Tape reading books

[Hotch]

I have ended up spending a fair bit of time staring at the ticker of late. Pretty mesmerising. Think I've got a few good ideas about it, but it's hard to know as I'm only seeing a very small % of what happens in the day.

I was wondering if anyone knew of any good books on the subject?

Cheers

Hotch

 

[timsk]

Hi Hotch,
See the penultimate para in post #2: Tape Reading

If you find any more that you think are good - please post them to the FAQ.
Tim.

 

[DionysusToast]

There aren't any Hotch.

Futures or stocks ?

 

[Hotch]

Thanks guys, this makes me look very lazy, but I guess that's fair representation, didn't even think to search.

 

[DionysusToast]

The books mentioned won't help one bit for tape reading as it is today, they don't actually cover the topic. One of them was published in 1931.

On the bright side - they are available as PDFs all over teh interweb, so you can get them for free.

 

[MrGecko]

try www.nobsdaytrading.com - the pdf is floating about the net but the video might give you a few ideas.

 

[DionysusToast]

try www.nobsdaytrading.com - the pdf is floating about the net but the video might give you a few ideas.

Agreed - that's a good source.

You can't teach tape reading in words - it needs to be video or person to person.

The No BS book is a good intro and it's based around scalping.

Tape reading can help you with a lot more than scalp trades though but no BS vids would be a great place to start...

 

[tradingRAW]

Can I help on tape reading. That's what I do.

 

[Waterfield]

Hotch, you know I have a library of 300+ books! I have wykoff and nobstrading if you want the pdfs.

 

[DionysusToast]

OK TR - I'll ask you a question.

On your site it mentions 'perfect prints'.

So - on the inside ask, we see 1705 and a print comes through for 1705 - you call this a perfect print.

What is your explanation for these 'perfect prints' and how do 'perfect prints' vary by market?

 

[tradingRAW]

OK TR - I'll ask you a question.

On your site it mentions 'perfect prints'.

So - on the inside ask, we see 1705 and a print comes through for 1705 - you call this a perfect print.

What is your explanation for these 'perfect prints' and how do 'perfect prints' vary by market?

Please direct the board to where I mention perfect prints, because I do not recall talking about perfect prints. But I will still elaborate. Well it would depends on what happens after a perfect print. That's the key...a perfect print is interpreted if on the offer means buyers are willing to buy all that is being offered. Sellers are willing to sell all that is being bidded. We can speculate what that means all we want but if bids aren't stepping down and offers are not being lifted on perfect prints then there is hidden supply available that is not being truely represented at the bid/ask size.

You see Toast tape reading alone isn't the answerthat is why many tape reading books fail...tape reading is not a magic tool. The idea of predicting the market is difficult task unless you have inside information. To be succesful you must learn to react to postive and negative news and deal with the price adversity within the macro trend through tape reading patterns that leads the momentum, that is key.

 

[DionysusToast]

TR - just to let you know, I trade every day and I consider myself a tape reader.

I have written much on here on the topic but mostly in terms of very specific scenarios to watch out for in terms of combinations of Time & Sales and DOM information on futures. I do not scalp but the more I watch this, the more obvious it is when scalping opportunities come up.

I am trying to get a grip on what you are doing but thus far you are talking at a very high level and not providing any details.

Your style and mine are obviously different. I do not use news, yet you say I should use news to be succesful.

My style is very simple.

- I use the pre-market and open action to guage the kind of day we are going to have. For example, I would not want to look for reversals on a trend day where there is nothing but overwhelming trade in one direction from the off.
- I have certain levels I am looking for to place a trade. If it doesn't come to my level, I won't trade. Some of these levels will be set after the open and some are set before. Most often, it is levels I set after the open that are used.
- I use time & sales/DOM information to then guage if the reaction is what I am looking for in that area

I do not use patterns. I do not use news other than staying out of the way when news is coming.

I shall give an example of my last trading day which was Monday as the baby kept me awake Monday night and I was a zombie yesterday.

On Monday there was a sizeable gap up. My expectation was initial selling which would result in buyers jumping in. A sell off is effectively a search for buyers. There was a sell off but it didn't close the gap before buyers jumped in and I didn't get to go long as it hadn't reached the area I wanted for a long. Areas I'd have gone lone were the pre-market low or the prior high. At this point I am not sure if it will carry on down or if we had the low of the day. It had moved down to 1236.50.

