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Soultrader

[Tape Reading Part 2] by Traders Laboratory

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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

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  kentClark said:
hi,

 

Is it possible that you do a series of pit noise lessons?

 

thanks,

C.

 

I will try to post a video on pit noise soon. Do you currently use pit noise? Also is there anything in particular you would like to learn?

 

Note: there is a glossary of pit noise posted in this forum. Make sure you take a look at the list. It can be very useful.

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as a matter of fact, the glossary posted was extremely useful. The issue I'm currenly having is when to detect there's change of short-term market direction based the caller's bids/asks. In addition, I'd like to learn how to detect the subtle 'buzzing' level in the pit crowd.

 

thanks a bunch,

C.

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What I listen for when using pit is the level of emotions. On a scale from 1 to 10 (10 being the loudest), I will figure out the current level of noise. If a sudden trend starts with good noise this confirms a breakout or buying interest. After a runup, I will then listen if the level of noise has decreased or increased. An increase in noise indicates further buying interest while a decrease indicates less market participation. This can lead to a choppy market or a reversal.

 

  kentClark said:
The issue I'm currenly having is when to detect there's change of short-term market direction based the caller's bids/asks.

 

Usually the caller will mention phrases like "locals are trying to push it lower", "locals are selling into strength", "paper seller again", "one of my top teners fighting the entire pit", etc...

 

Whenever I hear these at a key pivot level, this can act as a confirmation for a reversal signal. One particular phrase I hear is when the markets make a new high or low by a few points and the caller mentions how the "top tener" are fighting the market.

 

Usually I go with him. I have no clue how big of a size they trade but I have seen these guys go head on with the markets and reverse it. It is a pretty scary but amazing phenomenon.

 

Also tune in to the caller mentioning whether the pit is crowded or not. On a day before a national holiday.. the pit is pretty empty. Time is another important factor. I do not like trading after 11:00am until 2:00pm. The pit is usually quiet during these times as well.

 

Note: Top teners refers to the top ten biggest floor traders for that particular contract.

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i notice you reference TRIN levels right after the opening. imo, TRIN is useless in (at least) the first 1/2 hour. after then, i start looking at it.

 

that's just my opinion though.

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Guest cooter

The first THREE minutes are useless for market internals like $TICK or $TRIN as they need to settle to current market activity.

 

Thus, in TS, I've set them to a custom session beginning at 8:33am CT (9:33 ET) to account for this discrepancy.

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I don't use internals at all any more - just support, resistance, price and volume - but out of interest what do you mean by "they need to settle to current market activity"?

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Guest cooter

Ever look at the first couple of minutes of these internals, right at and after the starting bell?

 

$TICK, $TRIN, $WPCVA (put/call) and $VIX are slightly askew until the market activity settles from the initial open.

 

These readings are usually discounted by seasoned market technicians for the first 2 or 3 minutes of RTH activity.

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