How to Use Reading the Tape to Make a Simple and Profitable Large Cap Stock Trade

In this video, learn how to use Reading the Tape to make a simple and profitable large cap stock trade. Two firm traders do a fantastic job breaking down a trade in Pfizer, where they spotted important information from Reading the Tape. Let’s get to work on sharing these important trading lessons so you can grow your trading account.

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in this video learn how to use reading
the tape to make a simple
and profitable large cap stock trade hi
i’m mike bella fury co-founder of smb
capital and we’re a proprietary trading
firm
located in midtown manhattan and i’m
also the author of the trading classic
one good trade
and the playbook click our subscribe
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videos they’re producing for you
in the trading community in this video
two firm traders do a fantastic job
breaking down a trade advisor where they
spotted important information
from reading the tape let’s get to work
on sharing these important trading
lessons
so you can grow your trading account
this trade we’re going to be showing is
for pfizer
the real reason we were looking at this
why it was in play today was because it
gapped up off
news that the government would be buying
600 million um vaccines
from pfizer for covid so naturally this
gives it a lot of extra attention volume
and range which makes this um
a really good trading vehicle off the
open and also
on monday we had very similar news in
pfe
that they had secured or secured a
contract with the
uk government for something like 30
million
doses of their vaccine and we saw the
same action of gapping up in the
pre-market
and then being quite weak off the open
so keeping that in mind contextually
that might be a trend with this stock
yeah we can see we open up below this
pre-market range
that it was holding so we’re thinking
some weakness here
so we’re gonna get our first somewhat of
a consolidation or buyers
stepping in um so you’ll see we’re
holding this like 3811
well not really breaking down and we
probably should have come
down through this level because we
tested it on that opening candle
if it was going to be really weak
especially
with respect to the size of the gap the
fact that it’s holding up is not
you know overwhelmingly bearish at all
even though it is below opening print
cnc there we just bounced off 3811 all
the way to 3816
with a large size on the bid at 3816.
so that’s pretty significant definitely
shows there’s someone there trying to
buy or at least hold it up
so come back down to this 3810 level and
don’t don’t break it again
so thinking
still open to either side of the trade
but definitely know that this is an area
of contention now
and that there’s buyers and sellers on
both sides so just seeing
where it reacts and see kind of which
way we get a range break if at all
so this is important here we see we’re
testing under this 3810
so if it were really weak it would have
stayed under 3810 there
but instead it comes right back over
again people buying it up
so definitely not trying to start a
short position here
because kind of tough entry to hit that
breakdown which
already looks like it failed so and no
clear
resistance level from above to easily
play off of
and you see here we push above 20s with
relative ease
so then the top of the range from the
morning open was pretty much like 38 40
38 42 so we’re gonna see how it reacts
into that level if we can even get up
there to the top of the opening range
since
we have some buyers coming in and we see
3830 had some size on the offer
and it just gets taken out so that’s a
really good sign this is still moving to
the upside your
bids are stepping up
and moving quicker to the upside than
we’ve really seen the stock move
directionally all day
yeah this is i mean the biggest move in
a minute candle so far so definitely
shows confirmed volume to the upside
but we do see some big size coming up on
the offer flashing
yeah so now we’re watching how it reacts
at the top of this
this pre-market morning range or
sorry opening range not the so we saw
that 38
like 40 42 started to hold with some
size on the offer
so if this is really bullish we probably
would want to
hold in these 30s and break up through
that level that was clearly
a resistance in the 40s
so what we’re kind of looking for here
what we’re going to be showing on the
tape is there’s
a very large and consistently held offer
at that 38 42
43 and over these next couple minutes
we’re gonna kind of consolidate up here
and keep failing to get over that level
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yeah again still just chopping around in
this range all morning pfp’s been
rather indecisive a lot of volume
everywhere
yeah so right now we’re just kind of
watching this with the information that
there were
buyers at that 3810 but still
um want to see how it reacts in the
3840s so you can still see the montage
right now on the bottom left and
that 38 45 44 is really holding
it just keeps refreshing at 3844
every time not getting over that level
so
definitely thinking there’s a seller
here a major seller
and now there we saw 55s on the offer
so when you see such a consistently held
level like that to the penny
that’s a really good indicator there’s
someone there with actual size
either accumulating or shorting or in
this case
shorting um so
if it gets above that 44 level there’s
really probably room for this to
explode to the upside and then if this
level keeps holding the descent then
definitely probably
room to at least the bottom of the range
again near 3810
exactly and this is where you can start
to be looking for
short opportunities with really tight
risk just playing off this really big
wall of sellers at 45 and 44 cents
yeah this is a trade i often see traders
take on the desk where they see this
really
large held level and i’ll just try and
play
right in front of it and buy like 42s
43s
and something like that and just risk
the scent and if that huge
offer decrements then you get out um
and something that’s nice about this
stock the way it’s trading is we’re just
seeing it being
so liquid at all price levels so often
times with that kind of strategy you
could worry that when 3845 lifts you’ll
get swept
fairly aggressively but you shouldn’t
really be too worried about that in this
name
another thing we’re looking at is the
volume in these up moves was pretty
