Is Reading the Tape still important?

 

readingthetape

Hi Mr. Bellafiore,

I can start by saying this is a huge honor being able to write to a legend as yourself in the world of stock market trading.

I read your book One Good Trade and am on the way to reading The PlayBook which are hugely influential course materials on the subject matter of trading as I’m sure you are well aware. This leads me to my point/ question, is there any software or web-trading application that you know of that I could use in a demo format(free) where I can practice tape reading and order flow in the hope of implementing same into a workable and potentially profitable trading strategy.

You are a legend and industry leader assisting so many people around the world with your publications, online tutoring/mentorship and social media communications. Your guidance is invaluable. If there is any way you can assist me with this issue I would really appreciate it.

@MikeBellafiore

An interesting observation about the traders that have been successful at our firm is that they all can read the tape and use it to make trading decisions.

You might hear statements from new and struggling traders like:

  • “You cannot read the tape these days.”
  • “The tape is not helpful.”
  • “HFTs have made reading the tape impossible.”

Our experience is that those who make the statements above do not succeed as intraday traders.

So excellent job by your working to improve your Reading the Tape skills.

As I say often, we are one firm, trading in one location, during one moment in time, trading our style.  I do not mean to suggest those who cannot Read the Tape are not smart or cannot become good traders.  What we have observed however may be meaningful for short term traders.  Perhaps if you cannot Read the Tape your thinking skills do not match that which is required to intraday trade.  Certainly the data is clear that if you cannot Read the Tape at our firm you will not succeed.

Here is a software resource to consider to improve your Reading the Tape skills-

Thinkorswim:  thinkOnDemand lets you replay any trading day at any specific time. The data is real time data.

Also consider recording your screens during trading hours and watching back the tape of important trades.  This is an exercise we use internally to help new traders improve their tape reading skills.  And we watch the tape as a group on Fridays and point out important information to newbs.

Finally here are some related blog posts on Reading the Tape from us…..

SMB Reading the Tape

A question on Reading the Tape and Skill Building

How Reading the Tape helped me play the bounce in LULU

Reading the Tape questions and trading from the Middle East

Reading the Tape in multiple time frames

*no relevant positions

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