Price rose up to 1239.50 and then started selling off again. Now I have another potential entry. My zone for a buy is between the low of the day and this swing high and my trigger is based on Tape/DOM showing signs that buyers are becoming active again as they were at the low.

During all of the above, I had been watching the tape, and the way the ES had been moving, I am fairly well tuned into it and I already know the bounce off the low was a fairly significant change in action from that preceeding it.

Anyway - price got back down to 1237.25 and there was still a lot of people selling but at this point, price stopped moving down and someone was sitting on the bid absorbing all the selling. This represented a "sea change" (to quote Mr C) in the action. I didn't hit buy at this point but did when a few seconds later a number of large prints came in representing large buyers jumping on to buy. These were single prints of 1000,700, 500 lots. It could have been shorts exiting but I saw it as final confirmation that I was good to go long at 1237.75 at just after 10:00.

This is pretty much the way I look at things and one of the ways I'd read the tape - of course every scenario is different.

Perhaps you could walk us through the thought processes of one of your trades.

 

[tradingRAW]

TR - just to let you know, I trade every day and I consider myself a tape reader.

I have written much on here on the topic but mostly in terms of very specific scenarios to watch out for in terms of combinations of Time & Sales and DOM information on futures. I do not scalp but the more I watch this, the more obvious it is when scalping opportunities come up.

I am trying to get a grip on what you are doing but thus far you are talking at a very high level and not providing any details.

Your style and mine are obviously different. I do not use news, yet you say I should use news to be succesful.

My style is very simple.

- I use the pre-market and open action to guage the kind of day we are going to have. For example, I would not want to look for reversals on a trend day where there is nothing but overwhelming trade in one direction from the off.
- I have certain levels I am looking for to place a trade. If it doesn't come to my level, I won't trade. Some of these levels will be set after the open and some are set before. Most often, it is levels I set after the open that are used.
- I use time & sales/DOM information to then guage if the reaction is what I am looking for in that area

I do not use patterns. I do not use news other than staying out of the way when news is coming.

I shall give an example of my last trading day which was Monday as the baby kept me awake Monday night and I was a zombie yesterday.

On Monday there was a sizeable gap up. My expectation was initial selling which would result in buyers jumping in. A sell off is effectively a search for buyers. There was a sell off but it didn't close the gap before buyers jumped in and I didn't get to go long as it hadn't reached the area I wanted for a long. Areas I'd have gone lone were the pre-market low or the prior high. At this point I am not sure if it will carry on down or if we had the low of the day. It had moved down to 1236.50.

Price rose up to 1239.50 and then started selling off again. Now I have another potential entry. My zone for a buy is between the low of the day and this swing high and my trigger is based on Tape/DOM showing signs that buyers are becoming active again as they were at the low.

During all of the above, I had been watching the tape, and the way the ES had been moving, I am fairly well tuned into it and I already know the bounce off the low was a fairly significant change in action from that preceeding it.

Anyway - price got back down to 1237.25 and there was still a lot of people selling but at this point, price stopped moving down and someone was sitting on the bid absorbing all the selling. This represented a "sea change" (to quote Mr C) in the action. I didn't hit buy at this point but did when a few seconds later a number of large prints came in representing large buyers jumping on to buy. These were single prints of 1000,700, 500 lots. It could have been shorts exiting but I saw it as final confirmation that I was good to go long at 1237.75 at just after 10:00.

This is pretty much the way I look at things and one of the ways I'd read the tape - of course every scenario is different.

Perhaps you could walk us through the thought processes of one of your trades.

Please do not avoid the question....please show the viewers where I talk about perfect prints. This on slaught colluded effort against me is starting to look very fishy. I've answered your demand, I gave Tim what you guys asked for. Again I would like for you to post where I talk about perfect prints. So that you will not look like what you portray me to be on mere speculation. Because I don't recall ever taking about perfect prints.