light
into that 3844 um
compared to the the prior up move and
now we’re getting some actual volume
coming in
on the selling candle so
really looks like that 38 44 held and
sellers
could be taking control um so that would
be
that would have been a really good place
to start a position i get
short with like 42 43 cents
risking just right against that 44 45
and then you just look kind of for this
move to the back of the or the bottom of
the range for
20 30 40 cents when you’re only risking
two three
four with slippage it’s a really strong
risk to reward play when you can notice
these
really strong held levels and again just
at all these levels 43 44 45 just so
much on the offer
you can see all the red prints just went
through there on the times and sales
bringing us back
under 40s
and keeping an open mind on these trades
is important i know
from talking to mike this morning
mike bella fiore he was trading this
originally long um but then saw this
really
large held offer area at 3844
and then got short and was using that
trade i was talking about just risking
right against that level
so this is a really textbook example
of trading off of that and why we want
to highlight this area
for the stock on the day because
there’ll be a large reaction for the
rest of the afternoon after
seeing that there were sellers that
really wanted to hold this
yeah again off keeping an open mind you
know it’s important to acknowledge our
ball is over 15 on the day so
with so much volume and such a big
contest going up here at the in the high
40s
we can kind of expect price to really
extend from whichever direction it picks
all right it’ll be this this it’ll be no
no it’ll be this candle or the next i
believe or it breaks down
is that like 39 yeah so then we see
come to the bottom of this range the
3830s quickly give out where there was
some buying to hold it up there
so if you were in short from risking
against that held offer level you’re
in the green now by a good 15 20 cents
so and in all likelihood if you’re
taking that strategy
we shouldn’t see price start to grind
back up to that level
exactly yeah this should work in your
favor almost instantly and you can take
a little risk off in an area like this
where you know it could get supported
because it got supported earlier there
in the 38 tens but
there’s no reason to take off all your
risk as your short is definitely still
working you know there were people
holding this down
in the 38 40s last time it gapped up on
vaccine news as graham said earlier
it did open week and had a weaker day so
that’s a little bit in the back of our
mind that
that’s a similar trend we’ve seen and
traders might be thinking about that
on longer time frames we’re trying to
maybe swing this and things of that
nature
so you see come into these 38 tens want
to see how it holds here
realistically we want to see it get
under 3810 and hold under there
because earlier in the morning we got
under that 3810 looked like it was gonna
break down
and then once we got back over that’s
where we saw that up move to the 3840s
so this is going to be weaker than last
time and really get that failed
breakdown now we want to stay under
38.10
so now we’re under it we can see how it
reacts we’re a new world of day now
huge offer bid there 3805 if that gives
out then that’s going to be even more of
a wash
they’ve got 350 on the bid there
so i would be holding here looking for
that wash out
to cover some more
so we’re under 38.10 so now we’re really
hoping
to see this hold under here
we see that big better is gone now yep
yeah we got right to 38 10 didn’t test
over it
and came back down so this is looking
a good bit better but he seems to
refresh down there
and then
and then this is the real
part of the move you’re looking for
where it breaks under that
major support gets extended now you know
anyone who was buying for the morning
dip
is now um in the red uh anyone who’s
trying to buy the breakout
is in the red so uh you know you
definitely have people that are a little
bit underwater now anyone trying to take
this long off the positive news and
you see very large bids there yes yeah
that’s important there’s 38
if that can give out then you definitely
know
there’s less people holding this up and
you get a wash under
and that’s really the biggest part of
the tape we wanted to highlight
because it gives it a weaker trend on
the day and we’ll see
throughout this morning session it did
continue to fade off as sellers just
kept pushing it down
maybe major institutions who needed to
accumulate
because changing fundamentals of the
company based off their new
cash flow that they’ll be awarded from
their vaccines and things of that nature
they could be seeing this as a little
overvalued on the pop and
that could have been someone big that
was holding it down in the 38 40s
definitely and even if you do just look
at this as 40 cents from
remember from a risk reward standpoint
this is a pretty fantastic trade
if you’re risking four maybe five cents
on this yeah you can
really scale in pretty significantly if
you know how to manage it
yeah that’s an easy three four times
risk reward trade well not easy but
that’s a really solid
three four times restored trade where
you have a clearly defined risk level
that lets you like you said size up
accordingly if you
see your variables that give you
continued confirmation to add in more
size
so if you just want to i guess skip
ahead now gram maybe like
through most of the morning i mean just
kind of see the continued
fade yeah the rest of this is just
knowing how to sit on your hands for a
trend and letting it work for you
um yeah cnc under that 38 level
kind of got there held under came out 37
80s and then it’s just a matter of if
you’re trying to play the trend on this
throughout the day you’re probably
shorting pops that hold under major
levels like holding under 38 there and
covering your risk on the way down and
just sizing appropriately
playing the trend so that’s this is just
a really good example of how
that that information you gather in the
opening half hour
can really lead you to spot the bigger
trades and the bigger trends and
who’s really in control of the stock and
just from that five minute
period of watching the tape closely we
gained so much information that showed
us there were
a lot of sellers really holding this
down and it can lead to
definitely a really solid trade hey go
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