An Introduction to How We Use Reading the Tape to Make Profitable Trades ($TWTR)

in this video we're gonna learn how reading the tape can be used as an effective indicator perhaps the most effective indicator we have is active intraday traders to make quality risk reward decisions hi I'm Mike bellifiore co-founder of SME capital and I'm also the author of the trading classic one good trade in the playbook if you want to work on your reading the tape skills you want to improve your rating the tape skills check out this video we've got some really great examples of how reading the tape can be incorporated into a larger trade thesis to make really terrific traits [Music] so Eugene you're visiting us from Russia how was your experience training with us here this is the best experience of my life like I learned a little things here I met display best-rated traders here and they also like share with me their lessons they tips so it was very great alright great so you got a chance to interact with some of the traders that we talk about a lot here yeah yeah I spoke to mostly like all of the traders here senior senior traders yeah we went to some of them hockey games and yeah it was a great great experience and what did you learn here that you didn't know prior actually about more I thought that the amount the amount of work you have to put in in order to be great to me now it's it makes sense why all these guys are the best because the amount of work they do every day all these meetings it's I couldn't imagine before and now it's it's it's obvious it's obvious why they are good because I don't know anyone like before who was making so much work every day and I believe if he do it each day for a year two years you inevitably become great trader especially if you have a support from these guys because they they shared with me all the chats G chats and yeah they told me that if you have any questions I will always be able to ask them what do you think was the most helpful part of the training for you for your trading I think it was just understanding that it's it should take a kind of understanding that you at the beginning gonna be the worst trader that you'll ever be and you have to admit that and you have to cut your size better try better start trading on demo account and unless you you get profitable like three days a week at least in because it doesn't make sense to lose real money if you know that you're gonna be you're not gonna be good at the beginning and you you started trading lost a couple of lost a couple of dollars and then start to take a little bit more seriously and engage in training what advice would you have for your if you go back and do it again all over again and how would you do it would you do it the same way that you did it would you do it differently absolutely not I would start trading with paper trading account yeah and only after I become more and more consistent I would start trading real money okay good and then going forward what are you trading goals from here can we expect from you next and next I'm gonna try to become better every day I'm gonna despite that I'm going back I'm going to follow and post my playbooks every day so I'll be using that SMB forum every day before I go to bed you guys like I go through all of your playbooks that you post so it's kind of already a bear routine so I said alert on my phone that rings and I have to go and watch your playbooks so post mine and yeah I think it's I'm doomed to success No and so you are you are responsible for the great picture and great video that we put up on our SMB capital Instagram account a picture of the two of us so thank you for that that's it's actually great I don't know if you guys have you guys seen it yeah and I have it in my I have it in my office there's a great video though of how it actually was done on an Instagram page the process that the artist went through so that is it is on my office until the end of time thank you so thank you I really enjoyed that and so one of the things that you learned in your training with us is to do a playbook trade to build your business through playbook trades so let's let's take a look at one of the play books that you did and specifically let's focus on how reading the tape can help us to make some good decisions some good risk reward decisions as a trader if you want to learn three real-world setups that our traders use including the simple setup that we teach all of our new traders and the setup that turned one of our traders into a seven-figure big money earner check out the free webinar that we're currently running just go ahead and click the link that should be appearing right now at the top right hand corner of your screen that's going to open up this free registration page in the new window so don't worry you're not gonna lose this video you're gonna learn more in a couple of hours from this trading workshop then from years of online education guys this is Detroit I want to share with you from the last week I was telling you that I saw it like it was a really obvious trait to me because I spot the real really big seller on the tape but now with the help of our month he told me how to download upload videos to our play books so now I can show it to you so this Detroit on the last week this is the big picture I found that before there was the similar volume or 990 millions on this candle so and after the earnings report on Twitter we broke below that level and I was assuming that it it will continue to fight the other days so previously so Twitter missed the earnings on q3 as well as they