Learning tape reading

[dcraig1]

the 'facts' are that hedge funds do in fact do buy or sell programs off pivot points, you can't deny it. You can't do well reading DOM , you can do well reading tme and sales- for example the pivot point is at 1000, you see on the DOM a sell order for 5000 contracts at 1000.50, in this example you would place a limit sell at 1000.25, so that when you get filled price will more than likely shoot back down because of all the sell orders, after that move take profits-this is what i mean for scalping.

You are mixing up facts and interpretation. You don't know that it is hedge fund activity. No doubt a fair bit of activity in futures markets is options hedging, arbing etc etc. The only way of knowing for sure who is doing what to whom is via inside knowledge.

In general in a strongly trending market, size in the book is on the side of the trend. You will get killed by trying to hop in front of that.

Analyse the data, and do not make unwarrented and unsupportable inferences.

 

[TAjammy]

there is a difference between trend trading and scalping . of course that trade would be suicide most likelyin the long term if the trend was up. But like i said i'm a scalper, and in that case i would have taken that short quick scalp.

All that i'm saying is that there is a lot of activity around pivot points, and big players trade around them, maybe not hedge founds, but people who can afford 5000 contracts anyway.

 

[Aspire]

I don't know what you expect to see in T&S or price ladder that cannot be charted and digested far more easily.

Watch, watch, watch for a very long time and think about what people might be up to and then you will.

You can think about a futures market as having TWO supply and demand pairs - demand for longs/supply of longs and demand for shorts/supply of shorts. For example contracts visible in the book on the ask represent the supply of longs and and trades executing at the ask represent the demand for longs. Alternatively traders who place non marketable limit orders are sometimes called passive traders (they let the price come to them) and traders who place marketable orders are called aggressive traders because they want in immediately.

It is this interplay of supply and demand that determines price. I presented a graphical illustration of that. The great advantage of graphical presentation is that you can see how things are developing over time.

IMHO most of the stuff I've read on the net about reading the DOM is a waste of time. As are are the comments about faking.

A final comment, it is a mistake to attribute aspects of market behaviour to things like "its the hedge funds buying at a pivot point" because you don't know that, I don't know that and the guru down the road just says that sort of thing to make themself sound knowledgeable. Stick to the facts and only the facts.

Sorry, dcraig1, I don't mean to pick on you but this is all wrong. You obviously don't know much about what the OP is asking and so have ended up being quite misleading.

As far as the inter-play between demand and supply is concerned keep in mind that a lot of what you see in the DOM ends up being pulled, yet for the price to move say 20 prices it will usually trade many multiples at each price of what you would see at each price on the DOM.

Also you will be able to get an idea of who/what sort of trader is putting orders through and this is important as you can think about what each of these market participants are likely to do next under different circumstances and use this to predict what you think will happen next to the market. For example, if paper is buying and the price goes up a bit then comes back, paper may well come in there again pushing the price up a bit. If it was locals/scalpers buying then when the price comes back they are more likely to stop out giving a short sharp move down as they scramble out.... and then what would you expect to happen next?

TAJammy, Best of luck with this, you seem to be on the right track as far as your attitude etc is concerned but be careful that you remain open minded and don't get too fixated on any early conclusions you come to and think you've cracked it. Take your thoughts and ideas and grow them and develop them. If they seem right think about why they are right but most importantly if they seem wrong think about why/how things are going wrong. I'm afraid your not going to get much help from others on this (I've probably said too much even here) as those that know what their doing want your fills, not your competition for their fills and most of what you read will be from people that dont know so don't take anything anyone tells you as gospel. Just keep watching, thinking, and getting involved for a long long time and if your not crap you'll get there. Good luck.

 

[TAjammy]

yeh thanks, i probably won't be posting here a lot mind you, considering the amount of time it takes to learn from the tape, ninjatrader is all messed up which isn't helping things as well as school starting soon with gcse's this year in a grammar school which is quite a lot of pressure.

 

[pedro01]

the 'facts' are that hedge funds do in fact do buy or sell programs off pivot points, you can't deny it. You can't do well reading DOM , you can do well reading tme and sales- for example the pivot point is at 1000, you see on the DOM a sell order for 5000 contracts at 1000.50, in this example you would place a limit sell at 1000.25, so that when you get filled price will more than likely shoot back down because of all the sell orders, after that move take profits-this is what i mean for scalping.

