Tape reading

THX Qwik, precise as always ;)...now, I get it what youre sayin, just one more thing... Theres was this article on HardRightEdge (I think praet posted it) about some "fish in the ponds lol" ... K, It was like this : main timeframes to trade in and NOT CHANGING FROM ONE TO ANOTHER.

It stated how main timeframes are 2(scalpers, MMs, slippage...), 5(daytraders), 15 (institutions)mins dailys(funds) and weeklys.

Does this division matter and is it true that basically "you're taking money from the timeframe above you, and giving it to the one below"? If its true then I guess by swing trading I should trade off the 15 min charts, find my plays on the dailys ...and do the weeklys matter? I hold 1-2 days...

Aleyandro
 
I trade mostly Nasdaq, but I do a little listed too, and I have tried to use T&S, but I can't seem to glean much useful information from it. Like Neo said, when I watch it, most of the prints seem to be outside the spread. It's like the MM or Specialist hold the prints they don't want to show, and then print them when it won't hurt to "tip their hand" - when they're through buying or selling for the moment. I know some of you use the tape very effectively, so there must be a way to read it. I read about watching for prints being either at the bid or the ask, but I rarely see that. I think it would be great to have the prints prints instantly with each fill - then T&S would really be useful for me - but I don't think that happens right now. It appears to me that the MMs print whenever they want. In fact, I have had fills that haven't printed for ten or fifteen minutes in high volume stocks. When you get a fill above the spread, and it doesn't print, you can be pretty sure it's going higher. For my trading, I do fine without T&S, but I would really like to understand how some of you use it. Thanks.
 
My personal opinion is that if you are swingtrading or position trading, time and sales and level 11 are useless. I never use them. I used to try to use them to "get a better entry" but found it to be no better than 50/50. If you are doing anything other than scalping, t and s and level2 are only "noise". I am always willing to learn, though, if somebody can show me how to use them effectively for these types of trades.
 
Here's a tapereading question that puzzles me. Not often, but not rarely either, I see a bid that has been static for some time hit and then the bid immediately jumps higher. Not what one would logically expect, so what's going on them?
 
Tape reading is THE MOST IMPORTATANT skill to have on NYSE, it is the only way you can judge the truth strength of a trend and it is absolutely critical when you enter and exit positions, and if you trade size every single trade has more than one set of entry/exit points, you are always paring in and out of positions and having a strong set of tape reading skill is critical. I don't think you can become a top tier NYSE trader without a top tier tape game, even Tony admitted that he left NYSE for Nasdaq partly because Nasdaq allows him to be more chart oriented.

While I have not traded Nasdaq professionally to comment, Tony's MSFT trade on Friday, given his ending P&L I would estimate that he traded at least 20000 shares each way, and he built his positions and exited piece by piece, I would think he spend a lot of time on the Level II to judge the strength of the move and pared in/out of stuff.

Unfortunately I don't think there is anyway you can develop a good tape/L2 game without putting in a lot of hours looking at them, there are very few quality books on the subject and you have to look at a stock frequently enough to read the specialist's rhythm, what kind of size he usually prints, does he blow stops, does he fill the gaps, does he show a lot of fake BID/ASK's, etc . . .

The key to successful tape reading is that once you have the basics down, you must be able to separate noise from "critical prints". A stock can make a lot of prints in a certain range traded back and forth, then volume picks up and big size goes off, revealing the truth intention of the specialist. My biggest weakness in my tape game is like most other traders who haven't fully developed their tape game, that I tend to let the noises shake me out of stuff (it is getting better but I still get out of stuff too early sometimes).

The reason a lot of Nasdaq traders struggle on NYSE is because they simply never developed their tape game, this is precisely why most successful traders trade one exchange or the other, but rarely both at same time of equal proportion.
 
Originally posted by neo_hr
Does this division matter and is it true that basically "you're taking money from the timeframe above you, and giving it to the one below"? If its true then I guess by swing trading I should trade off the 15 min charts, find my plays on the dailys ...and do the weeklys matter? I hold 1-2 days...

Aleyandro
More...

well.. the longer your holding period, the longer the time period chart you would want to use.. im not sold on the idea that the smaller time frames take money from the longer time frames.. i suppose its true in a market maker/customer relationship but as most traders lose money, i dont see how there would be too much to trickle up to the long termers under that theory.. i am not a swing trader so you might want to get the opinion of others who trade in your timeframe.. i can recommend Alan Farleys book "The Master Swing Trader".. its probably the most comprehensive swing book that ive seen..

good trading =)

-qwik
 
I hear it so often that many very good traders only trade listed stocks. It seems that if you can figure out the true intentions of the specialist or read the encrypted message that the tape is giving, you've found a golden key to profits.

But I've found daytrading listed stocks difficult. The spreads, the slippage, the seemingly illogical price movement, etc have burned me many times. But I know there's a readable signal there that I've got to figure out. Since just watching price action is the best way to learn, can some of the more experienced nyse traders recommend a few stocks to keep on my screen and watch every day?
 
@nicodemus

My personal opinion is that if you are swingtrading or position trading, time and sales and level 11 are useless. I never use them. I used to try to use them to "get a better entry" but found it to be no better than 50/50. If you are doing anything other than scalping, t and s and level2 are only "noise". I am always willing to learn, though, if somebody can show me how to use them effectively for these types of trades.
More...

If you read Tony Oz's books you'll se that he uses LII and T&S - and it seems to help :)

But I'm not sure if using these tools makes the difference between a bad trader and a good trader or just between a good trader and a very good trader ...

Harry
 
Harry

I'm sure some people use them effectively but they drove me nuts. Its the same as making swing trading decisions off of one minutes charts as far as I'm concerned.
 
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