Reading The Tape 101 - Learn How To Read The Tape For Day Trading

I N T R O D U C T I O N T O R E A D I N G T H E T A P E
W W W . B I D H I T T E R . C O M
B I D H I T T E R H O L D I N G S , L L C
Reading The Tape 101
Copyright 2012 BIDHITTER HOLDINGS LLC

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R E A D I N G T H E T A P E 1 0 1
Introduction

Introduction
 About me
 Actively Day Trading since 2007
 Traded for multiple prop desks in Miami and NYC
 Head of training and new traders for Miami Desk
 Became head trader after 3 months
 What to expect
 To learn the basic foundation behind tape reading
 Do not expect to become an expert instantly
 Learning curve, do not get frustrated
 You will get better everyday you watch tape

Introduction
 What to do after watching it
 Read the book that came with it
 Re-watch DVD
 Watch tape from Tape Reading Archive and/or live market
 Email me if you have any questions
 Contact information: jose@josecasanova.com

Introduction

What Is Reading The Tape?

 Art of studying pure price action in real time based on
the Level II box.
 Gauge psychology and imbalances in supply/demand
 Leading indicator
 See real time where there is buying/selling at a level
 Improve efficiency, risk/reward, and catch more moves
 Helps you lower risk

 Tool of trading veterans
 Gives you an edge over chart traders
 Brings consistency to your trading
 Shows available plays that charts don’t
 Can determine where a stock is going to go

What Tape Reading Is Not
 Not a trading system
 Not buy or sell signals
 Not something you learn overnight
 Not something that will make you instantly
profitable

How Does Tape Reading Give You An Edge?
 Real time indicator, not based on past data
 Reading real-time order flow
 Go with the flow
 Great entries, lower risk
 Art that was around before charts
 Edge over algorithms and HFTs

What Is On The Tape That’s Not On The Chart?
 See what active buyers and sellers are doing in real-
time
 Notice important levels that there are big battles
 Can follow buyers, sellers, and/or certain patterns
 Get a feel for the market
 Charts are based on past data

Tape Reading is an art, not a science
 Tape reading is not a science
 Can’t just read a book on it and become an expert
 Something you learn over long observation and
personal experience
 Basics are simple
 You will get better over time

Tape reading affects efficiency with entries & exits
 Find great entries with low risk that aren’t shown on
the charts
 Get in front of real buyers and sellers
 Spot reasons for exits that are not on charts

Tape reading affects efficiency with entries & exits
 GMCR Example
 Accumulation not shown on chart in real time

How does tape reading it lower risk?
 Spot buyers/sellers and get in front of them
 Follow the big money
 Get out if the big money stops
 Can’t see on charts
 Not just getting in a random prices, but real levels

How does tape reading it lower risk?
 ASTM Example

How does skill at tape reading improve understanding chart
patterns?
 You will be able to see the supply and demand
dynamic in real time
 Adding it all together to gain an edge
 Example from GMCR
 See what buyers and sellers are doing at certain chart
levels
 See how patterns develop on the tape to spot if it is
strong or weak

How do you improve your tape reading skills?
 Takes time
 You will get better every day you watch tape
 Watch video of your trading
 Bidhitter.com’s Tape Reading Video Archive
 Easier to spot stuff on tape when not in a trade or trading
 Speed up the improvement process by watching your
recorded trading video after the close and BH’s Video
Archive

Trading the open with only reading the tape
 Charts haven’t developed first few minutes of open
 Edge is on the tape
 Intraday traders make most of there money on open and
close
 Most volume on open
 Spot levels the charts don’t show
 Can spot and follow buy/sell orders from institutions on
the open
 Real time order flow of a stock to follow

Predicting where the chart will go
 Find key levels that a lot of volume has been done off
 See how price reacts at certain levels
 Able to hold for larger moves while keeping risk low
 Able to spot an order and follow it
 Going with the big money and following them

Quotes From A Tape Reading Great
 Jesse Livermore
 “A battle goes on in the stock market and the tape is your
telescope. You can depend upon it seven out of ten cases.”

