Tape Reading

Quote from pinabetal:

Tape reading using the bid/ask spread and size is one way to intra day tape read. But it is certainly not the only way. One can also use intraday simple bar charts and correlate that with volume to determine next probable price move.

Now, if one is using bid/ask then obviously one has to understand the difference in the specialist and the MM's on the Nasdaq and their bag of tricks to manipulate prices to their advantage. Of course, IMO it is easier to trade with the specialist than with the MM's if using bid/ask however, one can tape read intraday WITHOUT the Bid/ask scenario. Just do it with charts and volume exactly as one trades by tape reading on a daily basis with just daily charts and volume. Except you will be using intraday charts instead of daily.
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Where you the one who mentioned wyckoff?

If so, assuming you read his material, then you should know that tape reading is an intraday strategy ONLY.

No, it does not apply to daily price movement. Tape reading seeks to capture quarters, .50's and possibly a point from the move. It is short term only.

Not trying to be condescending, but by definition tape reading is looking at micro events occurring in the T&S window (the tape). Daily volume dry-up and price exhaustion are not the same thing - this is price action and requires a totally different analysis.
 
Quote from trader28:

You know, pulling up market depth and seeing the bids waiting down at the 5 nearest levels and the asks waiting up at the 5 nearest levels... I have a very accurate set of proprietary indicators that i use but never felt any real connection to the other players until i started watching this last night, it's like god damned clockwork if you can add numbers in the thousands quickly on the fly

And to me it looks like because the majority of the numbers are not being hit yet then it is leading the price everytime
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Oh. Okay, you are using L2 then, not necessarily time and sales. L2 does lie, fake bids and offers are the norm. Lifted bids and asks are market orders that take liquidity - these types of orders can cause overreactions and subsequent price movement if they are large enough. I mostly rely on T&S.

Large bids and offers "waiting" away from the spread can sometimes be a safety net, like saying "there a 1000 lot waiting at such and such price, no way is someone going to sell into that..." BUT, that's what they want you to think, it is very easy to remove a bid or an ask of any size.
 
Quote from MacroEvent:

excellent tool for tape reading will be available on the 12th

http://www.mmti.com/TapeReaderInfo.htm


here is a partial screen shot {this shot does not have the scrolling T&S showing} --

http://www.ttrader.com/mycharts/display.php?p=37264&u=macroevent&a=MacroEvent&id=1511

http://www.ttrader.com/mycharts/display.php?p=37265&u=macroevent&a=MacroEvent&id=1511

http://www.ttrader.com/mycharts/display.php?p=37266&u=macroevent&a=MacroEvent&id=1511
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for the ES --- yes this together with the NYSE TICK can be a very good set of tools for tape reading or having a good "expectation" of forward going movement.
 
Quote from trader28:

Seems ok on the ES, you get a real feeling of flow and can feel when it turns and one or the other take charge
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The ES is a liquid market with reliable volume flow. I apply my ideas to thinner issues, i.e. less efficient markets. IMO, higher liquidity = tighter spreads = less bias = more convoluted tape reading.
 
Wow. I just wasted 15 minutes of my life that I can't get back reading this worthless thread. Reading the tape is an art which won't be learned here.

I agree, Livermore is an excellant source to get started and The Electronic Daytrader although dated gives some real good insight into reading order flow.

I also agree that reading the tape can be done on the NYSE, NASD, or AMEX or anything. Money is money and a print is a print.

Just stop all the bickering.
 
Quote from Mike805:

The ES is a liquid market with reliable volume flow. I apply my ideas to thinner issues, i.e. less efficient markets. IMO, higher liquidity = tighter spreads = less bias = more convoluted tape reading.
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yes but it depends what type of trades you are going to make from the information observed --- for making two or three tick scalps during the day for the ES my methods work fine.

i have been thinking of looking at the Hang Sang index though to see what that looks like while trading --- that may be the next good market to play.
 
Quote from Mike805:

Where you the one who mentioned wyckoff?

If so, assuming you read his material, then you should know that tape reading is an intraday strategy ONLY.

No, it does not apply to daily price movement. Tape reading seeks to capture quarters, .50's and possibly a point from the move. It is short term only.

Not trying to be condescending, but by definition tape reading is looking at micro events occurring in the T&S window (the tape). Daily volume dry-up and price exhaustion are not the same thing - this is price action and requires a totally different analysis.
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You are absolutely 100% wrong if you think tape reading is an intraday strategy ONLY. The facts are it CAN be applied to daily even weekly or monthly. Tape reading can but does not have to only seek to capture quarters..50 or just a point or two. And it certainly doesn't have to be just short-term. You my friend are very wrong. Classical tape reading involved intraday interpretation of the markets as prices went down or up but it also was used on a daily even weekly basis.

I quote Gann in the Truth of the Stock Market Tape "The best way to read the tape correctly is to stay away from it" "Therefore the correct way to read the tape is to keep up a chart showing moves of three days to one week and the amount of volume. Of course, you must consider the total outstanding stock and the floating supply. Again I emphasize the correct way to read the tape and interpret it accurately is to stay away from it".

Traders who are always looking at the screen tracking every transaction as they try to trade every minor fluctuation usually don't see the larger trend and miss out on the bigger money. If you look at a painting and focus only on the details you will miss the overall beauty, and overall form of the picture.

The more one focuses on the minor fluctuations the less one will see the true supply/demand in the larger trend.

Linda Bradford Raschke once said : "Tape reading is not watching every trade that passes by (a monotonous task) but rather keeping an eye out for unusual impulsive action, unusual volume, or just observing the way price trades at significant levels." "Tape Reading is the art of swing trading". (Drokes book).

Did you get that? The art of SWING trading!

So, there is more than one way to read the tape. Sure it can be done intraday but also daily..weekly..
 
I think we are arguing semantics here.

Given that, spreads and MM's are what/who determine time and sales. IMO, daily price/volume analysis falls into a different category. Specialists and MM's, while they do handle order flow on both large and small time frames, will hide and/or manipulate any significant size given enough TIME. That is my only point, as time increases, the momentum and reliability of the tape becomes suspect. This is where a price action approach becomes more appropriate. The S/R levels will start to become significant and history plays a greater role.

wyckoff is pretty clear in his definition. Tape reading seeks to exploit short term inefficiencies. This is all I am basing my point from. Note his stuff is from the 20's and 30's.

Look, I trade all time frames and have no objections to anyone's interpretation of market action. You can call what you do anything you want, it really doesn't matter. Hell, I buy and sell shit... that's about it really - it isn't complicated. To each his own.

Mike
 
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