to benefit from it.
 
Originally posted by JustStarted
Hello,

I just started practicing the art of tape reading. but the thing that most puzzles me is how you differentiate between trades that have a 'meaning' and those that are just random. for example, today(Sep 10) how could you figure out that GE was bottoming out at around 9:58 at 28.78?or that it was topping at 29.60 around 10:40? let's start this thread using practical examples hoping that new traders and seasoned ones will be able to benefit from it.
More...

Hi JustStarted...Actually, most people don't realize that
anyone who watches price action on a monitor is reading the
tape.


As Jack Schwager puts it, a tape reader is..."A trader
who attempts to predict impending market direction
by monitoring closely a stream of price quotes and
accompanying volume figures."

This is what I watch during the day...A stream of price
quotes and volume.


:)
 

Attachments

Originally posted by Breakout


Hi JustStarted...Actually, most people don't realize that
anyone who watches price action on a monitor is reading the
tape.


As Jack Schwager puts it, a tape reader is..."A trader
who attempts to predict impending market direction
by monitoring closely a stream of price quotes and
accompanying volume figures."

This is what I watch during the day...A stream of price
quotes and volume.


:)
More...

Hello. I just took a look at your .gif chart. I'm fairly new to trading and very new to tape reading per se, so please pardon my ignorance here, but what does Tick/Diff 10.00 60.00 -60.00 mean and how are your Price Channels set? Please let me know when you have a chance, and many thanks in advance for your time and assistance.

Regards,

cwb1014

:cool:
 
Originally posted by cwb1014


Hello. I just took a look at your .gif chart. I'm fairly new to trading and very new to tape reading per se, so please pardon my ignorance here, but what does Tick/Diff 10.00 60.00 -60.00 mean and how are your Price Channels set? Please let me know when you have a chance, and many thanks in advance for your time and assistance.

Regards,

cwb1014

:cool:
More...

Hi cwb...be happy to help. We'll start with Tick/Diff...

Tick/Diff means "tick difference". When the yellow bar
is going up, this means the bulls are in control. When the
yellow bar is going down, bears are in control. I should
point out that tick difference isn't "Volume" in the strictest
sense. Tiff/Diff doesn't tell you "how many" contracts were
bought or sold, but rather... who is in control, the bulls or
the bears? Which, personally, I find more useful.

Now, you'll notice that some of the yellow bars are
very long. This is where 60 -60 comes in. When the
yellow extends beyong 60 or -60, this tells me
who's "really in control", at least for the moment.

I like to get in on breaks of "support" and "resistance"
on a "50" period price channel, and high (60 -60) accom-
panying buying or selling.

Here's an example:...feel free to ask any more questions.
 

Attachments

Originally posted by ronb107
When discussing Tape Reading for listed stocks, it's defined as reading the Time Of Sales (TOS) for the stock. The TOS includes the Bid/Ask data which provides clues as to the impending movement of the stock. Looking at charts will not provide this data.

Generally, it is best to do this for small and mid-cap stocks (100k to 1 meg average daily volume). A stock like GE is far too large for effective tape reading.

--Ron
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Hi ronb...I knew some would disagree with me,and
that's why I added a quote from someone who many
feel, knows what he's talking about.
 
Breakout:

First, let me say that I am not attacking your strategy; it actually looks interesting from a TA perspective. And if it works for you, that's what counts.

But I disagree with your interpretation of Schwager. When he discusses a 'stream of data', I believe he is referring to the Tick data (the prints on the TOS) and the size of each tick. The Bid/Ask data (which includes size) provides the strength of the Buyers and Sellers at any instant. The instant we see a large Bid or Offer, we know who is in control.

Your Tick Charts are a derivation of the TOS; that is, it's a compilation of the ticks (100 ticks/bar). This incorporates a delay which the Tape Reader would not tolerate. In addition, the Bid/Ask data is excluded, which is a crucial element for the Tape Reader.

BTW, this is what I and other professional daytraders do all day; we read the Tape.

--Ron
 
Originally posted by ronb107
Breakout:

First, let me say that I am not attacking your strategy; it actually looks interesting from a TA perspective. And if it works for you, that's what counts.

But I disagree with your interpretation of Schwager. When he discusses a 'stream of data', I believe he is referring to the Tick data (the prints on the TOS) and the size of each tick. The Bid/Ask data (which includes size) provides the strength of the Buyers and Sellers at any instant. The instant we see a large Bid or Offer, we know who is in control.

Your Tick Charts are a derivation of the TOS; that is, it's a compilation of the ticks (100 ticks/bar). This incorporates a delay which the Tape Reader would not tolerate. In addition, the Bid/Ask data is excluded, which is a crucial element for the Tape Reader.

BTW, this is what I and other professional daytraders do all day; we read the Tape.

--Ron
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Hi ron...I understand what you're saying and I respect
that. I just think that most people, when they hear
the term tape reading, they have in their mind an old
man standing by his walnut desk in his plush office
with a glass globe sitting near him and a long string
of price data flowing through his fingers. If I'm
right, then the old man is looking at a "stream of price
data" and "volume". They didn't get TOS back in those
days.

It may be that the term "Tape Reader" has evolved
into something more since then, and I'm just not
aware of it.

But, anyway, thanks for the post. That's how I learn.
 
I actually got alot out of both your charts, even though I don't trade the mini's.

Would you go long on an upside tickdiff bouncing off support? It seems the trend in both charts is definitely down.
 
Originally posted by chasinfla
I actually got alot out of both your charts, even though I don't trade the mini's.

Would you go long on an upside tickdiff bouncing off support? It seems the trend in both charts is definitely down.
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Hi chas...I'm glad the charts were interesting for you. I
don't take trades that bounce off support and resistance.
The reason I don't,is because, when I'm wrong and price
does break thru S/R ,the market has a tendency to move very
quickly. I know a guy who likes to do that though, he'll
buy just below resistance, and get out if it breaks through.

BTW...I'm not sure if you were aware, but both charts are the same.
 
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