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Found 10 results

  1. A tape is a set of parallel lines drawn from 3 points of 2 bars. Coordinates: End result: Tape_v1.txt
  2. Volume leads Price. Always. And without exception. In order to comprehend how the above statement (both in concept and in practice) represents a true and accurate assessment of market dynamics, a trader needs to understand the basic structure of all markets and how such markets operate. Since all markets represent a fractal nature, it turns out, Mandelbrot had it right all along. By correctly and thoroughly applying a framework, in an effort to ‘see’ the various fractals operating on a market, a trader can begin to see the Price / Volume Relationship at work – all day, every day. Succinctly, unless and until the components of one fractal reach completion, the next slower fractal cannot begin. It trading terms, unless and until the Volume Cycle Sequences reach completion, the current Price Trend cannot end. In general terms: if Volume is increasing, then the Price Trend is continuing. Such is the essence of the Price / Volume Relationship. Much debate has ensued over the years with respect to whether or not Volume represents helpful and / or useful information with respect to understanding Price change. In addition, those individuals who do find value in Volume analysis have long argued their viewpoint for the best methodology for divining the information from Volume itself. For those interested in continuing such discussions, I recommend reviewing the plethora of threads already in existence as I have no plans to engage in yet another long drawn out Lincoln-Douglas, Presidential or Academic style debate. Rather than create yet another environment for posting opinions or sowing the seeds for epic battles over dogmatic philosophies, my goal here is to provide a framework, for anyone with an interest, to learn how to learn to ‘see’ the Price / Volume Relationship at work as shown through the fractal nature of all markets. In other words, this thread isn’t about me teaching people to trade, ‘calling’ trades or seeking converts to a new religious cult. This thread is about the individual trader developing the skills needed, and the knowledge required, to learn to trade based on what the market says, instead of what the trader believes (or I post). So, what can one expect from this thread? Over the next few posts, I plan to detail the fundamental building blocks used in order for a trader to thoroughly, correctly and consistently annotate a chart across three separate trading fractals. By learning to see the visual cues provided by Price and Volume (Trend Lines and Gaussians), a trader can develop the ability to see the Price / Volume Relationship at work. I expect a number of questions with respect to the need for me providing clarification on a number of posts moving forward. Everyone should feel free to post as frequently as necessary in order to completely comprehend the various aspects of The Price Volume Relationship as presented. I encourage active participation from those attempting to learn. In addition, everyone can expect to see plenty of information which flies in the face of conventional wisdom and long held belief systems. Contradicting conventional orthodoxy and religious dogma, when it comes to individual trader beliefs, often creates an almost visceral response from those who feel (for some unknown reason) threatened by the mere discussion of alternative viewpoints than exposed in the mainstream literature. Again, I have no desire to debate the validity of that which I use to trade on a daily basis. Anyone who feels they ‘know best’ or simply considers the information already presented devoid of value, should stop reading immediately. To reiterate, this thread will not teach you to trade. If you are looking for a canned set of rules for entry and exit, look elsewhere. However, this thread will teach you to learn how to teach yourself to trade using the only tools you’ll ever need – a chart and your own brain. Lastly, the market speaks on every single bar delivering its signals to the trader in a timely fashion – and well in advance of the next trend. It turns out; one need not know how long a particular trend will last. One only need know the signals for when a particular trend has come to an end. As all trends overlap, where one trend ends, the next trend begins. The basic principles involved in learning The Price / Volume Relationship require no more than a few paragraphs to articulate. The repeated and consistent application of those principles onto the market represents the bulk of the effort required of the individual. To Be Continued .... - Spydertrader
  3. Hi Soultrader, Great site! Very relevant to the way I trade. I don't use indicators either and use price action, Market Profile (daily and composite profiles) to identify a confluence of support/resistance levels, and market internals for trading. Your tape reading videos were quite interesting, but I couldn't really follow along what you were doing. I would like to learn to tape read using time and sales and was wondering where I could find more information on how to develop that skill. More tape reading videos would be great. Thanks.