Level I & Level II

What is Level I?
 What Does Level 1 Mean?
A trading service consisting of real-time bid/ask
quotes for securities trading on the stock market.
 Investopedia explains Level 1
Basically, this just consists of real-time quotes. Also
known as Level I.
 -Investopedia.com

What is Level II?
 What Does Level 2 Mean?
A trading service consisting of real-time access to the
quotations of individual market makers registered in
every security.
 Investopedia explains Level 2
This allows you to watch the trades being executed right
in front of you. Also known as Level II.
 -Investopedia.com
 Advanced Level I

Level I and II
 “Reading The Tape” refers to reading the Level I, Level II, and
prints
 Level II shows us who is willing to bid and who is willing to
offer at what price and how much
 Shows you the real time order flow
 See the open orders (Level II) and trades that have been
executed (Prints)
 Prints show if trades have been made on bid, offer, or in
between
 Level II are the open orders that are being shown

Level I and Level II Box

Level II Box
 Grey = Level I
 White = Stock symbol and
position
 Green = Bids
 Red = Offers
 Purple = Prints

Level II Box
 Level II shows the open orders
 Offers
 Best price people are willing to sell
 Above lowest offer are underlying
offers
 Bids
 Best price people are willing to buy
 Below highest bid are the
underlying bids

Level II Box
 Bids
 Size times 100 shares
 Exchange
 Price
 Offers
 Size times 100 Shares
 Exchange
 Price
 Prints
 Exchange
 Price
 Shares times 100

Level II Box
 Highest Bid
 $35.88
 Lowest Offer
 $35.91
 Spread is the difference
between the bid and the offer
 3 cents

Level II Box
 Watch spread of stocks when
trading
 Watch underlying bids and
offers to measure real risk
 There are also hidden orders
not being shown in level II
 Underlying bids/offers show
you how strong/weak stock
is

Real Risk
 Underlying bids/offers
show what your real risk is
 Shows where you are able
to exit the stock if it hits
your exit price
 Use this to calculate your
real risk/reward

Level II Box

Prints

What are the Prints?
 Prints are an important indicator
 Prints are each transaction or trade
 Can be on bid, offer, or between
both
 Shows which exchange it came
from, size, and price
 Shows where the stock is trading at
and last transaction

What are the Prints?
 Prints are important piece of
reading the tape
 The prints are what the old
school traders (back in the early
1900s) used to determine the
strength and weakness of a stock.
 Able to see the strength or
weakness and where there are
buyers/sellers at certain prices

Prints
 Prints
 Green Prints
 Traded on Offer
 Red Prints
 Traded on Bid
 White Prints
 Traded between offer and bid
 Highlighted Prints
 Through the market
 Don’t pay much
attention, only when
frenzy they appear

Prints
 There is a buyer for every seller
and seller for every buyer
 Common mistake for new
traders
 “if printing red they are
selling”
 “if printing green they are
buying”
 WRONG!

Prints
 Last traded 500 shares on
the offer at $35.91
 Means someone paid/sold
at the offer for 500 shares
at $35.91
 Before that $35.91 traded
100 shares on the offer

Using Prints as an indicator
 Shows you where the stock is currently printing and
with what size
 Shows you where volume is being done and
important levels
 Remember how much volume is done at each level
 Always gathering information from the prints
 Can spot where big players are and follow patterns
by how the prints are printing

Printing repeating on the bid, repeating on the offer
 Keeps printing on the bid at lower prices
 Sign of weakness
 Keeps printing on the offer at higher prices
 Sign of strength
 Continues to print on the offer?
 Someone really wants the stock and are aggressive to pay the offer
and spread
 Not willing to bid for the stock, waiting/hoping to get hit
 Not always the case, but with experience you will be able
to know the difference

Big Prints
 Stock continues to trade 100 and 200 share lots at a
certain price then see a big print for 100,000 shares at
the same price
 Usually institutions
 Most of the time they dictate order flow since they have more money
than you
 Clue to what they are doing, pay attention and remember it
 That 100,000 share print at that price is now important

Big Prints
 If it continues to trade at that price and bids hold then it
is strong, if bid drops then probably going lower
 If it continues to trade at that price and offers hold then
it is weak, if offers lift then probably going higher
 Watch the prints and see how they react to that price and
size
 Big prints are relative to the amount of volume being
traded
 Also to the amount of shares traded per price

Big Prints
 Usually sticks out compared to other 100 share
prints and current volume traded
 Sometimes means it might be the end of an order
being filled by institutions/algorithm

