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Tape Reading


mahavishnu: You said "I'm more of a tape reader than chart setup trader"

I do not know what tape reading is but I am guessing that it deserves its own thread so I have started this one in the hope that you will enlighten me.
Perhaps you could post what the price and volume was telling you at this time so we can learn something from this. I don't know anything about tape reading if it is refering to time and sales or Bid/ask analysis but would like to. This COULD be a great example. What makes this a high probability trade setup? Perhaps once you explain this in detail we can watch for it.Thanks

Bruce


quote:
Originally posted by mahavishnu

Today, a very high probability trade was setting up at the 1452.00 level. This price proved to be a barrier for the bulls (and a fortress for the bears) from approximately 1:30 to 2:45 p.m. This was also a period of fairly low volatility and for lack of better words, consolidation.

I observed the expansion of volume after 2:45 and immediately after 1452.25 was pierced, the price ran to 1455.00 in less than a minute on this mini breakout on large volume. Watching the price and volume action would have alerted the student of tape reading to buy at 1452.25-1452.50 for a quick 2+ point profit.

For tape readers, this was a classic setup with instant gratification.

I don't save screenshots of the time and sales from the prior setup.

Next time the setup occurs I will (it happened again today and led to a precipitous decline but I didn't read this and so didn't capture the action for you although I did take the trade).
What charting packages are you using BruceM and mahavishnu? Some of the packages allow you to replay the day's action tick by tick.
I use TradeStation and if you give me exact instructions on how I can transport the charts here I'll do my best, but I want to say in advance I am not computer savy.
If you go to the Charts part of the forum you will see some sticky subjects on how to put charts up. I also saw some instructions on another part of the forum but I cannot find them now.
I just use my basic free IB data but also have Investor R/T. I'm not sure what we are looking for with this tape reading setup but consider myself fairly resourceful. If we need to "playback" a time and sales window or something else from today I can probably find someone who can get that just give me the specific time frame ( eastern time) that I need to acquire and I'll do my best. This will be great to see as this is the "Stategies and Setups " section of the forum. So without seeing what is happening or having specific details of the trade set up it doesn't have any value to me. Having some screen captures or whatever would help greatly. Let me know and thanks for trying to get this calrified.

Bruce
quote:
Originally posted by elite trader

What charting packages are you using BruceM and mahavishnu? Some of the packages allow you to replay the day's action tick by tick.

Is this what you are looking for? I had the 300 block trades on the first one (#1) and 10 block trade filter on the rest the time line on the first pic is the entry and exit point acording to mahavishnu.



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T&S 2/8/07


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T&S 2/8/07


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T&S 2/8/07


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T&S




Where do we stand with getting this information posted? I've posted charts before and it was fairly easy...even for me...no offense Mahavishnu but I see you've had "time" to make other posts so out of pure selfishness and a thurst for knowledge I want to see you follow through on this. It would be ashame if you back away from following through...perhaps this is a work in "progress". Again my offer still stands to help if I can in any way. Why don't we start with the basic setup? That could just be typed in. Thanks

Bruce
quote:
Originally posted by mahavishnu

I use TradeStation and if you give me exact instructions on how I can transport the charts here I'll do my best, but I want to say in advance I am not computer savy.

Looks like Mahavishnu Dropped the ball here......anyone have any links or anything that explains entries using these concepts?

Bruce
I am a rookie trader, and although my knowledge is limited, I feel very comfortable with the tape. Usually, I use the chart to find a price pattern that I like, like break-out, round top or bottom. Then I use the tape to gauge the supply and demand at the moment. For example, in a brisk move out of a consolidation, incoming trades should be executed at higher and higher offers. If that happens, I know that there are demands for the stock. You can use the tape to determine supports and resistances as well. Suppose that the incoming orders are drying up as the price approaches $100 -- I know that no one wants to pay $100. On the other hand, there may be many overhanging orders at $100 to absorb the demand and keep the advance in check.

I do not know if the tape has any predictive value, but it does tell you what is happening AT THE MOMENT. Right now, I am still practicing on pacing the incoming orders and on determining the strength of the buyers or the sellers.
Originally posted by wldr316

i would like to learn how to tape read, but I don't want a book. is there anyone who could point me in the right direction


In the past few years "tape reading" has evolved into the field of study called "Order Flow Analysis" so that is where you will want to start your research of the topic. A new cottage industry of trading educators has sprouted up to support traders wanting to learn and use this technique.

I have studied the topic for several years myself, there is a lot we can learn from order flow analysis. By itself order flow is not a complete solution for trading, it can be a helpful way of looking at market behavior but is only going to be helpful on a consistent or repeatable basis if viewed in the context of the established and developing price structure.

Here is a good starting introduction and overview of the key order flow concepts... Peter Davies is one of the leaders in developing order flow concepts and advanced OF tools...

part 1:

part 2:

part 3: