Look the basics are simple. Are the important transactions being executed near the bid or the ask. Filter out the daytraders, the pennying progs, the fake spec prints and you get more accurate on the institutional buying through the floor. But that's an outtdated model, NYSE floor is slowly dissapaiting. If it's a buy/sell prog, you simply try to track it down by seeing how it reacts to daytrader orders that push the price against the trend. Slowly you can notice some patterns, although it's much easier on NYSE where is one main central route, vs Nasdaq. Just look at the homebuilders right now, that's a basket sell prog, I'm surprised it even took it that long to kick in judging the numbers. Observe how it handles the up chops, obvious mook daytraders panicking, covering and bouncing. I'm not even trading and I can probably imagine the actual price action in those stocks, LOL.
Nothing can take the place of experience, of just sitting on your ass all day and just watching the bid/ask/prints. But I think tape reading isn't just a matter of staring at one single ticker or tape, but the ability to judge the action in context with other factors in reaching a decision. The same price action you see one day could be bullish, the next day bearish -- it's just not so clear cut by assuming "if X then Y" etc.
Actually, some of is that simple. At least with NYSE specialists, the signals for clear cut tops and bottoms in a big mover stock are very very similiar, no matter the day. Yeah each time you will doubt yourself as the specialist grabs your balls and squeezes hard as sh*t hoping for you to cover, but still. Not 100% accurate, but damn close. This pattern never happens in Nasdaq, but on NYSE it's so reliable that even some progs take advantage of it on ECNs. Which is why as NYSE goes electronic, expect many many daytraders to lose their edge. Some guys got so used to certain patterns and the slow speed that it's doubtful they will be able to adjust. I saw it happen with bullets, and I'm sure it will happen again. I saw a guy who had some of the best discipline & selection literally fall apart as his 250k/year edge dissapeared in 24 hours.
read wyckoff's books from 85 years ago. techniques of tape trading (graifer/schumacher) is an excellent read, released a couple years ago.
What is the name of wychoff's book? Is this it? This looks like a bootlegged computer printed copy of it. If this is it. http://cgi.ebay.com/SUREFIRE-STOCK-...ryZ32600QQssPageNameZWDVWQQrdZ1QQcmdZViewItem Or is this one it? This one is from 2005, not 85 years old. http://www.amazon.com/gp/product/15...8132/ref=pd_bbs_2/002-4190328-6890449?ie=UTF8 I think this one is it. This one is a reprint from 1924. Only $11.00 http://www.amazon.com/gp/product/08...8309/ref=pd_bbs_1/002-4190328-6890449?ie=UTF8
Any good videos on tape reading? Or DOM reading for the emini index futures? Sometimes watching a video and visually seeing what the person is doing helps to understand better instead of reading a book.
For futures I have found reading the tape is OK (nothing that amazing to for tell moves just ahead with high probability), but if I read the "delta" realtime it can have a huge advantage. You can definitely see when bigger position trades are coming in to initiate a move. You can also learn to see "accumulation" maneuvers during congestive periods - those are the trades that once they pop you can get at least 3 to 4 points many times from the breakout. These are the type of activities during the trade day that I have never been able to track as precisely with just tape reading....my bad.