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tape reading
- Thread starter darren
- Start date
Quote from darren:
Anyone know of a decent book explaining tape reading ? I looked around and the book review on this site of the only book for tape reading wsnt great it was the graifer and schumacher one. Thanks in advance
Yes. I can think of a few. The NYSE book, the Arca Book, the NSDQ book, EdgeX book, BATS book, and all the other market makers books', as well as realtime time and sales. Video recording software won't hurt in the early stages. Creativity, patience, and belief in the process is necessary. Tape reading is the best kept secret that can let anyone smart enough learn to take money from the pros, so no one will write about anything useful about it.
Watch everything and look for patterns and watch enough different markets to learn what's tradeable. Focus on stocks that move. Watch watch watch. the money's there but unless you can convince a pro to train you (a pro who most likely taught himself by watching the screen), i.e by somehow making it monetarily worthy to them (which means 95% of the time they'll try to take every penny you make by churning you to death if they can get away with it as that's how the prop business model works). Trade 100 shares after spending a month on demo. Risk $50/day as your max loss, keep losses to 5-10 cents, don't trade really expensive stocks until you know what youre doing or stocks so illiquid you can't minimize losses (though tape reading works better the thiner the market). At the end of the day review the time and sales or a video recording of the prints + books to see what you missed and what happened. Be creative in your thinking and let the market feed information to you, which will only happen by watching it and interacting with it with minimal risk.
Tape reading fills in the gaps on charts. There's a lot left on the table when using only charts.
Quote from NYOBScalper:
Yes. I can think of a few. The NYSE book, the Arca Book, the NSDQ book, EdgeX book, BATS book, and all the other market makers books'
book reading is not tape reading. book chasing is for rebate and volume geeks who would rather line Goldman's and the NYSE's pockets instead of their own.
Don't get me wrong. Somedays penny/ rebate trading is the only thing working. But it ain't every minute of every day in every stock. Situational Trading, the ability to adapt to the day and the tape. One trick sheep tend to get slaughtered.
Do a search. There was a thread on this topic recently. In that thread there was a link to a PDF file you can download which is Wycoff's book "The Day Trader's Bible." It is from the early 1900's but the principles are the same. Check out Linda Bradford Raschke. It thnk there was a link to something written by her as well.
Quote from bdon:
book reading is not tape reading. book chasing is for rebate and volume geeks who would rather line Goldman's and the NYSE's pockets instead of their own.
Don't get me wrong. Somedays penny/ rebate trading is the only thing working. But it ain't every minute of every day in every stock. Situational Trading, the ability to adapt to the day and the tape. One trick sheep tend to get slaughtered.
I trade for 15 cent to 1 point moves and could not do it without the books. Everyone except the other traders I know who trades like me talks about how useless the books are. Good, that means fewer people taking advantage of the tool I use. Just because books are ripe for manipulation doesn't mean you can't learn to profit off that manipulation. As a tape reader you should be familiar with the book and what liquidity will cancel and when people will panic out and where to limit to capture that panic, and if you see manipulation that you cannot ascertain a pattern too, as a tape reader you should not trade that stock at that time.
over 95% of my entries are from taking liquidity in situations where the stock will immediately print higher if I'm long or lower if I'm short. I capture good moves and have a decent ticket average, .001+. I don't rebate trade - I usually post to nyse - and don't get into trades for less than 10 cents, unless I see that taking a 4 cent profit is my out on the trade and if I don't do that I am not exiting according to my trading plan (i.e. I believe my choices are: 4 cent profit, or wait for an 8 cent loss).
There are few old books about tape reading (for example Tape Reading & Market Tactics by H. Neill, Studies In Tape Reading by Roll Tape). They were published back in 1920's and focus on the price/volume action without any technical analysis bullshit. But a lot of things have been changed, and you cannot apply most those brilliant rules anymore in the modern market structure.
I'd second what NYOBScalper said - the best book is the screen time. But not spend too much on market depth - often depth is stale orders or orders with fake size that get pulled off when price moves. Look at the top of the book - what size is quoted, where price gets printed, what size, what is quoted after the print, check any refresh, plus/minus tick bids/offers, etc...
I'd second what NYOBScalper said - the best book is the screen time. But not spend too much on market depth - often depth is stale orders or orders with fake size that get pulled off when price moves. Look at the top of the book - what size is quoted, where price gets printed, what size, what is quoted after the print, check any refresh, plus/minus tick bids/offers, etc...