Tape Reading

[eagerbeaver]

Quote from coolweb:

I'd like to share:



bid asks in index futures, don't work.

Time and sales are much more important.


Players who want to buy/sell go market,
bid and asks limit orders are loser orders, they don't move the markets

In index futures, even more so, its more about key price ranges which is why somebody who's going to drop 100 contracts will not sit around watching bid /asks. Key is to watch how volume is effected/supported in these key ranges is what makes the market MOVE.

Thank you, Cool. I've noted (and learned from) your posts in the past, and I appreciate this latest contribution. This is exactly what I'd sense from my (albeit limited) examination.

I'm wondering if you wouldn't mind clarifying one point:

When you say "bid asks in index futures, don't work" do you mean bid/asks that are NOT inside bid/asks don't work? Or do mean ALL bid/ask that are not at the last traded price should be ignored?

Specifically, if the last traded price is on the bid, do you treat the inside offer the same way you would the offer three or four or five levels up? Are you saying, literally, that the only orders that count are market orders? Period?

Thanks again.

 

[Stalker]

Quote from coolweb:

I'd like to share:



bid asks in index futures, don't work.

Time and sales are much more important.


Players who want to buy/sell go market,
bid and asks limit orders are loser orders, they don't move the markets

In index futures, even more so, its more about key price ranges which is why somebody who's going to drop 100 contracts will not sit around watching bid /asks. Key is to watch how volume is effected/supported in these key ranges is what makes the market MOVE.

thanks coolweb,

the idea that i have as a starting point is the same as yours, that the limit orders are the orders of losers.

I´ve got the idea from different people here at ET that price gravitates towards high bid/ask size instead of the opposite. That is if cumulative bid size is bigger the market is more likely to go down, if ask size is bigger it´s going up. This makes perfectly sense in theory. The big players needs someone to take the other side of their trade. The tricks in the orderbook is a reflection of this.

I´m more or less saying things here that other people have already written, just wanna point out that I don´t claim these ideas to be my own. But I´m convinced that this is true. The tricky part is how to use it practically, in what situations to look at bid/ask size and how?
For example I believe that it sometimes could be possible to spot fake break-outs and moves that are going to be faded if you can spot fake orders and use this information together with the bid/ask size.

Everything I say here is just theory though, and if you can´t use it practically it´s a completely useless theory. All opinions on this are welcome.

best regards,
Stalker

 

[Stardust]

Macro, what data feed does TapeReader run on? Got it loaded but no data?
Thanks

Quote from MacroEvent:

yes if you see they will have that link active sometime today as the site was being upgraded to include all the new info --- the TapeReader platform guys are working to get everything updated with all the new info for you by today. just keep checking the link today or tomorrow to see what TapeReader is all about.

i have watched TapeReader for a couple of days now and i like what i see --- good idea imo --- you will see what i mean once you get a chance to view the TapeReader tool in action.

 

[mdl060374]

Quote from pinabetal:

You are about as blunt as a fire hydro!! I doubt his stores where handed to him.

I agree. Probably were giving them away:

 

[mdl060374]

Quote from Hydroblunt:

If you had any real successful experience with NYSE stocks you would know that in at least half the scenarios the specialist purposely paints a false chart signals just to get the chart only traders out. A good reader of the NYSE tape will actually recognize the fake out and take the correct trade, which could either be an intraday swing or just a quick 5 second trade.
.

Can you elaborate a bit more on this?

 

[Babak]

What sort of time frame are you guys talking about? tick by tick? minute bars? 5 min. bars? 15 min bars? I would argue that the time frame matters as 'painting' would create much less noise when you go into the longer time frames.

 

[MacroEvent]

Quote from Stardust:

Macro, what data feed does TapeReader run on? Got it loaded but no data?
Thanks

currently TapeReader needs a TradeMaven dome up with a "profile" selected to "S&P live" and "esignal" for the feed ---- then you also have to have esignal active at the time feeding the data. if you have any questions then PM me and i can go into more detail for you. this trading tool is brand new so it will be a few weeks to get everything going and hear feedback from users in which to make enhancements from.


also the TapeReader web page is now active with one very short video to give a brief description of how to activate TR -----

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

 

[glenjohnson]

Quote from trader28:

You rake leaves at best... a real trader would not waste their time arguing with me, you gave yourself away many posts ago

A REAL trader WOULD waste time argueing with you. Because a REAL trader has lots of time on his hands from winning so much money and has nothing better to do with his time than to hang out on the computer.

 

[mokwit]

One dimension not being homed in on is that as much as the action on the tape itself, the old tapereaders would have been looking at the tape to see which groups/pools were active i.e who as well as what.

 

[illiquid]

What's not talked about on this or the other excellent thread on tape reading is timing aka pace of price development -- one reason why I never gravitated towards tick-based charts. Pace becomes a far more critical component to tape-reading in homogenous, ecn-structured markets (electronic futures) which do not involve any human intervention/safeguards (specialists, mm "preferenced" orders) that may interfere with prices expressing themselves as "purely" as possible. Of course, as with equities, it is far easier to catch patterns and rhythms in less "crowded" markets.

As an aside, some may knock charts as just vestigial history, especially the pure tape readers, but I think that goes too far. Sure, nothing beats seeing and experiencing how price movement unfolds in real-time, but a close second best is just looking at how prices got to where they are now. One skill worth acquiring is sizing up a chart and being able to literally replay the moves in your head, a sort of "empathic" catching-up on the past to give you a heads-up on what may come next. Just my .02 on the topic.