Serious question. How can you say what does & doesn't work when you aren't actually trading ?

I can tell you what worked on Wednesday night - having 2 beers in the hotel bar, going back to the room, chatting on Skype with Timsk & placing 'beer orders' on the e-mini's.

Get off the SIM, start trading the SPY for small size & that would give you a better feel for what does/doesn't work. I have recently started to use T&S as well as the DOM on stocks and I would say that for stocks, it is indeed a dimension that should be considered. The DOM is not useless, it's just another dimension that you either can or cannot make use of.

On Tuesday, this approach made me a little over $180 but I was trading 100 shares at a time, so this was more 'demo' size than the 1-2000 I'll used when I gain more confidence.

Two people can look at the same thing. One of them may see nothing, the other may see something useful. It's not so much what does/doesn't work, it's what does/doesn't work for you.

 

[timsk]

the 'facts' are that hedge funds do in fact do buy or sell programs off pivot points, you can't deny it. You can't do well reading DOM , you can do well reading tme and sales- for example the pivot point is at 1000, you see on the DOM a sell order for 5000 contracts at 1000.50, in this example you would place a limit sell at 1000.25, so that when you get filled price will more than likely shoot back down because of all the sell orders, after that move take profits-this is what i mean for scalping.

Hi TAjammy,
At the risk of sounding like a patronizing ol' git, I'd say forget about all this stuff completely until you're at Uni' at the earliest. Get your education sorted first, plus all the other really important stuff like sex, drugs (not too much, mind) and rock 'n' roll. Try telling your friends you've been studying a DoM price ladder and before you've had time to utter the words 'path of least resistance', they're gone. Next time you see them, they'll cross to the other side of the street to avoid you. However, if you're absolutely determined to ignore what is really great advice - though I say so myself - then go here and fork out the $40 or so that John's asking for his e-book. He explains precisely how scalpers trade exclusively off the ladder. No charts, no funnymentals, nada. Of course, as I've found out myself, reading the book and understanding the principles is one thing, utilising them in a live market with real money is a very different kettle of fish altogether. Good luck with your gcse's. http://www.nobsdaytrading.com
Tim.

 

[TAjammy]

lol, i know this works because im young , impatient, like to take things quick- pretty much what a scalper should be. So i know im a scalper, indicator based systems didnt work on the scalping front, although i did decent swing trading with them, although i have been doing quite well , around 40 pips daily using some custom indicators on forex.Tape reading is the realm of the scalper , chasing the big money by placing limit orders just in front or behind, or reading time and sales to see what the pressure in the market is.

thanks timsk, but before i splash or open an account i need to have some experience with the tape under my belt, 6months to a year im aiming for

 

[counter_violent]

Or you could ignore everything Timsk said and watch this

Interview with Frank Kern and John Reese

 

[Masquerade]

You'd be better off saving your time, getting a few £ together and actually trading than wasting your time with something you can see on a chart.

 

[Technically Fundamental]

Timsk did you just really tell a teenager to forget about learning and to try drugs and listen to music instead because his friends will think he's boring? Why don't you tell him how to blow up his account too while your helping so much :-/

 

[rawrschach]

You can see things on the tape before you see them on the chart.

If this (minor) edge is worth staring at a screen like a demented chimp 8 hours a day, only you can answer.

 

[timsk]

Timsk did you just really tell a teenager to forget about learning

No, the exact opposite, please re-read my post. Education and having fun (responsibly) is much more important than trading for a teenager. The markets will still be around when he's my age, but there are lots of things in life that are best enjoyed when one is young. Surely there's nothing contentious in that!

 

[TAjammy]

lolz i'm not as bad as you think , well yeh at the moment im staring at time and sales a lot etc because it's summer and bored outa my mind, but i do socialise past month been going to gym 3 times a week plus assing about with mates lol.

I'm disciplined enough to not let this interest ruin my exams, i have been learning about the market for a year, that's two sets of exams in between, in both being in the top 10 in the year in scores and top in economics in both

 

[Paul71]

So i wanted to find a deeper way of looking at the market, not just trading bounces of support/resistancem something more deep, more pure. Something that would take a lot of time but in the looong run make me a far better trader.