  4. I don't know where to post this so i thought here would be fine. Price hit resistance at 77.5, is rejected and supply significantly overwhelms demand and drives price down to 81.25 (a short-term support level that i did not have marked). 81.25 is rejected and the test is unable to make it to the low on low volume, indicating the supply required is not coming in. I took this trade and was stopped out around 88. I did not have as sound a reason for taking this trade as i have outlined here, but i had an idea that price was rejected at 81.25 and the test was a weak one.
  5. hi guys, does anyone have any info where i can find some help on this subject ? i saw some stuff and i want to find more. mostly i trade forex, but i want to trade futures too. mostly day trading because of the levarage etc, and my account is not so big, (YET!!!).
  6. Tape Reading by Linda Bradford Raschke Sometimes it is nice to reexamine a simple concept when there appears to be overwhelming volatility in the markets. Mechanical systems and patterns are helpful and even necessary for the structure they impose in organizing data, but even Richard Dennis in his original course discussed ways to "anticipate" entry signals, exit trades early, and filter out "bad" trades. Learn to follow the market's price action and read the signals it gives. This can become a strict discipline in itself and the result will be greater confidence that a trade is or is not working. Tape Reading "Trading technique is simply the ability, through study, observation, and experience, to recognize the signals in each of the several phases of market movement." - George Douglas Taylor Tape reading long ago referred to the practice of studying an old-fashioned ticker tape and monitoring prices, volume, and fluctuations in order to predict the immediate trend. (It does not mean you have to have the ability to read the prices scrolling across the bottom of the screen on CNBC!) Tape reading is nothing more than monitoring the current price action and asking: Is the price going up or down right now? It has nothing to do with technical analysis and everything to do with keeping an open mind. Even the most novice observer has the ability to see that prices are moving higher or lower at any particular moment or, for that matter, when prices seem to be going nowhere or sideways. (Markets do not always have to be going somewhere!) It is also fairly easy to watch a price go up and then tell when it stops going up - even if it turns out to be only a momentary pause. I've known hundreds of professional traders throughout my career. I don't want to disappoint you, but I know of only two who where able to make a steady living for themselves with a mechanical system. (I am not counting the well-capitalized CTA's who are running a money-management program with "OPM" - other people's money.) All those other traders used some type of discretion that invariably involved watching the price action at some moment - even if just to move a stop up or down. If you can learn to follow the price action, you will be two steps ahead of the game because price is faster than any derivative. You may have heard the saying, "The only truth is the current PRICE." Your job as a trader will become ten times easier once you accept this. This means ignoring news, opinions, and personal biases. Watching price action can actually be very confusing if you go about it like a ship without her sails up in an ocean squall. You will get tossed back and forth with no sense of direction and no sense of purpose. There are two main tricks to monitoring price action. The first is to watch the price relative to another "reference point." This is why many traders use a "pivot point" - and it works! It is the easiest way to tell if the market is moving closer to or further away from a particular point. This is also why it is often easier to get a "feel" for the market once you put a position on - your "reference" point tends to be your entry price. Some reference points, such as a swing high or the day's opening price, will have much more significance than those points involving some type of calculation. (Some numbers might have special meaning for those who calculate them, and who am I to argue if they work.) I like to concentrate on pivot points that the whole market can see. To sum up so far, when watching price, we want to know the following: how fast, how far, and in which direction. It takes two points to measure these things. One will always be the current price, the other a pivot point. * Do not watch price for the sake of watching price. Watch price with the intent to do something or to anticipate a certain response! "The study of responses ... is an almost unerring guide to the technical position of the market." - Rollo Tape (Richard Wyckoff), 1910 The second main trick to monitoring price action is to watch for the market's response to a particular condition ... in other words, anticipating a particular behavior. For example, if the market has been at a very low volatility point and just begins breaking out of it's particular trading range, one might anticipate that the price would begin to