Big Prints

Big Print and Big Print Higher
 Important indicator, indicates the stock is about to trade
higher
 Example:
 Stock trading at $50
 Big print of 100,000 shares at $50
 Trades higher
 Big print for 125,000 at $50.25
 Big institutions willing to get more stock higher with size
 Notice and pay attention, bullish indicator

Big Print and Big Print Lower
 Important indicator, indicates the stock is about to trade
lower
 Example:
 Stock trading at $20.50
 Big print of 150,000 shares at $20.50
 Trades lower
 Big print for 225,000 at $20
 Big institutions willing to get rid/short more stock lower
with size
 Notice and pay attention, bearish indicator

Speed
 Each stock trades with a certain rhythm and pattern
 Not all stocks are the same, your job is to recognize the pattern
 Prints fast – important
 Prints slow – not that important
 When a stock is printing quickly on the offer then prints faster – bullish
 Indicator showing buyers are getting more aggressive and paying for
stock
 Can mean its about to break out if its at a resistance level or buy
order about to get filled

Speed
 When a stock is printing quickly on the bid then prints faster – bearish
 Indicator showing sellers are getting more aggressive and hitting the
bids
 Can mean its about to break down if its at a support level or sell is
order about to get filled
 Notice if offer steps down and gets taken quickly
 Means there is demand at that price
 Notice if bid steps up and gets taken quickly
 Means there is supply at that price

Speed
 If an offer steps down, lifts and quickly prints on the offer then it means
the stock is strong and offer is being taken—buyer really wants stock
 If an bid steps up, drops and quickly prints on the bid then it means the
stock is weak and bid is being hit—sellers in control
 Stock slows its printing then might not be in play at the moment
 Doesn’t print much then probably not in play/illiquid and should move
on

Volume
 Watch, notice, and remember how much volume is done
at certain prices
 Very important when reading the tape/prints
 Unusual amount of volume done at a certain price then it
becomes important
 Important level to note
 Rule of thumb:
 More volume done at a price the bigger the move that is expected

Volume
 Volume is all relative to:
 How much the stock has traded
 How much you expected to trade at that price via Level II
 How much volume is done around the level
 Just because a stock does a bunch of volume and trades
up doesn’t mean you should be long
 Combine the level with charts and what the tape has been
telling you
 Amount of volume done at a level gives you an idea of
how much it should move

Volume
 Example:
 Stock trades 300,000 shares (relative to overall volume) in a 10 cent
range
 Breaks out of range, can expect a 25 cent move
 Stock trades 3,000,000 shares (relative to overall volume) in a 10 cent
range
 Breaks out of range, can expect a one point move
 Don’t be stubborn and wait if the stock doesn’t do what you
expect
 Amount of volume done at a level gives you an idea of how
much it should move away from it

Big Buyer with a refreshing ECN
 Refreshing ECN:
 Shows a few 100 shares on ECN at a price and refreshes to show more size after it
has been filled at same price
 Example of a big buyer:
 Bid is $50 and offer is $50.10
 See a bunch of red prints on the bid for size (remember relative volume) at $50
and the buyer doesn’t drop
 Notice how much they are buying
 If he buys a bunch on the bid, refreshes, and holds the bid then it
can be a good entry for a long with stop if he drops (if everything
else is in your favor)
 Great risk/reward setup

 Example of refreshing ECN:
 BATS on bid at $30 and they’re showing 100 shares
 Notice a bunch of prints at $30 (over a thousand shares) and
he continues to hold
 Buyer is hiding his size and trying to accumulate
stock
 Can get long there with stop if he drops
 Follow the refreshing ECN too

 Sometimes there will be a big buyer at a price (say
$50) and they drop the bid for 5 cents then rebids
the price (back to $50) (Advanced)
 Games they play to shake people out
 Should always follow plan if it was to hit out if buyer
drops
 Can always reenter with stop below the move

Big Seller with a refreshing ECN
 Refreshing ECN:
 Shows a few 100 shares on ECN at a price and refreshes to show more size after it
has been filled at same price
 Example of a big seller:
 Bid is $25and offer is $25.10
 See a bunch of green prints on the offer for size (remember relative volume) at
$25.10 and the seller doesn’t lift
 Notice how much they are selling
 If he sells a bunch on the offer, refreshes, and holds the offer then it
can be a good entry for a short with stop if he lifts (if everything else
is in your favor)
 Great risk/reward setup