I trade US equities, my style isn't about predicting markets, I don't know where this market is going...those who think they do were calling top at 9k, 10k, 11k dow. Learning skills to trade reaction to a catalyst is where you will find consistency. There are books after books discussing about market timing, technical analysis...you name it. But yet this profession still commands a 80%-90% failure rate. Why is that? Because hindsight education fails; it is the oldest trick in the book . Who can't draw trendlines and input buy/short/exit after the fact. Those are the people newbies should run away from. In this modern day and age hindsight education is dead and should never exist as we have desktop recording that can show real-time entries and exits if trading methods are real. Will you show us 1 week of desktop recording of your trading?

 

[DionysusToast]

As for perfect prints - actual quote was from Wasseman site, not yours...

http://wassermancapital.com/SC Tape Reading.pdf

I presume your methods are similar as you were trained by Wasserman. My apologies. Perfect Prints sounds like nonsense to me when you consider how the prints are actually generated.

As for me putting together a bunch of Charlie Chaplin movies to show my trades - why would I do that when I'm not selling anything? That would be a huge waste of time for zero reward.

Anyway - why not now step up to the plate and as I have - give some details on how you interpret the tape. Remember - this is a thread about tape reading, not a thread about you. We are all well aware here of the failure rates of newbies, the uselessness of trading books and TA etc. etc. ad nauseum. Why not get to the point in detail?

Of course, you can feel free to pull my post on Mondays trade apart too - you can tell me why this method of trading can't possibly be profitable. At least then we'll be discussing the topic at hand.

 

[tradingRAW]

As for perfect prints - actual quote was from Wasseman site, not yours...

http://wassermancapital.com/SC Tape Reading.pdf

I presume your methods are similar as you were trained by Wasserman. My apologies. Perfect Prints sounds like nonsense to me when you consider how the prints are actually generated.

As for me putting together a bunch of Charlie Chaplin movies to show my trades - why would I do that when I'm not selling anything? That would be a huge waste of time for zero reward.

Anyway - why not now step up to the plate and as I have - give some details on how you interpret the tape. Remember - this is a thread about tape reading, not a thread about you. We are all well aware here of the failure rates of newbies, the uselessness of trading books and TA etc. etc. ad nauseum. Why not get to the point in detail?

Of course, you can feel free to pull my post on Mondays trade apart too - you can tell me why this method of trading can't possibly be profitable. At least then we'll be discussing the topic at hand.

Thank you for correcting the "perfect print" issue and thanks for posting the PDF link. Now we are getting somewhere. Iike i've been saying, skills aren't taught enough if they are, then its being applied to wrong content. Many times applied to trying to predict moves(TA) rather than as tools of reaction. Take a random building with no catalyst, its very hard to anticipate who goes in who goes out, its a random walk. Inject a catalyst(fire) then immediately the odds increases, you can anticipate people trying to run out of the building, jump out windows...etc. Trading psychology is no different, catalyst plays an important role and align thought process of market participants to either buy or sell the stock. Tape reading is just a means to navigate price volatility that leads to shake outs and missed trades. The idea that you can gauge order flow through level II or time and sales will not allow you to achieve the level of consistency a trader needs to make a solid living....I've seen it time and time again.

Using level II and time and sales only hurts a trader because it limits their multi-position development.

>"As for me putting together a bunch of Charlie Chaplin movies to show my trades - why would I do that when I'm not selling anything? That would be a huge waste of time for zero reward."

Yes but you will spend hours here talking about your trading, desktop recording would be allot quicker, press the record upload the file and let transparency rule for once. Maybe then we can fight the battle together to rid this 80-%90% failure rate in the industry.

 

[DionysusToast]

The markets are not a random walk, they are an auction. Price moves up to find sellers and down to find buyers. Sometimes there is balance. Between news events, you can still exploit these moves.

Just because you trade off news/earnings, does not mean that no other way is possible - that's nonsense.

I agree that using L2 or DOM plusT&S limits you to one instrument to a degree but I would argue that this is exactly why it is useful IF you understand the way that particular market moves. Using DOM plus T&S you have a much better read on the market than just L1 info IF you know how to use it. It is all about personal preferences.

Also DOM + T&S as a means of refining an entry only limits you to refining a single entry at one time. I know tape readers that use DOM/T&S on futures and trade multiple markets. When they get an alert that a price level has been reached, they'll zoom in on that market. Just because you enter based on this information does not mean you need to micro-manage a trade based on it. I started tape reading using it for both entry and exit. Now I rarely use it for the exit as it isn't necessary for me.

