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..... especially the video section..........I can really see the advantages of tape reading in giving clues at pivot points/support/resistance. I trade forex, which means that I don't have a tape so I'm left without some very valuable price information. |
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Yes. It is easy to conclude after watching Soultrader's videos that the forex spot trader is at a considerable disadvantage. Some of the most important pieces of information are being withheld from most retail traders.
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... I use MetaTrader for it's charts, but I notice that it has volume bars as well. I expected that their volume bars would be useless as no doubt it captures only one piece of the forex volume moving the market. However, I have noticed that candlesticks at support/resistance (for example) more often than not predict a turning point or continuation when you use the volume bars as confirmation. |
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There is a way to read the tape in forex. We read the chart as if it were the tape. We look to the tape masters like Wyckoff, Williams, and Ney.
Volume is activity. As such, tick volume can be used in place of actual contract volume. Moreover, the activity on your platform can be used as a proxy for all volume activity. 85% of all volume activity represents the activity of Professional Money. When you see a volume spike it is true that some of that represents the 'herd'-small retail trader on your platform, but WHO IS ON THE OTHER SIDE OF THE ORDER?
Retail traders are buying at the top, and somebody must be selling to them. This is a zero sum game. For a trader to be let in (long), there needs to be a trader to let them in (short).
More importantly, volume is the power house that drives the market. It is the main tool of the professional trader. Having said that, volume means little without looking at price spread (range) and price. The key questions are what did price do on the associated volume, and where within its range did it end up?
Volume
Spread
Analysis attempts to read the tape by studying these key relationships. Ultimately the markets move because of supply/demand dynamics. In particular, the supply and demand from the Professional trader. And that supply, can best be seen in a simple volume histogram and price bar.
Support and resistance areas become important places to look for what the Smart Money is doing. They "force" the Smart Money to show themselves in certain places. This allows the astute tape reader to "piggy back" off of their actions. It seems as if you already can see some of this going on. So, you are already tape reading as it must be practiced by the spot forex trader (of course, once you can read price and volume, you can read any market).
If you really want to learn how to read a chart, go to Tradeguider.com and watch some of their free videos. I am a customer of the book and bootcamp, but not the software. I do not like the software and do not recommend it. A lot can be gain from the free stuff. Another site is Tradingmentor.net. One of the mentors was a tradeguider teacher and studied under both Tom Williams and Richard Ney. I do not recommend taking the course, as I have not done it myself. They do offer a free live demo (long distance charges may apply). Joel's ability to read the market(tape) using price and volume is second only to Tom Williams, Richard Ney and Richard Wyckoff.