February 4, 2011

Pace of Tape Indicator measures the Speed of the Futures Markets we are day trading

–          Pace of Tape Indicator
o    Measures the speed of the orders coming into the market
o    Does not count contracts
o    It is not a vol indicator
o    Treats a 10c trade the same as a 1c trade.  It simply counts the trades coming into the market
o    Very simple indicator
o    Three colors:  red/yellow/green
§  Red = slow
§  Yellow = medium
§  Green = Fast
o    My focus is not so much the color, but the disposition (rising or falling)
§  Rising Speed = im looking for a trade
§  Rising Speed = hold my trade and look for more profit (let it run)
§  Falling Speed = im avoiding a trade
§  Falling speed = im taking profit or looking for a price reversal
o    What does rising speed really mean?
o    More people are participating at that price level
o    Speed slows down = fewer traders = less interest in this lower price = price will rise again very soon.
o    Speed rises = more traders = they agree with rising prices = prices will rise 
          
–          What do I mean by looking for the 2nd push, when we need more confirmation?
–          Sometimes support and resistance is too difficult to break, and when we do finally break it, it often comes back to stop us out
–          Im looking for 2 pushes through overhead resistance/support below to qualify entry on a specific higher risk trade.
      
–          White on the time and sales, am I watching price or the volume?  Both
o    White background = trades at the HOD/LOD
o    White text = trade between the bid and ask
o    Watch the video on the blog about tape reading for more info on how we use them
–          Day trading the euro
       
–          Swing trading with this method
–          Same patterns, the same rules, and the same trade management
–          The only difference is the timeframe we use.
–          Rather than using 4/13/21, use the 21/34/55/89/Daily, Weekly, etc.

    schooloftrade

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