You do have to watch the tape. Its all about looking for signs that show if the stock is strong or weak.
and thanks to Maverick, it only took 5 weeks to realize it!! Something tells me this post is about to save me some heartache and make a positive impact on my P&L. .... back to staring at the tape Thanks Maverick!
Great thread, I believe I learned a lot. Maverick, you stated that you believe tape reading will die eventually as the hybrid NYSE system is implemented. I'd like to ask you as well as others, whether you think it is viable for someone to start learning tape reading today, when the end could be on the horizon. How much more time would you give until it is impossible to profit from this. Thank You
one thing everyone has to remember is that Maverick's posts are more for the traders at home, etc... that do not trade prop and can only have level II access without openbook. If you have openbook, you can see where the sizes are (although some may be fake, etc...) but tape reading is also important. For example, today in the book a stock was showing 2000 in size where the specialist kept printing 2000 each time, and he will be there for a while until an odd large lot prints (clean up print) and he's done. Maverick is definitely on top of the strategies but keep in mind that everything is in level II for people who do not have access to the openbook.
I believe maverick said that openbook is garbage. Anyhow, I was wondering whether he thinks tape reading will exist after the hybrid implementation. He has hinted it will die, but how fast...is there time to learn?
openbook is not garbage. It does tell you the price level of institutional orders, granted some sizes may be fake but with careful observation, one can relatively tell which ones are real. For example, if a size is stepping down, and all of a sudden 3 sizes just came in below the big size, it may be possible the size is real since the sellers saw selling pressure and gets in as well but most likely it's fake (specialist trying to show more selling interest than there is) as if it's a real size, it would not be behind it, it would be in front trying to get filled. openbook can also give you an idea of buying/selling bias at the moment. If the book is thick on the offer, the currently selling pressure is there. Sometimes the specialist will show a much larger size on Level II than what it really is in the openbook. For example, if there's size in the openbook of 8000 shares, he might try to stir some interest and show 160 on Level II. That's where you really have to watch every single thing that's doing, if he is printing a penny above, below, to get it for himself, how are the ECNs doing, etc... No one knows when it's going to happen, or how long the process is going to take, back then, they said the same thing, and 5 years now, it hasn't changed. just my 2 cents.
tape reading is a wonderful skill to have. It takes a lot of observation, understanding, and experience. It encompasses everything. Tape reading is not just about what it prints on the tape, it's about, what he prints, where he prints it, where's the bid/offer right now, how are the ECNs doing, if the offer is stepping up/bid stepping down, if size walks, comes back, etc...it's.....everything.