Tape reading substitute for forex

[DrEvil 10]

First of all, I want to say that I'm massively impressed with traderslaboratory, especially the video section. It's one of the better forums that I've found so far.

 

I can really see the advantages of tape reading in giving clues at pivot points/support/restistance. I trade forex, which means that I don't have a tape so I'm left without some very valuable price information. I use MetaTrader for it's charts, but I notice that it has volume bars as well. I expected that their volume bars would be useless as no doubt it captures only one piece of the forex volume moving the market. However, I have noticed that candlesticks at support/resistance (for example) more often than not predict a turning point or continuation when you use the volume bars as confirmation.

 

What I would like to know ask to the people that tape read on this forum is do you think that candllesticks at key support/resistance levels confirmed with volume bars are in any way an alternative to tape reading? I'm not so sure because from looking at Soultrader's tape reading videos I see that he looks for clues from the big players (larger lot size trades) and this seems to be far more important that the little guys. You can't see this with a plain old volume bar (at least I think you can't!).

 

Would love to hear anybody's thoughts on this.

 

cheers

 

The evil one.

[Anna-Maria 10]

As you’ve quite rightly alluded to, there’s no such luxury within the Foreign Exchange environment. And apart from the futures camp, volume prints won’t afford you a very reliable take on the cash movements either, well certainly not with sufficient enough accuracy to warrant any kind of consistant strategy to be compiled around that tactic anyway.

 

I guess you’ve witnessed the candle prints forming on & around key levels? Big Figures (00’s), prev zones of weekly/monthly supply & demand (highs-lows), intra-range swing zones etc?

 

These levels provide workable clues as to the propensity of a pairs ability to continue or stall-out/reverse. Such is the cross section of agenda’s at these levels from the differing camps (aggressive intra-day specs/large non-commercial activity/Bank desks working customer orders etc), you’ll often spot candle or bar prints which if utilized with typical math gauges, offer pretty good entry/exit levers.

 

I guess it depends on which type of trader you are & the specific strategies you employ as price buffers these common zones of interest? But volume/pressure isn’t always necessary. After a while observing the price activity around the “obvious†levels, you’ll begin to get a feel of how reactive they are & the likely build up of each-way traffic residing there.

 

Doji’s, neutral prints, engulfing, inside/outside patterns occur for a reason!! Team that up with WHERE they print & WHERE they lay in relation to the trend or range, & you can begin to develop a plan (& a contingency) to take advantage of the price journey.

 

There are brokers out there with ladders in which they'll display best & cumulative bid-ask availability. But again, it's only indicative of that specific suppliers traffic. A broker which clears thru a rolling tranche of suppliers will only offer bid-ask traffic available at that time.

 

It's not what you're seeking, but then nothing (with any degree of accuracy) exists to facilitate your requirements anyway as far as I'm aware.

[notouch 10]

You can tape read Globex FX futures and see proper volume - much better than trading with a bucketshop.

[Anna-Maria 10]

If you’re referring to the majority of in-house shops trunking feeds thru a manned operation, then you have a point.

 

Someone striking out with an adequately capitalized funding base (if trading is their main income earner), won’t have too much trouble locating (& negotiating with) a spot facilitator.

 

I guess it boils down to your style & objectives. Most serious contenders play, or at least have access to, both options.

[Anonymous 11]

..... especially the video section..........I can really see the advantages of tape reading in giving clues at pivot points/support/resistance. I trade forex, which means that I don't have a tape so I'm left without some very valuable price information.

 

Yes. It is easy to conclude after watching Soultrader's videos that the forex spot trader is at a considerable disadvantage. Some of the most important pieces of information are being withheld from most retail traders.

 

... I use MetaTrader for it's charts, but I notice that it has volume bars as well. I expected that their volume bars would be useless as no doubt it captures only one piece of the forex volume moving the market. However, I have noticed that candlesticks at support/resistance (for example) more often than not predict a turning point or continuation when you use the volume bars as confirmation.

 

There is a way to read the tape in forex. We read the chart as if it were the tape. We look to the tape masters like Wyckoff, Williams, and Ney.

 

Volume is activity. As such, tick volume can be used in place of actual contract volume. Moreover, the activity on your platform can be used as a proxy for all volume activity. 85% of all volume activity represents the activity of Professional Money. When you see a volume spike it is true that some of that represents the 'herd'-small retail trader on your platform, but WHO IS ON THE OTHER SIDE OF THE ORDER?

 

Retail traders are buying at the top, and somebody must be selling to them. This is a zero sum game. For a trader to be let in (long), there needs to be a trader to let them in (short).