 Example of refreshing ECN:
 ARCA on offer at $60 and they’re showing 100 shares
 Notice a bunch of prints at $60 (over a thousand shares) and
he continues to hold
 Seller is hiding his size and trying to accumulate
stock
 Can get short there with stop if he lifts
 Follow the refreshing ECN too

 Sometimes there will be a big seller at a price (say
$70) and they lift the offer for 5 cents then reoffers
the price (back to $70) (Advanced)
 Games they play to shake people out
 Should always follow plan if it was to hit out if seller
lifts
 Can always reenter with stop above the move

Big buyer/seller drops or lifts
 If we notice a big buyer/seller and we are in the opposite side of them
then we exit assuming it will go against us
 Example:
 You’re long AMZN
 Notice a big seller
 Exit thinking it goes down
 If they lift, then you can reenter long since they’re done selling
 Same goes with the opposite
 Isn’t the only reason to get in/out of a trade, make sure you have other
indicators in your favor too

Big buyer drops

Big seller lifts

Hidden buyers/sellers
 If the bid is at $50.10 and the offer is at $50.20 but you
notice white prints $50.12 continuously.
 You should pay attention to this and gather information
about it.
 If you notice that the offers step down to $50.18 and they
get taken immediately then this means the buyer is
willing to buy at whatever price you are selling at and it is
a bullish signal.
 This will present a great risk/reward setup.

Hidden buyers/sellers
 Same goes for bid.
 If you notice that the bids step up to $50.12 and they
get taken immediately then this means the seller is
willing to sell at whatever price you are buying at and
it is a bearish signal.
 This will present a great risk/reward setup.

Hidden buyers

Probabilities
 Indicators mentioned previously are usually reliable
 Trading is a game of probabilities
 Indicators can be false sometimes
 Must have more indicators in your favor, not just one
 More indicators in your favor = higher probability of
trade working
 Have multiple in your favor for a trade, including
technicals, to spot high probability trades with good
risk/reward ratios

Using Prints and Level II Together
 Reading the tape is using the prints and level II
together
 Using level II you see how much they want to show
 Prints show you what they are actually doing
 Have an edge over most traders

Using Prints and Level II Together
 Be able to determine the amount of size you can use
and see your REAL risk
 Advantage to spot algorithms/HFTs
 Can see and follow a buy/sell order by the trading
pattern
 Using both together will provide great opportunities
that you won’t see on charts

What different prints means and what are some bullish and
bearish prints
 Different prints mean different things
 Prints are your edge
 Will show you if a stock is strong or weak and you
use this information to develop a plan

What different prints means and what are some bullish and
bearish prints
 Reminder:
 1 ARCA = 100 shares on ARCA
 10 ARCA = 1,000 shares on ARCA
 100 ARCA = 10,000 on ARCA.
 Whatever the number is multiply it by 100 and that is how
many shares.
 Single digits = hundred(s) which can be 100-900. Double
digits = thousand(s) which can be 1000-9900. Triple digits =
ten thousand(s) which can be 10,000-99,900 and so on)

Bullish and Bearish Prints Examples
The bid shows 10 ARCA and prints 60k on the bid at
the same price and holds
Bullish
The offer shows 10 ARCA and prints 60k on the offer at the
same price and holds
Bearish
The bid shows 70 ARCA, prints 9k on the bid, and refreshes Bullish
The offer shows 70 ARCA, prints 9k on the offer, and
refreshes
Bearish
The bid shows 70 ARCA, prints 7k on the bid, and then the
bid steps higher
Bullish
The offer shows 70 ARCA, prints 7k on the offer, and then
the offer steps lower
Bearish
The offer shows 70 ARCA, prints 7k on the offer, and then
the bid steps higher
Bullish