accelerate in an impulsive manner and not run into immediate resistance. Or, on a directional play, if the price is moving in an impulsive manner in a trending market and then pauses to catch its breath on a mild reaction, one would expect it then to continue on in the direction of the trend. When there is a particular behavior to anticipate, it is easier to watch the price to see if it acts according to one's expectations. Is the market failing to break on bad news? Is it finding support after a series of advances? Does it run into an invisible overhead wall and sharply back off, implying strong resistance? These are market responses to certain conditions. Tape reading is like playing a tennis game and watching to see how your opponent hits the ball back. Part of studying price behavior and gaining experience as a trader is gradually learning what actions to anticipate. Then you must learn what the market's most probable response or outcome should be. It will always be easier to anticipate an event or response which happens 70% of the time than to be looking for that which happens only 30% of the time. However, it can also be a profitable strategy to recognize when a given signal or expected response is failing. Sometimes a failed signal can be more profitable than the normal expected response. For example, a classic failed response might be a scenario wherein price was consolidating in a pattern of higher lows and lower highs - a classic triangle pattern. One would expect a breakout from a chart formation to have some follow-through. However, if price only penetrates the lows by a small amount and then turns upward, picking up volume and momentum as it goes, and comes out the upside, a very significant reversal has probably occurred and there may be much more price advance to unfold. One last trick to watching price action is to learn to think in terms of "handles," or levels. Think of the S&P's as reaching for the "1110" handle, or the "low 1060's" as a level. Each ten points is a defined level. Use big round numbers as reference points for levels. It doesn't mean that you are placing orders at those numbers. It is just a simple way of organizing data that professional traders practice subconsciously. Pivot Points An astute trader will always have the previous day's close in his head. He also knows the previous day's high and low (prices he would have liked to have bought and sold but probably didn't). He also knows the opening price, for that tells if the buyers or sellers are in control for the day. The previous day's high and low and today's open have very strong psychological implications and are the most important "pivot points" to recognize. By concentrating on price action near these points, we can eliminate much of the hard work in tape reading. Many times the market will let us know right away if this is going to be an area of support or resistance. The previous day's high and low tend to overlap in congestion areas. Look to exit profitable trades immediately at these points in sideways markets. In trending markets, the price will run through these points a bit before pausing. When the market is strongly trending, the opening price becomes the most important. If we are watching a high, low, or opening price as a pivot point, we are watching to see whether there is any impulsive price action as the market approaches the point or moves further away from it. What is "impulsive action?" I like to call it a "whoosh." The market moves rapidly as if just coming to life for the first time. It is usually a series of ticks in one direction without a tick in the opposite direction. The market is tipping its hand. A sequence like this tends to consolidate or pause a bit before being followed by more impulsive action. This is quite easy to see in a market like the S&P's if you look on a short-term time frame. If we quantify these "whooshes," which we can do in several ways, we will see that the market tends to have continuation moves at least 2/3's of the time. Not bad for arriving at a "positive expectation" simply by following price action. In conclusion, tape reading is not watching every trade that passes by (a monotonous task) but rather keeping an eye out for unusual impulsive action, unusual volume, or just observing the way the price trades at significant levels. Each price swing has forecasting value as to what the next most immediate move should be. We then follow the price action to see if that move plays out. Tape reading is at the heart of swing trading. When looking for short-term moves, price-based derivative indicators will be too late to be of value. Ultimately, traders should feel a great sense of freedom when they can rely on simple charts to formulate a game plan or a conceptual roadmap in their heads - and the movement on the tape to tell them their game plan is correct. Article contributed by Linda Bradford Raschke from https://www.lbrgroup.com
