Read the Tape Like a Pro: Timing Entries with Level 2 Data
Published 2021-07-09
NEW: Tape Reading Level 2. Learning to read the tape is an old-school trading strategy that still works to buy the right stocks. Today we discuss Level two, time and sales, bid ask quotes and how we use tape reading on price carts to identify order flow.
Introduction (0:00 - 1:18)
Pete introduces the concept of "tape reading"
Overview of the topics covered: understanding order flow, timing stock entries, and how stocks move
Explaining Level 1 & 2 Data (1:18 - 4:30)
Definition of Level 1 (bid/ask prices) and Level 2 (depth of market data)
Meaning of colored "prints" (trades) in Level 2
Interpreting Order Flow (4:30 - 8:20)
Active buying (green prints) vs. active selling (red prints)
Yellow prints and indecision
How orders from big players ("deep pockets") move stocks
Reading the Tape on Charts (8:20 - 16:50)
Translating order flow to candlestick charts
Identifying bullish vs bearish order flow
Signs of changing order flow (indecision candles)
Practical Applications (16:50 - 18:11)
Using order flow to find entries
Managing risk by following the "smart money"
Joining Pete's trading community
Section Summaries:
Introduction (0:00 - 1:18)
Learn an old-school "tape reading" technique to understand order flow - the driving force behind stock movements. Discover when to buy stocks by analyzing the actions of large, institutional players.
Explaining Level 1 & 2 Data (1:18 - 4:30)
Dive into Level 1 (best bid/ask) and Level 2 (full order book) stock data. Understand the color coding of trades and what the different "prints" signify for order flow.
Interpreting Order Flow (4:30 - 8:20)
Decipher the market's order flow by reading Level 2 quotes. Green prints reveal eager buying, while red prints show aggressive selling. Yellow prints hint at shifting dynamics.
Reading the Tape on Charts (8:20 - 16:50)
Translate raw Level 2 order flow onto candlestick charts. Identify bullish vs bearish flow through price patterns. Spot potential reversals with indecision candles signaling a tape change.
Practical Applications (16:50 - 18:11)
Apply tape reading to find optimal entry points by piggybacking on institutional order flow. Manage risk by staying aligned with the "smart money" until signs of distribution emerge.
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All Comments (20)
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Thank you for such an informative leasson! Would love to discuss stocks with you more
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Great job, thank you.
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Thank you so much. Have a great Friday.
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Most helpful video you have posted!
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Thanks Pete! "Light Bulb" moment for me in understanding how order flow correlates into the candlestick formation! Starting to see the charts with much more clarity thanks to you!!! Best Wishes...
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PETE nice job of understanding what people are asking and what comments people are making.
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Thank you. Very helpful. I enjoyed this a lot and it helped
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This is awesome, thank you so much!!
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Great video imparted by a great teacher. Thank you very much.
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Awesome.
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Green Prints with price moving up = Active buying Green Prints with no price movement = Distribution Red Prints with price moving down = active selling Red Prints with no price movement = Accumulation. Very simple concept.
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thanks Pete...You explain well. Appreciated
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thank you so much!
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How are you seeing who exactly is doing the buying and selling (like when you said you “see Goldman Saks buying…and then GSCO”)? I never see personal information on who the seller/buyer is on my level 2 data.
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Awesome vid. SUBBBED!!! I recently programmed some indicators to help with the visualization of this!!!
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I've heard a lot of people say that the level 2 can be deceiving because there are a lot of fake orders that get put in that are meant to confuse traders. The idea that you'll see big blocks of trades and get the sense that the smart money is stepping in but it's not a real offer to buy or sell.
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Thanks, Pete -- very informative. I still am not sure what the entry point would be. I normally enter in a buy zone, but if a stock is passed the buy zone, where would the entry be?
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another question if I may. we are always talking about inflow and outflow. if every purchase of a share is accompanied by every sale of a share. then what does outflow and inflow really mean?
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Past bullish performances of a stock don't guarantee a bull run will continue. Just by looking at where smart money has gone, how do you know if its the right time to enter?
