How Poor Tape Reading Skills Sabotage Retail Trader Profits
You know and I know, that all your competitors (especially institutions) are ruthlessly seeking the same thing: an advantage. Tape reading is one such advantage. Not wanting to be left behind, you read all the books, take the classes, watch countless YouTube videos, and sit in trading rooms with those who seem to have the Midas touch turning tape numbers into consistent order flow profits.
But Still, Fat Paydays From Tape Reading Elude You
Everyone tells you reading the tape is just about the chart / price action. So you bury yourself in candlestick charts. Maybe you even fiddle with order book time and sales lists to make sense of it all. Still, it’s all like reading Greek.
That’s when you fork over another few thousand dollars for an order flow indicator you pray will tell you when to pull the trigger on your trades. But it doesn’t take into account the monstrous impact of institutions on every move you make. Hopefully, you realize this before you and your account are viscously drained yet again. Most people don’t. It may be of little comfort, but this happens to tens of thousands of retail traders everyday.
What You Really Need To Know About Tape Reading
- You must be able to read, and correctly interpret, bid / ask in all order conditions within the order book.
- You must understand trading volume in context to price.
- You must know which volume traded on which price level.
- You must be able to decipher the type of volume on each level.
- You have to know who really initiated — and is controlling — the trade (most retail traders pay dearly for taking their eyes off this).
Studying each of these on their own will be useless. You must master how they all work together to consistently profit from order flows.
Shortcuts Always Cost More Than Learning Those Fundamentals
In our instant gratification, gotta-know-it-now world, it’s never been easier for traders to be lulled into a false sense of confidence about their tape reading skills. This leads to trying fruitless shortcuts like:
- Focusing only on parts that are interesting vs. the important ‘non-interesting’ parts and data you don’t understand.
- Pinning your hopes on one ‘golden ticket’ method or tool.
- Using isolated methods and indicators not interconnected to your entire system, across all your markets.
- Looking for perfect market conditions, instead of knowing how to take advantage of what the market gives you.
What You Really Need To Do
Of the last 3 tape reading methods you’ve tried, how many of them left you feeling more confused than when you started? One? Two? All three? Join the club. Let’s face it, if those methods did make you totally confident in your tape reading you wouldn’t be on this site.
If you sense your tape reading skills are what’s holding you back from making the consistent order flow profits you know are possible, then you’d immediately benefit from learning tape reading from the ground up.
Our Free Tape Reading Mini-Course Is A Great Place To Start
You’ll start to learn how to solve many of the problems listed on this page like: how to understand bid/ask; finding who’s in control of a block trade; what footprint charts are; why volume imbalances are your new best friends.
If you’ve already done this course, there’s a free Order Flow Basics and Market Profile Analytics mini-course too.