Tape Read (Time & Sales) Strategies

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carltonp

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Hello Traders,

I wonder if you can help. I've spent the last few days trying to track down information on tape reading (time and sales) strategies. I searched the four corners of the internet and trying to find suitable information buth nothing.

Just to prove to you how little information there is out there I found one site, Welcome to the Price Action Room, charging $1995 for a DVD called 'The Magic of Tape Reading'. This blew me away. I thought how can they justify that price tag? Then I thought, 'of course they can, they know there isn't anything out there on Tape Reading'. Don't get me wrong, the DVD might be the Holy Grail of Tape Reading, but I'm not ready to pay that kind of money until someone has reviewed it and gives it the thumbs up.

So if there is anyone here that can point me in the right direction, I'd appreciate it.

Cheers guys/gals

Carlton
 
Hi Carlton,
There are loads of threads here on T2W on this topic. Admittedly, few of them contain 'how to' type info', but there's enough around to enable you to follow your nose and find out what you need to know. Here's one to start you off:
Reading Tape
Check out other posts by DionysusToast - as he's probably the most knowledgable and experienced tape reader who actively posts on the forum.
Tim.
 
timsk,

Thanks for responding. As I mentioned, I looking for strategies. I will check out the link.

Cheers mate, really appreciate it...
 
The best, and argueably only way to learn to read the tape is to plonk yourself down in front of a 1 min chart on one side of the screen and time & sales on the other.

Then watch them both for about 2 years minimum, and probably up to 4 to get really good.

No short cuts, repeat NO SHORT CUTS because it's ALL to do with EXPERIENCE and even if you've got Eistein's brain it doesn't matter, ie intellgence is of little use to speed up the process.

Now, before you think that's too long consider this - the good tape readers, the ones who are a) making all the money and more importantly b) are after the SAME profits you're after, WILL HAVE SPENT THE YEARS perfecting their craft.

So when it comes to making those profits, who has the probabilities on their side?
 
anley said:
The best, and argueably only way to learn to read the tape is to plonk yourself down in front of a 1 min chart on one side of the screen and time & sales on the other.

Then watch them both for about 2 years minimum, and probably up to 4 to get really good.

No short cuts, repeat NO SHORT CUTS because it's ALL to do with EXPERIENCE and even if you've got Eistein's brain it doesn't matter, ie intellgence is of little use to speed up the process.

Now, before you think that's too long consider this - the good tape readers, the ones who are a) making all the money and more importantly b) are after the SAME profits you're after, WILL HAVE SPENT THE YEARS perfecting their craft.

So when it comes to making those profits, who has the probabilities on their side?
Click to expand...

Those are my sentiments entirely.

I can't begin to tell you, that even though I didn't want to hear what you said I truly believe its the only way to becoming successful at reading the tape - top man.

Having just said that, I would just like a starting point. Just a taste. Just a few samples. For instance, I have posted thread close to this topic http://www.trade2win.com/boards/day...ease-comment-my-new-strategy.html#post1669312 where I have asked people to essentially give me some idea what is going on in the attached snapshot of Time and Sales in the six seconds between 11:12:14 and 11:12:16 EST. Please check the link if you would like to know the significance of that time.

If someone could shine some light on that and a few other samples I intend to post, I think I'm smart enough run with it myself.

Thanks again for your comments
 

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carltonp said:
Couldn't find anything on Mr Charts and Tape Reading....
Click to expand...

I should point out that he is a vendor, and I believe charges for training etc. This is definately not an endorsement (if you read any of my posts I'm more likely to suggest that all vendors should be hoofed in the plumbs, then hung drawn and quartered)

I have no no idea if he knows his **** from his elbow, but I think I've heard him mention that he uses level for for fine tuning enties and exits. It might be worth emailing him to clarify one way or the other, he's usually pretty approachable.
 
Brock,

Thanks for responding.

I think you miss my point. I fully get what 'anley' is saying.

I'm simply after somekind of starting point - anything that I can get my teeth into.

I fully appreciate that this will be a marathon, not a sprint...
 
carltonp said:
Brock,

Thanks for responding.

I think you miss my point. I fully get what 'anley' is saying.

I'm simply after somekind of starting point - anything that I can get my teeth into.

I fully appreciate that this will be a marathon, not a sprint...
Click to expand...

What I mean is that 6 seconds of trades is either here nor there. It means nothing. What you need to see - in real time - is the 600 trades either side of it, how it trades into the level, where the level is in context of the day, y'day, what the spread is doing etc...

there is nothing in trading that is an if->then scenario, it takes experience and a solid feedback mechanism to develop a sound judgement of the action at the time. None of this can be learned in hindsight.
 
Carlton

You do not need to sit and watch anything for 2 years to benefit from it.

If you watch something blindly, without any guidance or any idea what to actually look for, then of course it's going to take a long time. In fact, with no points of reference, there's a good chance that looking at T&S for 2 years will be pointless.

If you think about it - what person on this planet has 2 years to spend staring at a screen? I know I don't.

Now - before we get our hands dirty - what is your goal with Tape Reading? Why do you want to learn it & what do you expect to get from it?