The bid shows 70 ARCA, prints 7k on the bid, and then
the offer steps lower
Bearish
The bid shows 5 ARCA, prints 7k on the bid, drops, then rebids at
the same price
Bullish
The offer shows 5 ARCA, prints 7k on the offer, lifts, then steps
down to the same price
Bearish
The bid shows 60 ARCA, prints 6k on the bid, drops, and the offer
steps down lower than the previous bid
Bearish
The bids get hit quickly and drop, moving the price lower Bearish
The offers get taken quickly and lift moving the price higher Bullish
The stock is quickly taking the offers and taking the offers and
taking offers higher and then will not take the next offer and slows
Bullish overall but bearish for that price

The bid gets hit and holds and steps up and gets hit and
holds and steps up higher and gets hit and holds higher
and steps up higher and then gets hit and drops
Bullish overall but bearish for that price
Big print and the next prints are higher Bullish
Big print and the next prints are lower Bearish
Big prints and big prints higher Bullish
Big prints and big prints lower Bearish
The bids are tested and holds Bullish
The offer is tested and holds Bearish

Bidding, Offering, Overlapping,
And Sweeping

What is Bidding and Offering?
Above, It shows BID 1,000 DANG, which
means you are bidding 1,000 shares
for DANG
 Bidding means that you are buying
on the bid.
 Offering means that you are selling
on the offer.
 They are limit orders
 Purchase the stock at the price you
want it at
 Should bid or offer most of the
time when you are entering a trade

Above, It shows OFFER 1,000 DANG,
which means you are offering 1,000
shares of DANG.
 Should always bid/offer wider
spread stocks
 Doesn’t have to be at
bid/offer.. Can go between
spread
 Will save you money over your
trading career
 By providing liquidity, it lowers
your commission

Above, It shows OFFER 1,000 DANG,
which means you are offering 1,000
shares of DANG.
 Helps give you patience
 Puts you in a position of
strength
 Have patience to wait for the fill
 Should bid/offer when a stock
isn’t going to move right away
very quickly

What is sweeping?
 Market order that will limit your entry
 Use when you want to get in or out quickly
 Difference between market order?
 Limits the price you will get filled up to (mine is set 10 cents
from market)
 Have more control with your price entry

What is sweeping?
 Great for illiquid stocks that you want to get in/out of
quickly
 Some algorithms know you are using a market order and
give you bad fills
 Useful for stocks that are about to break out or down
 Reduces slippage
 Makes your commission and trade more expensive since
removed liquidity from the market

What is sweeping?
 Market orders fill your order regardless of price
 Sweep orders fill you up to XX amount away from
offer/bid you wanted
 Better than market since it gives you control—always
have to be in control when trading
 Should always use when you want a stock RIGHT
NOW

When to bid/offer VS sweeping?
 Should always try to bid or offer stock, both entry and
exit
 Sweeping is when you want to get in/out very quickly
 Bidding and offering is when the stock is not going to
move in the direction right away
 Sweep when your bids/offers aren’t getting filled
 Sweeping is good for momentum trades
 Use your judgment when to use them

How does bidding/offers lower your cost?
 Two ways
 Providing liquidity to the market so you receive a
rebate—lower commission
 Better prices
 No slippage
 This adds up over a career

Hidden Orders and Different ECNs
 Sometimes you won’t get filled on a certain ECN
 Hidden orders are orders that are hidden from others
 Try using a different ECN, sweep, or hide your order
 Hiding orders do not show the algorithms or other
traders your orders
 Orders are filled FIFO, First In First Out
 Huge order at a price?
 Step in front of it or use a different ECN to get filled

What is Overlapping?
 When your put your offer
below the best bid by a
certain amount in order to hit
the bids up to that certain
price
 When you put your bid above
the best offer by a certain
amount in order to pay the
offers up to that certain price Shows that you want to buy 1,000 shares up to
$33.55. Order should get filled up to 54 cents
just by looking at the level II

Overlapping
 Used when you have to flip or want
to get filled up to a certain amount
 Pretty much same as the sweep key
but with more control.. Removes
liquidity
 Would use to make sure you get
filled with all the available stock up
to that price
 Will fill you up to a certain price
that you set and try to fill you up to
that price with all the stock that is
available
Shows that you want to hit the bids for 1,000
shares all the way down to $37.40, but just by
looking at the level II your order should get
filled by $37.48.