  7. Technology has changed and continues to change the financial world in so many positive ways-- from helping the little guy with small account to access any exchange to buy and sell stocks, futures and commodities anywhere in the world at a steep discount commissions to giving us the all the tools everyone needs to trade like the pros with instant access to news, charts, indicators, charting tools. Information overload is the norm for the average trader where every piece of knowledge is paramount. However, there is one consequence that has left traders crippled without essential ingredient for success: price action. This is the modern day equivalent of tape reading. In the former times when charts were only available to the professionals and the only source of information were the prices being printed from the ticker tape machine. Those individual investors who were serious about trading had to painstakingly hand drawn their own charts. By doing manually drawing these charts, they became to understand what patterns look like, how prices move, where the support and resistance are located. Today, with the charts available at the touch of a button, reading charts became a lost art. Why? With the computer, a trader a bring up numerous charts with the latest and greatest indicators... many indicators. Traders were fixing their eyes on the indicators more than the price itself (curious enough, most indicators are derived from prices so traders are focused on the secondary indicator and not the absolute indicator: price). Many older and experienced traders have been successful not from reading indicators but through price action. Many indicators come and go and new ones will come along but price action will always be around. Learning to read price action will only strengthen trading skills in any market and any condition. What is price action? Price action is the movement of the prices in one bar showing the High, Low, Open and Close in relation to price movements in previous bar(s), whether it is in 1-minute, 60-minute, or daily charts. The main area to pay attention to is how it's High and Low is related to the previous bar(s) High and Lowâ€â€HIGHER HIGH and HIGHER LOW concept (LOWER HIGHS and LOWER LOWS for downtrends). This principle helps identify the state of the market, whether it is motionless or in a direction of a trend or possible trend (up or down). This is the basic foundation of price action. The example above shows the bars and where it’s headedâ€â€in an uptrend by making Higher High and Lower High. Take a look at example below. From the chart above, the direction of the market is clearly showing a downtrend by making Lower High and Lower Low than the previous bar. Once this basic concept is studied, understood and practiced in real time, the next step is more challenging. From reading price action from bar to bar, the step is to group number of bars and compare it with another group of bars. Below is an example. In the chart, the bars is be grouped to reduce and noise by highlighting the pivots (shaded squares). These are the areas to determine where the market is going judging by its HIGHER HIGHS and HIGHER LOWS principle. The price action comes in waves... rising and falling, rising and falling. By marking these pivots, the eyes will simplify market structure into a simple question: is the market going up, is it going down or is it going sideways? Here’s the view of the weekly chart from the same areas as the above chart. The market has been in an uptrend so the daily chart action has reinforced the uptrend with HIGHER LOWS and HIGHER HIGHS. Here are the advantages to using price action: · It is a leading indicator, not a lagging indicator (many indicators are based on price so it lags by a few bars if not more). · Any timeframe, any market, price action doesn't change (wave-like actions) except the frequency and the width (personalities of each symbol). · Helps quickly identify the market’s bias (up, down, or sideways). · Helps identify entry and exit points. Not many traders understand or use price action as their choice of weapons to trade, choosing indicators alone to make their decisions, leaving them to know the indicator but not the market. They may only see the price charts when they're about to make the entry or exit. But having a grasp of this concept gives a trader a major advantage… the trader understands the market structure better than the other traders. Use it with an indicator or two along with volume and support and resistance, with time the P/L will prove that price action is an indispensable tool. ---------- This article was first submitted and posted at MrSwing.com. More trading articles. Charts provided SwingTracker
  8. A brief video on tape reading from a live recording on Sept. 11, 2006. The first two parts go over one particular trade I had using the tape. In the third video, I explain one interesting pivot point play. Gaps fills will act as a pivot. CLICK HERE TO VIEW PART 1 CLICK HERE TO VIEW PART 2 CLICK HERE TO VIEW PART 3 Note: Part 1 and Part 2 is fairly big in size. Depending on your internet connection this may take 10 - 15 minutes to load. Approx length is 40 minutes combined. Charts created by Tradestation Presented by Traders Laboratory
  9. Do I need to learn tape reading if I decide to swing trade and not day trade?
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