How to Read Level 2 Time and Sales, Tape Reading - Day Trading for Beginners 2021

level two and tape reading there are some traders who swear by it religiously and cannot trade without them and there are also traders who think level two is full fluff and therefore they never use it I'm not here to tell you whether you should or should not be using level two in the tape as part of your trading but what I will do today is breaking down what level 2 and time and sales are how to read it and what exactly you should be looking for in there after watching this video you'll be able to decide for yourself whether you should be incorporating reading level 2 and the tape into your own trading style this was a highly requested video by you guys my loyal followers here on YouTube so a lot of time recording and research went into this if you wouldn't mind I'd really appreciate it if you could drop a like on the video thank you so much my friends okay so that starts with the basics first this is a recording of my execution platform - traitor a recording of the stock ua vs obviously over here this is the stock charts intraday charts for 1 minute this window where you see all the colorful blocks this is the montage window also known as level 2 on the right side where you see these these numbers the white agreeing on the red this is timing sales also known as the tape so let's start with level 2 furs number 2 over here the left column is basically the buyers on the pending orders waiting to buy or cover the stock at a particular price the right-hand column these are the asks or the offers so these are orders waiting to get filled to either sell the stock or short sell the stock so basically just remember left-hand side of the bids the buyers the asks or the offers of the sellers let's start with letters these are abbreviations for the exchanges so you have MX backs Orica these are different change routes that the orders are coming from and the price you can see 391 over here 390 389 so these are the the orders that they are waiting to get filled to buy the stock so these are the buyers waiting to buy the stock at 391 right they're waiting to get filled and 390 s up some people who want to buy lower at 389 388 and the same will ask the these are the orders pending to sell the stock at 393 394 395 and these numbers the single-digit numbers these are the size of those orders so they are in hundreds right so the 4 stands for the spire wants to buy 400 shares to 200 0 is an odd lot so that'll be an order size less than 100 and 102 this is the pivot pretty big order right right 102 so that means the seller is trying to buy 10,000 shares wait there do the math right if you add to 0 yeah I did and I'm not all Asians can do math okay so 10,000 shares bidder at a CD and the same for the sellers right so 26 so that says no a sell order for 2,600 shares they are all in this order and us for the colors right you see these really pretty colors the yellow the green blue they don't have any meanings right but they are actually really useful when you want to see if the buyers or the sellers are stacked and it helps a lot to group them together when you're trying to read it on the fat fly like really fast you know like in real time and we'll talk more about that later on so don't worry ok if that's say if I'm trading right now if I place an order if I want to buy let's say I want to buy the stock at 389 all right let's say I want to buy a thousand Cheers if I click buy pattern right now this is recording so I can't buy if I click this right now then my order is gonna show up with the Arrancar the Arika exchange for you see me showing up a level two pending order 389 if I want to buy a thousand shares you'll see ten over here and the same if I'm trying to sell if I want to sell a thousand shares at Erica then you see my number added up to this Erica exchange right here you see 390 and this number will become fourteen instead of four keep in mind all the orders on level 2 they are pending orders that haven't been filled yet Penny orders to either buy or sell and if my orders are pending once they get filled you see them on the tape the time in sales so these are the actual transactions that has been filled and gone through in real time okay so let's talk about time and sales or the tape right now so these are like we talked about once an order gets executed on level 2 then they show up on the tape right so you see 388 that means the order got filled on the bid side right and you see quantity these are the actual number of shares that's being treated so you can see at this exchange they traded um you know somebody do the math really quick a thousand and fifteen shares right on the bedside and the greens are basically the orders that got filled on the asks right so somebody bought and sold on the ask 389 for two hundred shares of ARCA so these are the orders that's being filled so you have the price the quantity which is actual share size in the exchange you also have the option adding in the time to see what time the the orders got executed at but for me I had that hidden because I don't want to see too much information this is all I need the price the quantity and the exchange and for me when I'm trading I care more about the tape rather than level two because I want to see the actual orders has been filled and whether they are gonna being filled on the bedside or the ask right because these are the actual transaction that's gone through in real time again the stuff you see all