Andre 2

by Andre Andropolis - Short-term trading strategies -- Using 'Tape Reading' to Identify trade set-ups

I usually wait to the market opens before entering a trade to see how each stock is acting but there are times when I'll consider buying a stock in pre-market.   I like to scale into a stock as the trade moves the direction I thought it would.   As a particular stock rises in price, I will buy smaller blocks at higher prices until I reach the position size I want.   As I scale into a winning position and the stock continues to move in my favor, I may set a break-even stop loss if the stock has moved far enough away from my entry.   As these winners continue to move in the right direction, I'll continue to move my stop or trailing stop up according to a number of factors that include: my risk tolerance, how the stock market is acting, how my stock is reacting to the market conditions and any news that the company released.

 

I use tape reading now as an indicator to identify a stock that is about to make a move before it does.   To do this, I want to see the majority of trade executions(buys and sells) occurring on the offer price or the 'Ask.'   We want to see traders buying immediately with market orders and not waiting for their specific bids to get filled.  These traders have a mindset that basically says that if I want to participate in this stock before the big move is made, then I need to enter immediately.  Traders that are buying the stock on the offer price are saying they're willing to sacrifice the bid / ask spread in exchange to enter the stock