FuturesTrader71: I'll keep this thread going in hopes some other traders might learn something or add to the discussion.... Currently i day trade equities in a margin account with about 60k cash (so 120k buying power with margin), and i got a seperate options account and IRA. The day trading account is the one i consistanly watch the bid x ask & size, and i hope to learn more about tape reading. I mainly trade NYSE stocks and close out all positions before days end. Usually trade 200-500 share blocks. I trade NYSE stocks because i personally feel it's easier having to trade with one specialist rather than many market makers. I use a lot of technical analyist , support/restistance levels, and trading with the trend to pick stocks and trades. I've been watching the tape for the past month or so and found these similarities to occur on a day to day basis....please tell me if i'm correct in drawing these conclusions or if i'm wrong and why.... SHORT SQUEEZE: It seems to me that i can identify a short squeeze happening when this happens. You see orders go through that are higher than the current ask....for example, you have a current Bid x Ask of: 60.70 x 60.75 and the next trade takes place at 60.80...I feel this is a short squeeze because i've been short a stock, and trying to cover and the specialist always gives me a order fill higher than the current ask, or this happens at key resistance levels, and the stocks seems to break past resistance on higher than normal volume. SPECALIST FILLING LARGE ORDERS: Many times i will see a specalist fill a VERY large order at a higher price, then pull back the Bid x Ask, then see it rebound back up and show support at the price level in which the large order was filled....example: today i was day trading LOW, and the stock was in light volume trading around $67.50. All of the sudden a huge order of 300,000 got filled at $67.60, then the stock quickly dropped back to around $67.45 for 2-5 minutes (executing small trades - 100 - 500 blocks) before quickly trading back above $67.60+. I have seen this many times....a larger than average order will get filled at a price significantly higher than the ask, the stock will quickly fall back (thus serving as a buying opp), then quickly move back above the price in which the large order was filled....the same on the short side (huge orders on the way down)....I'm thinking the specalist is selling his shares short to the buyer at $67.60, then pulling the stock back and covering his short before moving the stock back up??? is this a correct obsercation? I'm also curious as to understand why this happens.....example: XYZ has a 52 week high of $68 (heavy resistance), the stock is in an uptrend all day (looking like its going to trade into a new 52 week high), the current bid x ask is: 67.98 x 68.00 - size: 5 x 213....from seeing this i would think that the stock will not trade above $68 (because the 213 is too large to be filled before a pullback), but instead, a order fill of 200 @ $68 gets filled and the bid x ask changes to 68.00 x 68.03 - size 5 x 5....would you take this to be bullish? what happen to the other 190+ shares that were being asked at $68? did that trader cancell his order after that order in front of him got executed? Or was that huge order at $68 just trying to scare away buyers? I'd love to hear anyones response about this or other tape reading tactics. Thanks all!
mjsmooth google Richard D Wyckoff or just go to Traders Press books website.. http://www.traderspress.org/categories/wyckoff.asp I like the one by Jack Hudson too.. Do not let the fact he traded many years ago stop you... Lot more at Amazon\books agpilot
Just read Deeman's posts. Even though I rarely trade individual stocks anymore I still found it very interesting reading.
Tape reading is not that complex. It is more about guts than anything else. I am not kidding here. A good bottom is formed when you see size "step in" to take advantage of the price. That, takes experience in reading the tape to get a feel of what its like. The "step in" part changes as the price start to print and locals/MM started to step on the gas to break a price level. The struggle of how big boys maintaining a price level is very good experience to learn. The reading of the struggle is important. If you are a small player, your best bet is to hop in after the struggle is over and a clear winner is declared.
Nitro, I will PM you exactly what I was doing in the scan and why I printed the tape at days end come Monday! Patrick
I think a lot can be said for the frequency of hit bids and hit offers and the rate at which this is occuring. During inflection points, not necessarily S/R levels, the frequency of hit bids and hit offers tends to decline, these are "quiet" points and good times to enter. It takes some time to get a feel for this but for me it allows a sense of building anticipation. The quiet times in an uptrend are usually the retrace points and the prior high is a lot like a dam about to be broken down by a flood of hit offers (and an ensuing price rise). It usually only takes a few solid hit offers to open the door. Nothing about this is sophiticated but with the aid of a P/V chart it works pretty well.
Firstly I like to say that I hope this thread continues. I have a question for the stock traders. Yahoo at around 1:00 was trading in the 34.30 range. There were 4 prints totaling 900 shares @36.00 then back to 34.30. How does this happen? Did someone get lucky with a buy order or did someone make a mistake with a sell order. How would it get from 34 to 36 without triggering a buy and shouldn't it have triggered a bunch of buy stops.