"Tape Reading" for Swing-traders

[RobinHood 10]

I know Dan Zanger watches his stocks intra-day even though he puts trades on for weeks -> months. In one of his interviews he even mentioned he sometimes watched level 2 along with ask/bid, vol, last. I just don't see how he extrapolates anything useful from this to make such large trades which he hopes to stay in for months.

 

PTJ also considers himself a "tape slave" but I hardly think he is watching T&S these days...

 

Essentially, what I think they are doing is giving a huge weight to present intra-day action when it comes to interpreting the previous price-action on a chart.

All T.A books however only really teach you about past action and looking for a pattern on a static chart, causing you to mis-time entries.

 

 

Thoughts?

 

 

BTW I recently setup an experiment where I worked purely of sentiment/news, price-action (speed of moves) and SR (30min charts) on gold futures (CFDs because account size was small). Holding times were a few hours to days.

It was highly inaccurate - so its just not feasible with small capitalization, but 17:1 win-loss ratio.

I imagine it could be vastly improved with better data, maybe some macro work, and of coarse more capital (You would have to keep getting smaller in size cas with 15% hit rate you will have pretty bad drawdowns if you don't, and often).

 

See equity graph here:

http://2.bp.blogspot.com/_znF9pQ5oe98/SEKcsv6j2tI/AAAAAAAAAFg/1y2Cm-xhSpU/s1600/unoptimized.PNG

Edited August 12, 2008 by RobinHood

[strtedat22 10]

RH,

 

I intra-day swing trade (30 mins-1 or 2 hours) and scalp at the same time in the same trend. Time and sales is the only thing i use for timing my entry/exits. I place my orders on the DOM. What type of trader are you? IMO, If youre looking at swing trading for months at a time, time and sales would be useless. You might as well look at charts to see whats going on :missy:

 

strtedat22

 

YM is what i trade.

[RobinHood 10]

I don't know what I am.

 

position / momentum / trend / swing. Everyone seems to have their own definition. When I traded stocks I bought breakouts . For gold I was simply picking tops on daily by looking at 30min chart (so swing I assume).

[strtedat22 10]

I don't know what I am.

 

position / momentum / trend / swing. Everyone seems to have their own definition. When I traded stocks I bought breakouts . For gold I was simply picking tops on daily by looking at 30min chart (so swing I assume).

 

RH,

 

Swing is fine if its fits your personalit. IMO you dont need the time and sales window for for entries/exits. You should use volume based bars instead of min charts for swing trades. Vol bars chow nice smooth trends. You can buy and sell previous swing highs/lows all day. Youll only get 2 or 3 solid trades from it each day but theyre high probability trades

 

strtedat22

[darthtrader2.0 10]

Well I'm sure you can use the tape to get better entry/exit price on your swing trades. That might be trying getting too microscopic though since if your scrapping for ticks on a swing trade its not going to matter much if your totally on the wrong side of the move.

Something I've found with the tape is that I'm not sure if alot of the older literature on the subject has been degraded value wise by fragmentation algorithms. If someone executes a 100 lot YM order I think you have to question who that trader is...in the past that probly would have been the biggest guy "in the room" but at this point the biggest guys in the room are certainly going to be chopping orders up and not showing their hand to that degree.