Just because you have a way of using L1 info that works for you and you trade fundamental events does not mean that all other methods are invalid.

 

[tradingRAW]

The markets are not a random walk, they are an auction. Price moves up to find sellers and down to find buyers. Sometimes there is balance. Between news events, you can still exploit these moves.

Just because you trade off news/earnings, does not mean that no other way is possible - that's nonsense.

I agree that using L2 or DOM plusT&S limits you to one instrument to a degree but I would argue that this is exactly why it is useful IF you understand the way that particular market moves. Using DOM plus T&S you have a much better read on the market than just L1 info IF you know how to use it. It is all about personal preferences.

Also DOM + T&S as a means of refining an entry only limits you to refining a single entry at one time. I know tape readers that use DOM/T&S on futures and trade multiple markets. When they get an alert that a price level has been reached, they'll zoom in on that market. Just because you enter based on this information does not mean you need to micro-manage a trade based on it. I started tape reading using it for both entry and exit. Now I rarely use it for the exit as it isn't necessary for me.

Just because you have a way of using L1 info that works for you and you trade fundamental events does not mean that all other methods are invalid.

Why level I is so important to learn? Because we need to have a means to efficiently track a myriad of stocks. More times than not trading is a numbers game, its very hard to pick consistent winners day in day out on the day. We simply don't know. If we did then yes I agree with you, perhaps you can use Level II and as many analytical tools to suite your preferences to track that one stock. Top proprietary day traders can be in 15-50 positions at one time. This is only possible with level I.

 

[DionysusToast]

You don't need to be in 15-50 positions a day.

There are prop traders that trade interest rate futures - just one or 2 instruments, mostly trading off the DOM.

Are you saying those people don't make any money because their methods are different to your own?

Why are all those people trading the S&P E-mini? 2 million contracts a day. Again - many trading just that single instrument.

There's a guy on here called Mr Charts - he does what you are claiming doesn't work. He mostly trades 1 stock at a time but off much more information than L1. He's using Time & Sales and L2 and analysing the order flow in detail. The result is that the entries are very well refined. If the price moves against, he's out with a few cents loss in most cases.

Making money is great - but let's not get ahead of ourselves. The fact that one method works doesn't mean other methods don't work. The fact that you make money, doesn't mean other methods can't make as much money.

 

[MrGecko]

I'm at odds with you here DT.

As far as I can tell, the approach that TRAW takes is keeping track of stock fundamentals and looking for trading opportunities when the fundamentals change. This, as a non-stock trader, makes perfect sense: Look for where the flow will be and front run / fade it as apppropriate using DOM/T&S as a cue.

This is what I have gathered from the limited time I could be arsed to browse his website. He hasn't said that whatever anybody else does can't work, and when presented with the accusation that the reviews of his service were dishonest he gave Amit a free trial to see what he thought.

I could go on, but I believe my position is clear.

 

[tradingRAW]

You don't need to be in 15-50 positions a day.

There are prop traders that trade interest rate futures - just one or 2 instruments, mostly trading off the DOM.

Are you saying those people don't make any money because their methods are different to your own?

Why are all those people trading the S&P E-mini? 2 million contracts a day. Again - many trading just that single instrument.

There's a guy on here called Mr Charts - he does what you are claiming doesn't work. He mostly trades 1 stock at a time but off much more information than L1. He's using Time & Sales and L2 and analysing the order flow in detail. The result is that the entries are very well refined. If the price moves against, he's out with a few cents loss in most cases.

Making money is great - but let's not get ahead of ourselves. The fact that one method works doesn't mean other methods don't work. The fact that you make money, doesn't mean other methods can't make as much money.

I think what we need to do is find away to let transparency rule, we can end much unneeded debate buy simply showing some real-time trading through desktop recording over a week time. I don't disagree with you at all, I'm just comparing the efficiency of the two. If you are trading one stock you can go off of level II because you are tracking one stock. You could have 10 stocks on your screen and still use level II but you are likey hopping from stock to the next which might result to sampling problems and miss opportunities in previous watch. But if you ever want to step up your game and develop mulit-position management, level I is more efficient in that respect.

I think we have to look at what type of size Mr Chart takes with his technicals. Does his system allows him the confidence to scale into 5k-10k shares position? This is why deskstop recording can really resolve allot of this and I'm sure can help allot of traders.