lower the guidance for q4 and Morgan Stanley they lowered the target to $32 so average volume was fourteen point 56 million arvo 1.9 ATR 1 point - nine short flow was 3.34 percent institutional ownership 74 and 59 inside our ownership 386 and sheriff Lewis 745 point 13 Millions all right so let's go back to that it so in terms of a news catalyst anyone have an opinion as to what really made Twitter go down so much was it just that they missed on q3 or q4 was it something more specific in more detailed they've got a bug in their advertising engine which is essentially their growth if Twitter is gonna grow they got to get that right they got to sell ads that's how they're judge that's how Facebook makes money that's how tor makes money that's how they grow and so they've got a problem with it and they actually haven't fixed it yet and the streets not sure how long it's gonna take for them to fix it but they're shooting first and asking questions later so it's not just that they missed on q3 and they missed on q4 it's that they've got a problem with their core business and that's got to be in your summary for the intraday fundamentals and you want to be when you're building your playbooks you want to be marking that so you can go back and check that when you see something like that again with a company whose core business is suffering and and and that matters so this is technical analysis and game plan for Twitter so descending triangle five-minute time frame is another check in my favor for a short possible scenario is to trade the stock so first one if this stock pops up in the morning I'm happy to scaling from 3050 to 31 with the stop loss before 31 and the second is if the stock drops on the open below 30 in Holtz I will get short on consolidation break or lower highs okay so one thing I want you guys to do also is to be open-minded you want to have long san there as well I agree with you that it was more likely for it to continue lower and I understand this is a continuation trade but just we're always getting the habits of this is a great long this is great short what I liked it you did right there is you came up with multiple scenarios for where you would think about getting short and and and and you were specific you were specific you were specific you were specific about the areas where you were gonna think about getting short you were game planning where you were gonna get short that is a best practice for excellent rating so on the open you can see that the stocks struggling at 30 above 30 60 so no prints above the absorb I'm gonna highlight in on the tape so I added Tier one here weather is just a risking the high and just a little bit later yep I highlighted it here you're gonna see the crazy volume so it's 39,000 366 shares so I started with paying close attention at these levels and I saw another big brain and that's where I added tier 2 risking the eyes so this is what's the first part he offers it couldn't hold below a bit above thirty fifty as well so when went down this is the second part thirty thirty was the previous day close so that's where the the battle began so pay attention to the tape here selling orders are all observed a around thirty thirty area so I decided to cover and put a cell stop below the area just for a separate rate you're gonna see here that there's gonna be massive volume as well but the stock won't be able to go ahead light it here as well so first big greens and oh here we go twenty thousand ten thousand prints and it couldn't go it couldn't trade lower than thirty 30 and after big wine orders starting to come in so at this point I already covered the entire trade so you're saying the big orders are coming in they're trying to push it lower they can't yeah that's a sign of strength and so you're going to take off your shorts or make a trade decision here because of what you're seeing on the table yep good yep that's what I did and I just placed the lowest level below 30 that's the reason to cover for it's a legitimate reason to cover trying to push lower increase the volume can't actually find a new price yet trade decision they're so good so yeah this word I entered a new trade and the third part is was very obvious as well that's the moment when thirty thirty level acts already as a resistance and you will be able to see as all prints that come in to thirty thirty area they all get observed eleven thousand seven thousand it's just another ten thousand so and it just can go higher so I added tier two right here and after big sellers selling orders they started to coming as well so after it couldn't trade higher so to me it was the first time the tape was so obvious and along the trade it was to me it was related to to make decisions because the seller he didn't try to hide his hand it was to me it was obvious when he was just hammering this dog with 30,000 shares 40,000 shares and the next it was my trade manager when you're looking at the tape you're looking for things that stick out yeah stocks trickling up trickling up trickling up it's getting heavy it's not able to trade higher you're seeing thickness on the tape can't push higher that's a signal you're seeing it you're seeing the weakness your thesis is continuation to the downside we're now using the tape when we see the weakness to enter and where we're letting it as you said I think that's a great word let it be obvious watch watch watch observe observe observe now it's obvious that there's way more selling right here that there hadn't been as I was watching the stock trickle trickle trickle up to this area short now it's