Cheers

DT
 
DionysusToast said:
Carlton

You do not need to sit and watch anything for 2 years to benefit from it.

If you watch something blindly, without any guidance or any idea what to actually look for, then of course it's going to take a long time. In fact, with no points of reference, there's a good chance that looking at T&S for 2 years will be pointless.

If you think about it - what person on this planet has 2 years to spend staring at a screen? I know I don't.

Now - before we get our hands dirty - what is your goal with Tape Reading? Why do you want to learn it & what do you expect to get from it?

Cheers

DT
Click to expand...


Thanks for encouraging words mate.

OK, my goal? My goal is to fine tune my entry and exits. As you will probably have already read I have a technique that allows me to identify a pullback. My system also allows me to see when there is a market in price for YM. I can program Excel to alert me when price has paused for 4 or 5 seconds. My entry is based on the pause.

DT, to describe what I want from the system it would be best to point you to the following thread where many people have attempted to assist, but quite honestly haven't really been able to help me - this is not a dig at those that have contributed to the thread, they just haven't been able to really help me.

http://www.trade2win.com/boards/day...-please-comment-my-new-strategy-new-post.html

So, the overall desire from Tape Reading is to be able to read into what Time and Sales is telling me. I have provided examples in the thread.

You might ask, 'why did I start this thread'? The answer to that is focus on the original thread was moving from the original request.

So I really do need watch the Tape and get a feel for it.

Any suggestions you may have will be warmly accepted.

Cheers
 
First thing to do - is get yourself an actual Time & Sales.

Interactive Brokers do not have a real Time & Sales. What they have is a 'sampled' Time & Sales. The two are quite different and if you want to lean on tape, then you need to use unsampled/unfiltered trade data.

Next, understand what the limitations are of the tape on your particular market. Specifically if you are planning to trade anything on the CME - you need to watch this first: Is It Bots Or The Exchange Engine - PriceActionRoom's library

You need to focus on one type of market - thin or thick. Thick markets like the ES & Bonds are quite different from thin ones like CL, NQ & YM. You can look at multiple markets but keep to the same type until you have some techniques down.

If you are looking at T&S to help refine/confirm your existing entries, there are two ways to do this.

1 - Enter as long as you aren't going against 'the flow'. In other words, if you are about to go long and there are large traders against you or the tape is moving down like a juggernaut - don't go long. I'd consider this a more aggressive use of the Tape.

2 - Enter when you see large traders come in on your side. This is less aggressive. This is more confirmation that '1' and will inevitably cost you a few ticks.

This is a good place to start. Remember it's changes over time you are looking for. If every other trade on your market is 50 lots and then you see a bunch of 200 lot trades, that is the sort of change over time you are looking for. On the YM, you won't see many 50 lot trades at all, so you'll need to adjust to a specific market. Hence - don't try to look at too many at one time.
 
Hi DT,
Good post.

Given the very high degree of correlation between the ES and YM, would it not be possible for carltonp (or any other aspiring tape readers) to use the ES as a proxy? As you know, I also trade the YM, and I find this works pretty well for me when watching cumulative delta - but maybe there are good reasons for not extending the principle to include the tape?
Tim.
 
timsk said:
Hi DT,
Good post.

Given the very high degree of correlation between the ES and YM, would it not be possible for carltonp (or any other aspiring tape readers) to use the ES as a proxy? As you know, I also trade the YM, and I find this works pretty well for me when watching cumulative delta - but maybe there are good reasons for not extending the principle to include the tape?
Tim.
Click to expand...

Hi Tim,

Thanks for your comments. I like the idea of using ES a proxy - that idea was also suggested in John F. Carter's book.
 
timsk said:
Hi DT,
Good post.

Given the very high degree of correlation between the ES and YM, would it not be possible for carltonp (or any other aspiring tape readers) to use the ES as a proxy? As you know, I also trade the YM, and I find this works pretty well for me when watching cumulative delta - but maybe there are good reasons for not extending the principle to include the tape?
Tim.
Click to expand...

I guess this depends on how big the stops are you want to have.

If you want to learn the ES, then the best proxy to trade is the S&P. Each tick on the ES is equivalent to 2.5 cents on the SPY - so a 100 share trade on the SPY is equivalent to $10/point $2.50/tick on the ES. My presumption has always been that trading the YM is no cheaper than the ES because even though the tick size is smaller - it's a lot more volatile. I looked at this a while back and it appeared that every point the ES moved saw a 10 tick move in the YM, which sort of makes them the same. Still - I haven't looked at it in depth for a while.

If you want to trade 'loosely' correlated instruments, then by the nature of the loose correlation, you'd be trading with bigger stops. My opinion is that if you want to trade YM, then watching tape for YM would be better. I'm not sure about trading a thin instrument whilst reading tape off a thick one. Still - Tape Reading the YM is fine, it' just behaves differently from ES.

In terms of cumulative delta, if you are looking intra-day, then the thinner an instrument, the less reliable if you are looking at lower timeframes. The CD on the YM can be going down for quite a while, whilst the YM is going up. So if you zoom in at say, the past hour, it doesn't seem to work as well as on the ES.
 
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