Is Volume is Futures Now Obsolete?

[emios 10]

Hi there everyone. Basically I'm at university and desperate to start trading live as soon as I can, as I wish to enter the world of finance (I don't do economics, which makes it nigh on impossible in the first place). I wanted to be able to trade stocks, as they are more simple to trade, as I can understand the volume in them, but the $25,000 pattern day trader rule has made it impossible for me to enter the market.

 

The only option I have open to me is futures. Is tape reading now obsolete due to the changes in the way that the CME report tick data?

 

Please respond. I am aware that time is running out, and my chances of entering the world of finance as a grad doing a pathetic french degree are very slim already.

[brownsfan019 17]

This was being discussed when the announcement was made. There's at least 1 thread talking about this on here, try the search feature.

[emios 10]

Hi Browns, I've looked at the thread, and unfortunately, no one came to any conclusion about this issue. I was just wondering if there was anyone here who was using volume in their futures trade analysis...

[i trade 10]

If volume ever becomes obsolete I quit!

[Spydertrader 10]

I was just wondering if there was anyone here who was using volume in their futures trade analysis...

 

The change in the methods by which the CME reports Volume had zero net effect on how I see Volume. As long as Volume reporting (from whatever source) remains constant across all time intervals on any given chart, nothing is ever going to change - with respect to Volume.

 

- Spydertrader

[bathrobe 10]

The change in the methods by which the CME reports Volume had zero net effect on how I see Volume. As long as Volume reporting (from whatever source) remains constant across all time intervals on any given chart, nothing is ever going to change - with respect to Volume.

 

- Spydertrader

 

 

I completely agree with Spydertrader and volume remains the most important analysis tool for me.

[zdo 20]

emios,

Most of the replies to your question answer re total volume – which has not changed.

My understanding of your question was that you were asking about the volume reported on the ‘tape’, correct?

I’ll take a stab at answering that.

I was told by an ES trader who uses the tape exclusively that it took him about a month to fully adjust…. that it was a process of understanding the changes, compensating / changing, testing - and then he was ‘back in business’

 

But he may be an exception. For one, not just any ole brain has the necessary knack to read via numbers instead of graphically day in and day out. Also, many may have been able to discern their ‘patterns’ in the old stream, but simply not be wired to learn new equivalent patterns (easily enough for it to be worth it) – so they are out of the game or their performance seriously compromised. In sum, a whiz savant could utilize either stream. Less than whiz savants may only be good at one of them, etc… and most people are simply good at neither... etc

 

What attracts you to do tape reading? Have you done it before?

If you never tape read the old stream, then you do not have to adjust!

Edited January 8, 2010 by zdo

[RichardTodd 10]

I was told by an ES trader who uses the tape exclusively that it took him about a month to fully adjust…. that it was a process of understanding the changes, compensating / changing, testing - and then he was ‘back in business’

 

I just made additions to my indicators to heuristically re-bundle the trades that were unbundled. It's not perfect but it seems to be good enough. And, with the new reporting, you do sometimes get more info than you got before (such as you know for sure when a large order is matched to a large resting order), so there can even be some advantages.

[natedredd10 10]

I question that the online "bitchers" about this move could read the tape at all anyway.

As if the tape on ES is too slow now, give me a break. If anything this move has made reading ES much more interesting..

[BlowFish 10]

I wonder if you mean tape reading in it's most literal sense (looking at time and sales and possibly the order book) or whether you are talking about a more liberal interpretation (using volume or market delta or other new fangled fancy indicators)?

 

If the former you will likely need gazillions of hours of screen time and there is a dearth of quality information to learn from, You will likely need to rely on your own observation. It's a long path.

 

If the latter you might want to carefully consider what you put on your charts. It seems to me a lot of the new fangled indicators certainly add an extra layer of information but (for me) the improvement in my trading decisions is marginal over say a simple volume histogram. Anyway dosen't stop me researching.

 

But to answer your question in a word. No.

[InGodsfavour 10]

Emios....RELAX!

 

Learn to trade effectively. The tape reading is not mandatory. Many other better ways. But if you have to, then just do it. You do not have to readjust as you never read the old way to begin with.

 

Finish school and get ready for a real education. Trading is like a high wire balancing act. No room for any mistakes.

 

Re the pattern trader BS...Open an acct in Canada or the UK to skirt that nonsense.

 

It will be here when you finish school. Don't worry.

 

BTW futures are GREAT trading vehicles. Better than stocks in many ways.

 

Finish your Francais Education and get ready for the ride of your life!

[TheDude 10]

At one stage I became interested in tape reading (T&S), but found the prints too fast to be of use - for me. Clearly a lot has changed since Wyckoffs time! A string of 200 x 1 lots peppered with 5 and 2 lots had little meaning now larger orders are broken up.

 

I tried filtering the tape, on say 10 lots. This was easier to follow, but then of course you miss the 2000 lot order iceberged in <5 lots; which is still important.

 

I decided on another route: I used range bars of a few ticks. I looked at each range to be 1 'price', and compared the volume print of each 'price'/range bar to be the volume print at the price for comparison. I imagine there are countless other ways of utilising other indicators and T&S info, but then it just becomes a derivative of a standard volume bar anyway.

 

In the end - after a few months, I felt I was chasing my tail somewhat. I was making little progress and decided I should just go back to what was working for me before - good old time bars and volume bars. The range bar idea may be of value to someone else though.

 

It's all about finding your niche. Tape reading requires a very analytical mind IMO. I'm more creative in personality, so it just doesn't suit as well as other approaches.

[LS_Chad 10]

See: Investor/RT - Answers  (LinnSoft.com) for a review of changes and their effects.

[Tiobingo 10]

This was very useful, thank you. Do you know if this change affected other markets? How about the Dow, Nasdaq or Russell eminis?