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Trading without charts (tape-reading)

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  • First Post: Aug 28, 2010 8:24pm Aug 28, 2010 8:24pm
Hello traders,

I would like to discuss trading with pure price action (tape-reading).

The last couple of days I have been playing around with pure PA (just the actual numbers) and have done it with surprisingly good success.

I have been playing around with mini lots with this model but if I can get more consistent I think this can be a funnier and maybe it will pay off better than my normal boring trading models.

Results
I have had 17 trades on 3 days where I have spent 6 hours all together and 12 wins and 5 lossess...

Anyway here's the model so far

 

  1. Wait for volume, would atleast see some good movement (10 pip change within 5-10 minutes....
  2. Looking at the price for a minimum of 5 minutes before action is taking place.
  3. After a win/loss --> your in penalty where you are not allowed too look at the price for atleast 15 minutes (this is because not knowing where the price have been keeps you from visualizing the chart as a whole, especially good if PA around big round numbers).
  4. Pip risk/reward 4/5 - 5/8 etc...


General Thoughts
Two ways to trade as I see it.

 

  1. I normally see the price to penetrate a new set of numbers like reaching 1.2723 before dropping back down to 1.271x (normally takes longer time)

  1. Forceful pentration of 1.2723 would normally lead to further incline or decline (tricky part & faster)

  1. Trying to catch price as it spreads over a round number gives a good probability and with a slightly better risk/reward we are hopefully good.

If this works out next week also I am going to write a book about it.

And for those who have just read around about how to trade with proper rik/reward and scalping is stupid etc. DON'T WRITE IT DOWN HERE.

simple thread rule.
IF YOU HAVE SOMETHING POSITIVE/HELPFUL TO WRITE=WRITE
IF NOT, F*** OFF.

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I looked into this for a while but decided to stick with backtested technicals. Here's some information I found which helped me.

I've been on a few trade floors and from what I've seen, most professional proprietary day-traders do this type of trading.

Generally speaking, they use:
1) Market depth
2) Order flow (time and sales)
3) Open book (for NYSE)

A general guide to this is to read the market depth and look for weaknesses in it. For example, if you notice that the bids are being hammered with lots of selling orders, and price is not falling yet, it either means there's a large buyer or it's about to fall. By watching carefully, you can place a very low risk trade and capture a few tick move either upwards (as sellers become exhausted) or downwards (as the buyers are overwhelmed). By doing a trades like this per day, you can collect a few ticks/pips/cents per day with small risk.

It's a very "gray" type of trading in that it is more "trading from the gut" than trading from a plan. It can be very profitable and most proprietary day-traders do this.

I do not like this form of trading because I can't program it and I can't backtest it. I only trade things that I know a definitive result or at least a very strong guide of performance. For example, I'd be more comfortable trading a moving average crossover because I know that 32% of my trades will be profitable rather than saying "well...it just depends".
Quote
The last couple of days I have been playing around
Quote
I have had 17 trades on 3 days

Gonna write a book already? A little soon?

-------

Quote
SOMETHING POSITIVE
Quote
F*** OFF
---

Just sayin..

But I think trading without a chart seems like a really cool idea. I'll give it a shot and I'll report back, great idea for a thread.
Honestly, there are a lot of people out there who make a lot of money doing this. Earlier this year I was on a floor with about 80 traders and probably 60 of them use purely market depth, order flow, and NYSE open book. The other 20 were using technicals and for the most part they were all profitable.

It really just depends on what floats your boat.
I just did my first DOM (futures - demo) trade this afternoon. I think I might have got lucky, but it was profitable, and kind of fun. Had a hell of time trying to figure out how to close the trade, though.
Haha, nice. X_Trader? Their DOM has a vicious learning curve ...On demo I ended up with like 10 lots short trying to exit my 1.

Ninjatrader's dynamic depth of market is pretty solid and easy to use. In other words, I don't end up short 10 times what I'm trying to get out of while using it
It was actually TOS. I don't like their platform; too many many bells and whistles for me, and I know they are expensive, but my demo acct has been going for 2 yrs+.
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Larseg,
Just curious how you learned tape reading? Wyckoff, Humprey, etc? Yeah, I know this is a very very old thread...
Quoting ramack
Larseg,
Just curious how you learned tape reading? Wyckoff, Humprey, etc? Yeah, I know this is a very very old thread...

I am not that old but I use the term so other traders know what I mean

But I learnt it by myself and if you ask me its hard to stop visualizing a chart when the numbers come up... indis etc automatically drop in your head when you have watched the charts for 10-15000 hours

I dont trade this way now but I can still do that if I want... not more or less profitable...

