Up until not so far back (about 25 years ago or so?), the most granular market action information was T&S. Exchanges did not publish their LOBs. So, yes, "tape-reading" was effectively interpreting T&S, unless you were a floor trader/specialist who had the privilege of a deeper look at the order flow.
What is the difference between traders using TA and tapereading?
- Thread starter erik_s
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Up until not so far back (about 25 years ago or so?), the most granular market action information was T&S. Exchanges did not publish their LOBs. So, yes, "tape-reading" was effectively interpreting T&S, unless you were a floor trader/specialist who had the privilege of a deeper look at the order flow.
Yes, I know that. But also that's what I was trying to point out. You do not stare at the limit order book and hope to find an edge by leaning on a big order. Noone would be stupid enough to post one anymore. But when you for example look at the book and there are 50 contracts while 800 are trading, that's a passive buyer refreshing his limit order.
On the other hand, when you see 300 single lot trades hitting a 400 lot bid in rapid fashion, soneone might use a drilling algo as a disguise to prevent other bots pulling their orders.
This is the name of the game for as long as the market exists. Small guys trying to frontrun the big guys orders and big guys trying to disguise their big orders from the small guys. The strategies and maneuvers are different, but the idea is always the same.
When the LOB's weren't available to the public, the picture was much clearer and it was easy to follow e.g. a human market maker. Now competition is more fierce and you have to follow the algo instead of the MM.
On the floor it was about watching the big guys brokers for paper coming in and transact in front of them...and the big guys woudl use several brokers in order to split up their orderflow. Same story, different technique
On the other hand, when you see 300 single lot trades hitting a 400 lot bid in rapid fashion, soneone might use a drilling algo as a disguise to prevent other bots pulling their orders.
This is the name of the game for as long as the market exists. Small guys trying to frontrun the big guys orders and big guys trying to disguise their big orders from the small guys. The strategies and maneuvers are different, but the idea is always the same.
When the LOB's weren't available to the public, the picture was much clearer and it was easy to follow e.g. a human market maker. Now competition is more fierce and you have to follow the algo instead of the MM.
On the floor it was about watching the big guys brokers for paper coming in and transact in front of them...and the big guys woudl use several brokers in order to split up their orderflow. Same story, different technique
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I suppose it's a common belief that because of all the spoofing, stuffing, smoking, iceberging/darkpooling, and layering, the LOBs are useless/manipulated/misleading. However, my analysis tells me that there is still an exploitable edge. I certainly don't "stare" at the LOB. Instead, it's all automated/algorithmic LOB analysis in real time. I trade ES, CL, and GC.
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In my opinion, if you are truly serious about trading you should stop trading until you learn how to program in a language like C++ or C# and have built and tested a fully automated trading system. There are many reasons why which I won't go into here. But in the end you can model your system to respond to all kinds of things such as TA and/or the tape.
I disagree. Learn how to gamble succcessfully and pay someone else to program
That's not true at all, who told you that? It's a very close minded point of view, you obviously haven't been around very long. It's also abit silly to say you should stop everything and learn how to code. There are so many different ways to trade and so many different types of people in the market. Coding an auto system does not suit everyone, and quite frankly not everyone can acquire the domain skill necessary to do it.
Most good discretionary traders are not skilled coders. Most skilled coders are average discretionary traders.
If you are a profitable discretionary trader, you have probably spent 10,000 + hours in front of the screen, trading- If you're a skilled coder then you have probably spent 10,000+ hours in front of the screen, coding. So if you're the profitable discretionary trader why would you now go and spend 5- 10,000 hours trying to become a skilled programmer, when could you pay a skilled programmer to do it for you? And do a much better job than you ever could.
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I have no idea how to program nor do I have the desire, time, inclination to learn. I am more than capable of learning but it doesn't interest me. Should I quit trading despite my ability to manage risk and do better than any money manager would have done for me? Absolutely not. I agree it would be helpful but not at all necessary. I actually strongly suspect if I coded my system that I would lose money initially because I don't know how you code that one chart pattern and set of indicators just looks juicier than another, even though they both fit your criteria to trade. Maybe slightly better R:R ratio you could code but sometimes it's just something you pick up after looking at it for years. My indicators sometimes pick up to hundreds of trade opportunities and only after reviewing the charts do I narrow it down. How do you program something you see visually? It's like trying to program a computer to say one face is prettier than another. Not only is it very subjective but also almost impossible to quantify. I think people who feel the way you do about programming say such absolutes because you have not developed an ability to SEE these nuances so you need numbers that a computer spits out to tell you.
There is more than one way to do things. As long as it works and your account proves your success that's what matters
In my humble opinion you would need one hell of a memory in order to use just the tape. I believe what tape readers are looking for is where price is sticking (support/resistance) and when volume on the buy or sell side comes in (volume imbalance). An example might be if you are seeing buy orders streaming in but price not moving; you would know someone is absorbing. If you see a string of sell orders with price declining and then the sellers slow down/stop; exhaustion. If you see price hitting support multiple times and then start seeing an increase in buy orders with movement to the upside; momentum.
I use no indicators in my trading other than vwap. I use the tape and depth of market (Jigsaw tools) along with a footprint chart and tick chart with volume profile and VWAP channels. All I use the tape for myself is to judge momentum and to observe what large traders on the market order side are doing. (I use a reconstructed tape for this).
I use no indicators in my trading other than vwap. I use the tape and depth of market (Jigsaw tools) along with a footprint chart and tick chart with volume profile and VWAP channels. All I use the tape for myself is to judge momentum and to observe what large traders on the market order side are doing. (I use a reconstructed tape for this).
Tape reader is like mind reader. Probably it is some term invented to help sell consulting services.