pulling in is pulling in it's pulling in now it can't push below a lower price it's obvious that it can't actually trade below this price when it trickled down trickle down trickle down it's different it's it's remarkably different it's markedly different at this price than all these other prices trade decision okay and then later same thing it's markedly different at this price at this level that I'm seeing on the tape the order flow is showing me resistance resistance resistance more weakness my weakness my weak it weakness and I'm seeing it and it's obvious and so now I have a trade decision it's foreshadowing that there's a big seller that's stepping in and there's probably more to go with that seller so I'm gonna jump in and make a decision based on the order flow you know the oldest and most time-tested of all the indicators since since we've been playing this game and since they started this game is the order flow is reading the tape it's the best predictor of what's going to happen next is when we see that there's obvious more aggressive buying or there's obvious more aggressive selling and we can we can make a career out of that all right you can make really good money looking for those areas looking for those signals okay particularly when you're doing so when there's a news catalyst that makes it more likely for the for there to be continuation okay so there's more likely there's it's a more like a snare for Twitter to continue to the downside and now I'm spotting weakness on the tape it's more likely for Twitter to go down now I'm spot at spotting more weakness on the tape okay it's not going down past this price let me lock in my profits make a trade decision move on so that's a really strong use that's you said that really really well I'm looking for it to be obvious I say see it okay that's what I mean when I say see it it's obvious it jumps out it's different than all the other prices yeah this is a straight trade management so as I said I saw a heavy selling above 360 so that's where I sure it's here one another like my message seller and that's where I spotted a that all the selling orders get observed by a buyer and another and I think I I didn't mention that there was also a bidder with a thirty nine point five thousand shares on the bid so yeah I didn't want to risk in my decision to get out of the trade and after to join a new one after they the battle some some somebody wins so yep so actually this is arrows it's not correct I added here too short cover a little bit and get stopped out before this level at this at this time like I was thinking that it the trade was done I didn't plan to trade more but next candle I noticed again a big sale seller he stepped in again so I added thirstier here and this is was the moment when at thirty thirty so the all buying power was absorbed by seller so that's where I added tier two so I covered here and here the first year and on the high volume below thirty because was a daily level and psychological level I covered the entire trade another reason was that it covered everything because of the 11:00 a.m. meeting so I didn't want to risk so this is the execution bubbles so this was the checklist I thought this is well done this is another good best practice to be thinking about as to whether or not you should making a trader and you're you're in a good trade whew so you run through this yep so stoking a strong downtrend on multiple timeframes weakness on the open huge market seller orders 2040 case on the open and stock holes below give up during the day and stock has a potential to go full ATR and the risk reward was above three that's what I learned from from Kenny from one of the senior traders to to have checklists the Train okay alright good job good good use of the tape right there very solid and we are gonna we're gonna miss you I know you have to go home and see your family and friends and and it's great to hear that you had had a good time and a good experience but I will just tell you that we've really enjoyed having you with us and I know the in the room have enjoyed having you around you worked really hard that's always a pleasure and I agree with you that going ahead you're gonna really find out how good you can be as a trader and and look forward to hearing some great things from you but seriously you did your work you did such a good job reaching out to other traders in the desk you know I think we had to get you a different kind of pass because you wouldn't go home at night we had to get you like an extra hours pass it's you did a really good really good job of role modeling for other independent and new and developing traders out there about the seriousness and diligence that goes into building a trader into consistently profitable so thanks for all your work and spending some time with us and we really enjoyed it so now it's your turn are you going to work on improving or reading the tape skills so that you can make better risk/reward decisions as a trader or are you going to spend the time like Eugene did creating a checklist before each trade so you're making quality trade decisions we want to know what you think we know we want to know what you're going to do next let us know in the comments section right now

Channel: SMB Capital

Views: 121,704

Rating: 4.8252907 out of 5

Keywords: reading the tape, reading the tape day trading, reading the tape smb, reading the tape smb capital, reading the tape stock market, reading the tape stocks, reading the tape trading

Id: miTB6nnASkY

Length: 21min 44sec (1304 seconds)

Published: Mon Nov 04 2019