the numbers and the orders from different routes on level two that you see they're just pending orders waiting to get filled a lot of times especially when you're trading large caps you see a lot of L goes and hft high-frequency trading on level two so that doesn't really help anyone can cancel their order that's on level two and pull their order any time and that's why you see a lot of orders they come in and disappear really fast whether they are real or whether they're just there to spoof the sellers or buyers we don't know right and on top of that it's very easy to hide your size on level two so maybe I'm trying to sell 10,000 shares but I can have the order pending on level two just as one hundred shares so that's why you see a lot of fake numbers on level two and why people say there's a lot of fluff on level two and we'll talk more about that later on so I also want to talk about adding and removing liquidity so if I'm trying to buy the stock you Avs there's two ways for me to get filled I can either sit on the bed on the left hand side and wait to get filled at 389 or 388 and under and that's called adding to liquidity right because I have to wait and to form n shares for somebody to hit my shares or the other way is I can hit the ask and get filled right away at 390 and that's called removing liquidity because I'm trying to get filled right away you know I'm removing the shears available in the market and generally speaking when you are removing the quiddity it's more expensive and there's more fees unless you're one using one of those flat rate brokers like I think like fidelity or think or swim used to be like that but when you add in to liquidity you get certain rebates or you get discounted you know commissions with something like that every broker is gonna be different but for the brokers I trade with it's cheaper for me to add to liquidity but a lot of times I'd say you're training breakout right away a lot of you or hit the ask because if you sit on the bed you won't get filled right because breakouts it happened so fast if you want to get in right away you have to ask and vice-versa let's say a penny stock just announced an offering and I'm trying to get filled on the short side and that's where you're here short Elmer is saying that they are hitting the bed or smashing the bed because they need to get filled right away they are removing liquidity it's more expensive but a lot of times it's worth it to do so so a lot of people are always asking what exactly is a secret to tape reading and understanding what's going on in a level two I feel like I'm always staring at these numbers like I'm in the matrix how do I wake up like neo in the matrix so the secret to master in reading level 2 and time in sales is just to keep reading it that's it ok just kidding I'm back you know I won't leave you hanging like that yes I can discuss what to look for in level 2 and time in sales but it's true the only way to get good at reading l2 and a tape and piecing together all the information really fast when you're trading is to hit the like button and actually just practice reading and staring at the tape and that's the reality there's no shortcut here again it's all about the screen time you're putting into the market so these are just a few things you want to look for when you're trying to read level 2 in the tape when you're trading again it's important to have them placed beside your charts as a confirmation right so the colored blocks that we talked about earlier helps you identify whether the buyers and the sellers are stacked what does that mean so that means around especially at the $4 resistance area you want to see so right now we have buyers stacked at $4 right may see a huge block of yellow right and they are bidding at $4 and you see the size ideally if you really wanna see if $4 can support you wanna see big orders stacked at $4 so right now we have like 2,000 shares 16,000 thirty-two thousand shares 1,000 shares at $4 you wanna see if it starts to hold and you wanna see if you know we actually break about $4 really clean and start to hold above it because if the owners start to come in around four or five you can see four or five there's the sellers right now they're sellers are stacked at four or five and these are pretty big orders nine thousand shares nine thousand shares 2000 shares this is probably you know it's probably not gonna hold the 405's area and again these are just the pending orders they can be here a stacked just to you know spoof the buyers or trying to drive the price down or these can be actual orders trying to get filled people trying to take profit on a breakout or they are trying to you know short the stock down and also noteworthy that $4 down here the bid is at 403 but you see four dollars here there's a pretty big order 50,000 shares so it could mean they're trying to support the $4 level again this is pending orders so they can be trying to prop the stock up around $4 whether we hold or not we don't know until actually go through on the tape so that's why you want to have the level two in a tape placed side-by-side otherwise strictly reading a level two doesn't really help that much in my opinion of course and that's why I really hate using the level two and think we'll swim because there's no color blocks it's very hard for me to identify whether were no stacked on the buyers side or the sellers side without these color blocks this is why you know - trader platform if you want to take trading seriously