Tape reading is the art of reading price action realtime using the Level II box. When using the tape you are able to gauge traders mindsets and imbalances in demand and supply.

Reading the tape is about assessment of the bid, offer, size, volume, and prints. With the help of reading the tape you’ll be able to find out the place that the stock will probably move around 70-85% of the time.

Tape reading is an essential skill to learn as an intraday trader because it means that you can see real-time where there is selling and buying taking place during a specific price level. This is an very vital skill set simply because it will boost you effectiveness, risk/reward ratio, as well as help you capture much bigger moves all while letting you take on the lowest amount of amount of potential risk attainable.

How tape reading provides you with an advantage:
Tape reading is definitely an edge which will put you in front of lots of other day traders who believe that technical analysis is the only stock trading strategy they have to know. Tape reading can be described as a leading indicator, in contrast to charts and technical indicators which are based on past data.

By reading the tape you are able to watch what price level a trader is selling or buying and get in at terrific entries and keep minimal risk.

The last thing tape reading provides an advantage over is against electronic algorithms and high frequency trading.

What you come across within the tape that you simply cannot see within the charts:
By reading the tape you will discover the active sellers and buyers and find out what price levels they were engaging at by observing the supply and demand they find.

It is possible to follow a certain buyer and figure out the sequence in which they are buying up the security. The same thing goes for sellers. By reading the tape you’ll be able to detect the patterns which the charts usually do not reveal and with this you’ll be able to go into and out at great prices.

With tape reading you’re able to sense the way the market is consuming your orders and also have an awareness on if a certain security is weak or strong.

As one example, if a stock appears weak on the chart but it’s difficult for your bid to get filled then this can be a clue that there is not that much selling going on, and so the stock might not be that weak after all.

Last but not least, charts only provide you with historical data. Given, charts will work but if you incorporate tape reading and technical analysis you’ll get an advantage that as much as ninety percent of speculators do not.

Exactly how tape reading is an art instead of a science:
Tape reading is not a science. I only say this because it’s definitely not something you can just read and watch youtube videos on to turn out to be an expert. Tape reading is something you master over extensive observations and personal experience.The longer you observe the tape, the more you’ll be able to figure out specific patterns. The basic fundamentals of tape reading are quite easy, but once you are aware of the foundations of tape reading you will simply get better as time passes.

How tape reading minimizes risk:
Reading and making use of the tape can lessen your potential risk. By using the tape you can recognize accumulation and get in in the accumulation range while exiting in the event you find the accumulation has concluded.

Also, by tape reading you can easily detect held bids or offers and move in front of them to find great entries on moving securities. Should you be looking to buy inside of an uptrend but don’t wish to chase you are able to look for a held bid to get in while keeping your financial risk minimized as an alternative to chasing and taking on unneeded potential risk.

How tape reading boosts your understanding of chart patterns:
Tape reading will enhance your understanding of chart patterns because you are able to see the demand and supply dynamic instantly. In case a stock showed some technical support, and you saw there is accumulation on the tape, an excellent trade is to get long while keeping your financial risk limited.

Also, if your stock reaches a significant long-term technical level you are able to recognize on the tape how it is reacting to it and trade it from there, simply by noticing what the buyers and sellers are doing real time.

How you improve tape reading skills:
Enhancing your tape reading skills is going to take time. You will only progress on a daily basis observing the tape. You’ll learn and see more things on the tape 90 days from now than today.

To help accelerate this learning curve you can view video recordings of your trades. You will only get better as time passes the greater you follow the tape and evaluate the stocks you trade. It also helps to view video clips of trades you made throughout the open and close to analyze. It’s a lot simpler to identify something on the tape when you are not in a position and the market is closed.

Haun Xing is a professional stock trader and tape reading expert. You can view more great site about trading by clicking here.


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