Time and sales trading strategy

Explanation of Time and Sales

 

time and sales trading strategy

The time and sales are the most detailed display of a market's trading information. The time and sales show every trade that occurs, in real-time, and provides a variety of information about each trade (e.g., the exact time, the direction, the number of contracts that were traded, etc.). Time and Sales: A real-time data feed of trade orders for a security. Time and sales, or T&S, shows volume, price, direction, and date/time for each trade. Sep 13,  · The DOM represents orders, which can be changed. Time and sales are the tape, they are transactions that have occurred. "Reading the tape" does not rely on a depth of market, though I do use a DOM to try to get a clearer picture. Don't know if it's been mentioned by the way, but if you use IB for data, their time and sales data is not accurate.


Tape Read (Time & Sales) Strategies - Market News & Analysis - Traders Laboratory


Conclusion What is the Time and Sales Window? From my experience in day trading over the last few years, my most valuable tool became the time and sales window, time and sales trading strategy, aka. The time and sales window provide details on each of the trades that have gone through for that security, such as Time of Trade, Price, Size of order, and condition of order.

Depending on the trading platform, you will have other data points available to you. Time and Sales Window After mastering the message of the tape, you will be able to time and sales trading strategy decide when to enter and exit a trade. How to Use the Time and Sales Window I am a very big believer that there are two truths in trading stocks. One is price, and the other is volume.

Tape reading involves both; and if used correctly, dramatically increases the odds of your trading working out. It does so because your goal with tape reading is to follow the money. While some professional traders may not like to admit it, trading stocks is an odds game. Your job as a trader is to put trades on with the highest odds of winning. Trading with the tape requires trading with patience. You cannot go out and buy or short a stock because you see the tape speeding up a bit.

You need to be aware of support and resistance levels and also combine the message of the tape with price pattern formations. Tape reading can be very fast and confusing at times and requires quite a bit of practice to get used to understanding the true meaning behind what you are seeing, time and sales trading strategy. Remember, every stock is a different story and tends to trade differently.

Reading the tape requires you to train your eyes to scan for changes in character. The size of the orders coming through will help you decide if there is conviction behind the price action you are seeing. When putting on a trade, you typically want to see a flurry of buy or sell orders which have greater than to shares in size, time and sales trading strategy. There is no hard and fast rule about this; it is more of a visual cue that your eye gets trained to recognize.

Many times, I will see great technical setups in stocks that trade low volume. I stay away from these setups as the message of the tape is not as clear, and this lowers my odds of a winning trade. Develop Your Trading 6th Sense No more panic, no more doubts. Learn About TradingSim Order Speed The speed of the orders is another key component to the message that the tape is giving you, time and sales trading strategy.

Typically, when stocks breakout through support or resistance levels, not only will the size of the orders go higher but you will see the tape start to speed up. This gives you an indication that there is an interest in this stock at this level and that the interest is larger than a couple of small traders buying or selling, time and sales trading strategy.

When we go long a stock, we want to see time and sales trading strategy orders being executed at ask. Conversely, when we go short, we want to see orders being filled at bid. This gives us a clue as how desperate traders are to get into our out of this stock.

Speaking from Experience… Above, I have reviewed a few basic principles of tape reading, but I want time and sales trading strategy discuss some of the lessons I have learned throughout my years of trading that I think you will find helpful when analyzing the tape.

Which time and sales trading strategy are best to trade? I have received this question many times. The answer to this question for me is simple; I only trade the most volatile stocks of the day.

These stocks are the ones which will provide you with strong volume and large interest from the public. They also provide strong and fast moves which you can make larger profits from. Remember, we need to see speed in the tape, and that requires a stock with public interest. Does the tape work better during specific times of the day? In my experience, the answer to this question is YES.

I typically only trade the first 2 hours of the day. This is when the most volatility is present in the market and also when most of the trending moves are made.

Typically, lunchtime produces a choppy market and has a different group of traders who are buying or selling for different reasons than the first hour.

I am not ruling out trading after lunchtime. However, my results have been less than stellar when I attempted to do so. Tape Reading with Level 2 Level 2 The level 2 window provides the trader with an edge. It will show you the sizes of the orders in the market makers book. While the market makers can play games with level 2 to fool traders, in general, you want to see high bid sizes and low ask sizes when you go long. On the flip side, you want to see low bid sizes and high ask sizes when you go short or sell out of a stock, time and sales trading strategy.

Exiting a trade This is probably the most difficult part of the trade for most traders. Tape reading helps me get out of the trade by looking for imbalances. When I see a stock moving sharply in one direction, I will immediately look to the tape to offer clues as to time and sales trading strategy the brake pads will be applied. Again, this skill will take practice to develop. This could be a tell-tale sign that the juice has been used up.

You will not have much time to place your trade, and if you are trading a volatile stock, you most likely will have to execute the orders at market. Large spreads tell me two things; first, your risk increases significantly when the spread increases. Because most times you will have trouble getting out of a stock with a large spread using limit orders time and sales trading strategy this can turn a small loss into a big one quite quickly.

Secondly, it tells me that there is not that much interest in the stock. If there was, the spreads would narrow, and both sides would come as close as possible. Extremely High Volume Stocks There is trading high volume, and then there is trading extremely high volume, time and sales trading strategy.

I try and stay away from stocks that trade, for example, 30 or 40 million shares as the message of their tapes can be a bit confusing at times if you are a beginner. You may see 14 orders come through at bid with large sizes, but that may not mean as much as if the stock was trading less volume.

Remember to always keep everything in context. If your stock trades gigantic volume, you should expect a different kind of tape action. Stop Looking for a Quick Fix. Learn to Trade the Right Way Make price prove the point Up to this point, we have discussed order size, speed, and condition.

While these are all key components of the tape, you must let price prove the point. If it does not, you may be involved in a trap that was made to get the weak traders out and then take the stock in the opposite direction. Remember, day trading is an extremely fast game, and if you do not react with speed, you will be left in the dust. When you make a decision based on that tape action and the stock does not go in your favor relatively quickly, the odds are that you are in a bad trade, time and sales trading strategy.

Focus It is extremely important to have utmost focus when you are trading and trying to listen to the message that tape is giving you. Try and stay in a zone and filter out the extra noise. If you are going to put a trade on, be in that trade and nothing else. This will help you feel when it is right to stay in the stock and when its time to get out.

Conclusion Tape reading is a very important skill to have as a short-term trader and can keep you out of many bad trades. If you do this, you will find a reason to put on bad trades in the heat of the moment. Discipline is key and it takes time to develop.

For any new traders looking to try this out, please practice, practice, practice before you put your hard earned money at work. Mastering the art of tape reading will take time, but when you do, you will be rewarded, time and sales trading strategy.

 

Tape Read (Time & Sales) Strategies | Trade2Win

 

time and sales trading strategy

 

Time and Sales: A real-time data feed of trade orders for a security. Time and sales, or T&S, shows volume, price, direction, and date/time for each trade. Sep 13,  · The DOM represents orders, which can be changed. Time and sales are the tape, they are transactions that have occurred. "Reading the tape" does not rely on a depth of market, though I do use a DOM to try to get a clearer picture. Don't know if it's been mentioned by the way, but if you use IB for data, their time and sales data is not accurate. Sep 10,  · What you need to see - in real time - is the trades either side of it, how it trades into the level, where the level is in context of the day, y'day, what the spread is doing etc there is nothing in trading that is an if->then scenario, it takes experience and a solid feedback mechanism to develop a sound judgement of the action at the time.