Home > Lessons from the trading floor > Day Trading and tape reading

Day Trading and tape reading

Day trading or full time online stock trading is a business of waiting for the probabilities to be in sync. Today so far is a day to be sitting on your hands. New stock traders have a hard time grasping the fact that some days there is very little to do. They are in the dollars per hour mentality. These are the days that you want to keep your money in your pocket because most trades do not follow through.

Today there is the Blackstone IPO, Russel re-balancing and a summer Friday. In order to truly run your trading as a business and not a hobby, you need to have a plan. Included in that plan must be the scenarios that the market and your stock must posses in order for you to be committing capital to a trade.

A part of the plan must also include volume recognition. Is volume easy or difficult to get a grip on? Is price action doing what it is supposed to do based on reading the tape for significant prints? For example; if most of the buying urgency as seen on the tape is prinitng at the ask, does price follow through with light volume pull backs? Or is it a day like today where you would swear price is floating around like a balloon on a windy day with no rhyme or reason.

Good trading conditions are effortless, there should be no doubt which side you should be trading from. If this is not the case and you are constantly switching sides, go for a walk or play a round of golf. The market will be around tomorrow. Our instructors are telling everyone to sit on their hands today until there is easy money lying in the corner. It is there, just need some patience.


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