I tried mechanical, indicator based systems, they kinda worked but i lacked consistency from them after a good 3 months of trying them. I tried naked trading, and i wasn't half bad at it, but it didn't match my personailty, trading pin bars or whatever off H4 and the dailies was too long for me, i am too young, too impatient so i went back to a style of trading that i previously attempted with lagging indicators-scalping.

I heard about jesse livermore-the greatest trader of all time perhaps, he based his trading of the tape. I figured im young so i can afford to watch the time and sales (tape) for 2 or 3 years on the YM using 89,150 and 233 tick charts. (the good thing about tick charts is that when the market is slow, illiquid and dull , less opportunities will present themselvesm rather than trading of a 2 minute chart. I heard somewhere that those in the pits don't care about 2 mintute highs or lows, they care about how fast the orders are flying in, who is buying them and at what volume and price.

So i heard from several traders that the best option for me would be to start tape reading the time and sales window, ' how can i trade of that?!?!!' answer-'it helps you understand the market you are trading in, the players, whenever i see 1000 sell orders ON DOM or tape hitting a 61.8% fibo level and price goes down i know to short the market'.

So i looked around for where i could get my hands on this time and sales window, it seemed i would have to pay arounf $55 a month, this was for other vital indicators like $tick aswell.

I was just about to suck up the cost for 6-7 months of this service when i seen i had downloaded ninjatrader from a while back. I found out with great surprise i could see real time data for what i wanted to trade later on (YM) for free! i could get access to tick charts, time and sales and real time data all for free. It took a bit of messing about to get it all configured but it got all sorted and yesterday i began tape reading.

At first i just looked at the price, this was actually on the ES , it was just goingfrom .50,.75 and so on, i hadn't a clue. I started looking at the volume of the tradess and then started to get a feel for what was goign on. The overnight session on ES was so slow , but it meant i could read the tape, buy orders in big volume - around 40+ were flying in (there had been nothing above 40 the whole time, just 1s and 2s) but price wasn't budging to the upside...hmmm, and when even just 3 or 4 sells came through price would shoot down. it was almost as if the sell orders would just squeeze through and then price would pop. So i took a short and it went well .

thats all i've learnt so far but this s*** is going to take years to master!

i'll be posting my thoughts on what i think i have found out etc.

I agree with Tim, concentrate on your studies.

Besides, why are you wasting your time with learning how to to tape read? What do you think you will get out of 'tape reading', are you thinking that the tape holds the key to millions?

Time is the key, and you are running to fast, way too fast. At the moment, you are doing tiny little doughnuts, in your mind. It's only you who is at troubles gate with that mindset, nobody else is bothered, especially the market.

Don't concern yourself with the title of trader, concern yourself with being right, and you will make more than most who have ever been part of the financial speculation game. Even if you only make a pound.

 

[TAjammy]

wasting time? So you suggest i try laggy indicators which i gave 3 months?

it's not the key to millions. But the tape suits my style like i said.

Time is the key, which is why im giving the tape 3 years, if that doesn't work, then hey at least i learn't i can't trade

 

[Paul71]

wasting time? So you suggest i try laggy indicators which i gave 3 months?

it's not the key to millions. But the tape suits my style like i said.

Time is the key, which is why im giving the tape 3 years, if that doesn't work, then hey at least i learn't i can't trade

Well, if the tape siuts your style, crack on.

 

[TAjammy]

People think i'm still searching for the holy grail, key to millions....IM NOT.

i learnt through failure after failure , going by books, i tried my 'knowledge' and put it to the test. I fuc**** sucked at demo when i first started.

through trial and error i have learnt what suits my style- tape reading.

i appreciate the advice about sticking to exams and living before trading- lol i'm not going to be trading any time soon anyway.

 

[Paul71]

People think i'm still searching for the holy grail, key to millions....IM NOT.

i learnt through failure after failure , going by books, i tried my 'knowledge' and put it to the test. I fuc**** sucked at demo when i first started.

through trial and error i have learnt what suits my style- tape reading.

i appreciate the advice about sticking to exams and living before trading- lol i'm not going to be trading any time soon anyway.

Trading? The act of trading anything, what is the purpose of trading?

 

[shatztrader]

nothing is impossible

The Associated Press: 17-year-old sails around the world

 

[TAjammy]

well usually you trade an instrument whenever you make profit .

for example i buy 1 share at $10 from a seller.
i then sell at $20 a share to a buyer .

get that ?