this is the execution platform to go with really fast data really clean level - for you to read and a tape hands-down the best trading platform if you want to try out - trader for two weeks for free I have a link for you to sign up down below and you can see right now we're not even supporting the 370's well actually getting pretty heavy right now and you only also want to use the candlestick charts to confirm a small you can see we're trying to hold the 370z area so what happens is for example there's an ask at 374 right now and showing zero right when you see zero this is supposed to be you know a size that's less than 100 shares but if you see you know the order going through on the l2 it's supposed to be less than Cheers but if you keep on seeing prints going through on the l2 you see tons of greens at 374 and the size is a lot bigger than 100 shares that say you know if you see mm shears going through three thousand shares but this ask of l2 is not moving then that means this seller is hiding their size they definitely have a lot more than hundred shares at 374 to sell so that's kind of what you want to look for whether there is any bit or asks that's just sitting there and not moving that's where you know you know whether there's a hidden buyer or hidden cellar for me I never use what I see strictly on the l2 in the tape for me to make buying or selling decisions I place more emphasis on the chart and how we got here right so right now we're really heavy around the 370z area the 370 support we won't know if I start to breakdown if it doesn't then we'll probably do not jump you can see now 370's we're trying to defend that a long time earlier right because on the charts over here you can see 370 was prior support and also over here so what does that mean if we're testing it right now again for like the fourth time if we don't hold if we don't see you know buyers start to bid it up at around 3:00 70s this stock is gonna fall you can see tons of prints going on I'm going through under 370 no it's all Reds going through only Reds transactions being printed 365 370 and we're not even holding 360s this is how you cook you know the tape is heavy and it's not just because I'm seeing it right now on the l2 it's because I know on the charts in the prior areas they had supported three 70s over here over here and earlier just I guess 10 minutes ago over here but if we're not holding that again the stock is gonna go you know it's probably gonna get dumped you can see this is really heavy tape all the prints they're trying to support a 350 s right now when I hold in 350 s oh my god is a dump right now this is heavy dumping it's like a perfect sample dump actually and you can see once we break down 370 the stock literally just plummets this is why you don't want catch a Foley night the stock is literally a 3/10 right now we're probably gonna get halted and we're gonna bolt right now so this is really good learning material right here you don't want to just base off your trading decision and what you saw on the l2 and it take you know those are pieces of information that helps but I always place more emphasis on the chart and knowing how we got here is important to me so that's why I really recommend any new trader to you know understand charts reading and reading price action first and foremost before spending all the time trying to study and master tape reading and the l2 those things definitely help but that shouldn't be the only thing that drives your buying or selling decision right so events saw a big buyer at 350 earlier well if they pulled a bit right and what if you know I tried to catch the support at 350 in the stock literally just plummet after breaking down 370 so reading a level 2 and time in sales or the tape is a skill that needs a lot of time and repetition in order to mature all that information definitely helps but it's not like the level 2 in the tape is the holy grail to day trading they are just you know useful pieces of the puzzle there's so much fluff on l2 and you could easily read the level 2 and the tape wrong as well so that shouldn't be the only thing that's driving you're buying or selling decision so hopefully this video really helps you out and answer some of your questions on level 2 and time in sales please remember to drop a like and the bottom of the video especially if you want to see more like this thank you guys for watching as always and the Humboldt trader and I'll see you guys next time hey guys thanks for watching I hope you enjoyed the video and the bad jokes if you want to see more day trading content make sure to subscribe and follow me on Twitter and Instagram for more if you'd like to trade with me daily and get my free weekend watchlist and trading journal make sure to check out the links below for more resources stay green stay positive and I'll see you guys next time

Channel: Humbled Trader

Views: 476,409

Rating: 4.9630537 out of 5

Keywords: ricky gutierrez, warrior trading, beginner day trading strategies, day trading for beginners 2021, how to start day trading in 2021, best trading broker for beginners, tim sykes, how to read level 2 and time and sales, how to use level 2 and time & sales day trading, how to read level 2 quotes, how to use level 2 market depth, best day trading platform, how to read the tape day trading, how to read level 2 for beginners, how to use level 2 day trading, how to read time and sales

Id: g6WZyHwd7oY

Length: 17min 48sec (1068 seconds)

Published: Wed May 13 2020