GL
i used to trade in a similar way,using bid ask only,infact it was my most profitable way of trading,as shown in my earlier part of my journal i somtimes went the whole week with out a single loss,ive turned many 500 pound accounts into several thousand trading this way,

maintaining this type of trading was the problem,extremly intense and the very stressful ,i just could not maintain this long term,although i still use for entry and understanding price at given levels

certainly worth the time to understand
Quoting Larseg
Hello traders,

I would like to discuss trading with pure price action (tape-reading).

The last couple of days I have been playing around with pure PA (just the actual numbers) and have done it with surprisingly good success.


[list][*]Wait for volume, would atleast see some good movement (10 pip change within 5-10 minutes....[*]Looking at the price for a minimum of 5 minutes before action is taking place.[*]After a win/loss --> your in penalty where you are not allowed too look at the price for atleast 15 minutes...
Hi Larseg ,
Could you please elaborate on your entries trading this way ? when price enters a new set of numbers do you play the breakout ? (Going long if price enters a new set high)
Thanks
Quoting diceman555
certainly worth the time to understand
Whose method, Wyckoff?
This is my interpretation of "Tape Reading"
In brief Price Action itself is insufficient and misleading. It is best to consider the "action behind the Price Action"
But it's just me and I am nutty nut nut so don't pay attention.

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Quoting Larseg
Hello traders,

I would like to discuss trading with pure price action (tape-reading).

The last couple of days I have been playing around with pure PA (just the actual numbers) and have done it with surprisingly good success.

I have been playing around with mini lots with this model but if I can get more consistent I think this can be a funnier and maybe it will pay off better than my normal boring trading models.

Results
I have had 17 trades on 3 days where I have spent 6 hours all together and 12 wins and...
Its a really cool idea man!

Will try it on O.a.n.d.a's demo contest this week.
.
Where could i get free or demo (broker or service) of currency contract options live tape ? Maybe someone can recommend broker that offer this ? I know TOS offer this but with 10 mins delay and you need to fund your account with 3,5k$ (also it doesn't support my country for acc registration...) .So any info about that would be appreciated .
Since Fx doesn't have a central exchange as stocks and comms, is volume really a good or accurate metric? I stopped reading "Wyckoff's Way" when when I realized this conflict.

I found tape reading while looking for alternatives for trading on price action only. What attractived me to "tape reading", is having info all on one little area of the monitor when watching multiple currency pairs. Being able to determine volume by how rapidly buy/sell changes blue/red colors and the colors themselves to indicate the direction of price movement. I just haven't been able to put it all together into a useful trading system.
Quoting ramack
Since Fx doesn't have a central exchange as stocks and comms, is volume really a good or accurate metric? I stopped reading "Wyckoff's Way" when when I realized this conflict.

I found tape reading while looking for alternatives for trading on price action only. What attractived me to "tape reading", is having info all on one little area of the monitor when watching multiple currency pairs. Being able to determine volume by how rapidly buy/sell changes blue/red colors and the colors themselves to indicate the direction of price movement....
Do you know what COT report is ? If yes then look at the chart and compare them with COT report and the fx spot chart , so seeing live action what is going on is better than having 1 week old COT report ...But to my knowledge it's almost impossible to get that data without having account with a real contract options broker .If someone will spot broker who offers demo let me know , i would appreciate it .
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I know what a COT report is, I don't know how to use one.
Quoting ramack
I know what a COT report is, I don't know how to use one.
Well when COT report is released usually it's already to late to use it or ride with the big boys , but it still can help a bit to determine trend ending or starting of a new trend etc .
Quoting ramack
Since Fx doesn't have a central exchange as stocks and comms, is volume really a good or accurate metric? I stopped reading "Wyckoff's Way" when when I realized this conflict.

I found tape reading while looking for alternatives for trading on price action only. What attractived me to "tape reading", is having info all on one little area of the monitor when watching multiple currency pairs. Being able to determine volume by how rapidly buy/sell changes blue/red colors and the colors themselves to indicate the direction of price movement....


now your talking ramack,

i watch 14 pairs of quotes and there value changes,although i only trade cable.as you have said you can see when the volume increases by watching these quotes my screen lights up like a Christmas tree when large volume enters the market.but there are 2 other key pieces of information from this perspective .

firstly you can see the momentum as it contracts and resides you can see the strength of the bid.you can see the market test s/r ,you will be very surprised to watch the whole market working as one.

secondly and more importantly you can see if the market is in a random chaos state or harmonic and structured.when structured it works together like a fine tuned swiss watch.this only happens on occasion .this is when we should be trading.
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