Wait, does "tape reading" mean watching TaS? Or looking at price charts?
- Thread starter IronFist
- Start date
Tape reading is simply watching the transactions. The closest thing to the original tape reading is watching trades going across on the bottom of the TV screen during a news broadcast. If you have streaming quotes you watch the transactions it whatever manner you've customized them, including T & S.
Tape reading to me is looking at the price and volume in relation to time. Time is a very important factor and can only really be 'felt' though experience of many hours of tape reading.
For example, tape reading a possible reversal is when you see a lot of trades happening with heavy volume in a very short period of time and the price is moving quickly in one direction. When the price pauses but there is still heavy volume in a short time, it indicates to me that the reversal is about to unfold.
To further tape reading that move, the price then has to reverse strongly on heavy volume without pausing. It should be that very few people were able to get a transaction at that great price. If the price pauses and everyone is able to buy at that 'great price' then that price isn't that great and instead of a reversal, it's likely a consolidation before continuing with the original trend.
For example, tape reading a possible reversal is when you see a lot of trades happening with heavy volume in a very short period of time and the price is moving quickly in one direction. When the price pauses but there is still heavy volume in a short time, it indicates to me that the reversal is about to unfold.
To further tape reading that move, the price then has to reverse strongly on heavy volume without pausing. It should be that very few people were able to get a transaction at that great price. If the price pauses and everyone is able to buy at that 'great price' then that price isn't that great and instead of a reversal, it's likely a consolidation before continuing with the original trend.
to add to the above- what is important is where in the chart price is, and what you need to look for will be different for each scenario. What is probably the best thing to put your efforts into is in reading the tape for timing a pullback ie in an uptrend buying the HL.
You can have a couple of tapes one filtered for larger blocks. If you use a program like X-trader you can have audio beeps for large trade sizes that you can specify, or you can just program this yourself.
It can be about seeing and following size and/or lack of size. It can be about the rate of prints or the tape having periods of âdry upâ.
No, tape reading implies real time watching of transactions. It got it's name from people who used to sit by a ticker and read the tape as it came out with the price and size of each individual transaction.
"price action" as used on ET has it's own defintition, and apparently differs between different chatters.
There's a book called Tape Reading and Market Tactics by Humphrey Neil written back in the 1930's. It goes into the details of tape reading.
Tape reading is watching different equities' price behavior in relation to eachother, and finding imbalances. An example would be to watch how the leaders in the S&P are trading, while comparing small cap leaders and how they're trading. You can see when real bids are coming into the whole market, versus just balancing and churning price action.
I like to watch many sectors at once, examples would be: xlf, xly, xhb, xrt, oih, uso, es, ym, nq.... etc. Then load up leaders in those sectors. You will start to see what really moves the market. Watching the time and sales, is a waste of time. Plus, it would hurt my eyes. I do watch market depth on the futures though.
Then I mainly trade the futures off what I am seeing in the overall price action of the market.
Some days, one sector will lead the whole market. That's another key, finding it early enough, you can be ahead of a lot of major moves.
I like to watch many sectors at once, examples would be: xlf, xly, xhb, xrt, oih, uso, es, ym, nq.... etc. Then load up leaders in those sectors. You will start to see what really moves the market. Watching the time and sales, is a waste of time. Plus, it would hurt my eyes. I do watch market depth on the futures though.
Then I mainly trade the futures off what I am seeing in the overall price action of the market.
Some days, one sector will lead the whole market. That's another key, finding it early enough, you can be ahead of a lot of major moves.
Excellent.
If one can identify the outperforming sector(s) early then trade liquid big cap stocks in that sector. Today, the tech sector recovered very quickly after the decline and zoomed ahead. Thus, GOOG, MSFT, YAHOO, INTC outperformed; XLF lagged badly as did most financials.
What are the best ways to indentify outperforming and lagging sectors?
I must admit that for my very first post here on ET and as a very noob trader I would LOVE to get a good definition about "Price Action"
Every web site i browse, and every information I get these days ( as a noob) talks about "Price Action" -Seems to me like a very abstract concept for the moment....
Every web site i browse, and every information I get these days ( as a noob) talks about "Price Action" -Seems to me like a very abstract concept for the moment....