 

More importantly, volume is the power house that drives the market. It is the main tool of the professional trader. Having said that, volume means little without looking at price spread (range) and price. The key questions are what did price do on the associated volume, and where within its range did it end up? Volume Spread Analysis attempts to read the tape by studying these key relationships. Ultimately the markets move because of supply/demand dynamics. In particular, the supply and demand from the Professional trader. And that supply, can best be seen in a simple volume histogram and price bar.

 

Support and resistance areas become important places to look for what the Smart Money is doing. They "force" the Smart Money to show themselves in certain places. This allows the astute tape reader to "piggy back" off of their actions. It seems as if you already can see some of this going on. So, you are already tape reading as it must be practiced by the spot forex trader (of course, once you can read price and volume, you can read any market).

 

If you really want to learn how to read a chart, go to Tradeguider.com and watch some of their free videos. I am a customer of the book and bootcamp, but not the software. I do not like the software and do not recommend it. A lot can be gain from the free stuff. Another site is Tradingmentor.net. One of the mentors was a tradeguider teacher and studied under both Tom Williams and Richard Ney. I do not recommend taking the course, as I have not done it myself. They do offer a free live demo (long distance charges may apply). Joel's ability to read the market(tape) using price and volume is second only to Tom Williams, Richard Ney and Richard Wyckoff.

[Guest FLX]

You need to follow the future chart/ currencies to get a head up of the coming event in the the forex pairs, this will give you the tape reading your looking for at market open (London, Toyko, NY) EST> 8:30am, 3:00am ETC. It is hard to read any other time of the day because the volume is to lite. Use the tape bid and ask indicator and the market delta on the Euro. It works well in trade station.

Also use these indicator on News event like the NON Farmer pay report ETC!!!!!!!!!!!!!!

The reason you use this indicators is because the bid and ask will show the true direction of the Market delta turning red and green. Volume pile up so fast that it is hard to determine the direction so you use the TAPE bid and ask indicator. One or three minute is the best setting, using charts any longer will slow

your reaction time down and miss the move. Use this indicator at the pivot areas to determine a quick direction indicator. FLX Full time trader! ER2

[Anonymous 11]

...............What I would like to know ask to the people that tape read on this forum is do you think that candllesticks at key support/resistance levels confirmed with volume bars are in any way an alternative to tape reading? .....

 

In a word, yes.

 

Check out the attached chart. Here is a great example of price/volume action at or just around support/resistance levels.

 

The first arrow points to a 'test' bar. Professional money is testing for supply. Since the volume is low (less than the previous two bars), we know that no sellers were underneath the market. The yellow line is the POC.

 

The second arrow is another 'test' bar. Notice that this test comes higher than the previous test. This one comes just below the Value Area High pivot line (upper purple line). Again test bar has volume less than previous two bars, closes on or near its highs, and makes a lower low than previous bar.

 

Next we shoot up to the R1 level. Here we what do we see? As price rises to the resistance level, the effort to rise decreases. The tool above is showing effort to rise (green) and effort to fall (red). Another word for effort is activity and another word for activity is volume. In essence, buying volume is decreasing as price moves higher. VSA tells us that rising prices on decreasing volume is bearish. But our focus here is on where this is happening: where we would "expect" to see it.

 

Lastly we again see divergence between bearish order flow (effort to fall) and falling prices. Now we are at the lower purple line, the Value Area Low pivot. The two pronged arrow points to a bar with ultra high volume that closes in the upper portion of its range and down from the previous bar. This is a bar that had Professional demand (buying) going on. In fact, the bar looks to be a shake-out. A maneuver used to shake out the early longs prior to an up-move.

 

Time after time, support and resistance areas force Professional money to show itself. These elephants leave footprints that the retail trader can use to trade along side the big boys. IT'S ABOUT PRICE AND VOLUME AND IT IS READING THE TAPE.

[Anonymous 11]

Follow up post.

 

Focus on the grey area. The bar with the two pronged arrow is the bar where we did see some Professional demand enter the market. I said the bar looked like a possible shake out. It was not. Two bars later, we get a narrow ranged bar that close higher than the previous bar, closes in the middle of its range, and has volume less than the previous two bars. This is a classic VSA No Demand bar. The Smart Money was not interested in higher prices at this time. The move down continued.

 

We just had a narrow range bar that closed in the upper portion of its range on ultra High volume. This is a squat or volume churn bar. Moreover, it appears to be Stopping Volume. Again we see divergence between bearish order flow and price. We are close to the green line (S1).

[Guest FLX]

The candles work great on the dow. and the forex. You have to look at the other market to determine the direction if your a trend day trader. If the other market are not in sink than the move will not develope. The question is, is it being pushed by the other market. Right now, also look at oil prices. Business......................Transportation is the bottom line of the equation.

It was 75.00 to fill my Ford van a few months ago, now it is 52.00 last week makes a big difference in your bottom line. Airlines, Trucking, Ships, Cars It all adds up!