Things to consider when sweeping, bidding or offering
 Consider the pros and the cons when you are
deciding whether to bid, offer or sweep.
 Ask yourself:
 What is your risk if you do not take the offer? Hit the bids?
 How easy is the stock to buy on the bid? Sell on the offer?
 What effect will placing a bid have on the stock? Placing an
offer?
 What is your trading style?

Examples of when to sweep, bid or offer
 Note: The examples go both ways and you should have
multiple indicators in your favor when trading certain
scenarios.
 If the stock has fallen quickly and there are no bids
 Throw in your own bid, if the down move slows and keep a tight stop
 If the stock has fallen quickly and there are bids
 Get in front of the bids with your own bid
 If the stock has a down move and there is a refreshing ECN
 Get in front of the ECN with your own bid or match the bid with a
different ECN

Examples of when to sweep, bid or offer
 If the stock is in a range and breaks out
 Pay the offer when the stock breaks out
 You are long and the stock climbs quickly
 Try and sell on the offer, but if you can’t get filled then hit the
bids
 The stock climbs and then stops because of a
refreshing ECN
 Try and sell just below or at the refreshing ECN on a different
ECN

Generating Information by your trades and orders
 Each time we place an order we generate information.
 Whenever you put on a trade, there is someone that sold or
bought from you.
 Each time you place a trade you are gaining information from
the stock.
 You will notice how quickly your orders are getting filled, at
what price, or if you are even getting filled at all at that price.
 You must gather all of this information when analyzing a
stock.

 Sometimes you will notice that you put a bid in and it will
get filled quickly.
 This means that someone quickly sold to you.
 Sometimes you will post an offer and you won’t get filled
for a while, even at all.
 This means that someone is not willing to buy at that price so you
will have to lower your offer in order to get filled.
 The speed of which you get your orders fill is important
because it shows how fast people want to get in or out of
a stock.

 Sometimes you will be long in a momentum move
upward.
 You can generate information by trying to sell a very
small piece of your position on the offer
 If you get filled quickly then the stock might still
have more room upward.
 If you do not, then the stock might about to slow
down.

 This is all information that you are generating from
your trades that you should take note of.
 This will all give you more information about the
stock than just the prints and level II.
 Ask yourself how easy was it to get filled?
 How much slippage, if at all, did your exit give you?
 How did the bids and offers react to you putting in a
bid or offer?

Big Bids

What are Big Bids and why are they important?
 It is a bid that is way bigger than the normal bids that are
shown and represent institutional size.
 At least 10x larger than what the bids have previously been
showing (Relative)
 A Big bid is when there is a bid that is noticeably bigger than
all of the other bids, usually over 10,000 shares in size.
 They are institutional orders and you want to follow what
institutions are doing
 Institutions are the big money and are the guys that move
stock prices

Big Bids Example
 TXN shows 234,300
shares on the bid (NYSE)
at $28.50.
 Watch and keep note of
that level to trade off.

Big Bids Example
 What does it mean when
there is 234,300 shares on
the bid and 300 on the
offer?
 It means that the stock will
probably trade higher.
 Keep note of these bids and
to remember the levels of
where they are at.

Big Bids Example
 TXN low was at that Big Bid of $28.50 and ended
up going 1 point higher to $29.50

What is Bid Decrementing?
 When a bid is reduced in size.
 This usually happens when the bid is getting filled
and the level II is representing that in real time.
 The faster a bid is decrementing then the more
important it is.
 You should take note of this and trade off of this
information.

What do you do when a Big Bid is Decrementing?
 When a big bid decrements then you should think about
exiting the position, if you are trading in front of that big
order.
 If it is decrementing quickly then you should really consider
exiting the position because the chances of the order dropping
are high.
 When a big bid decrements, or decrements quickly, you
should consider exiting your long position or consider
entering a short position.
 Remember that all of your other indicators should line up for
a higher probability trade.

What do you do when a Big Bid is Decrementing?
 Sometimes there will be a stock on the verge of a
break down.
 If there is a big bid and it starts to decrement quickly
then that can mean the stock is about to break down.
 Might be a decent spot to exit long (or enter short).

Decrementing
 rimmheldbidoffereverything have to edit
 Bby vid-
bbyopen35c60cheldoffer40cheldbiddrop
 chkbidbigflashorderdecrementingspeed

What to do when there is a Big Bid
 You usually want to step in front of that bid and exit
if it starts to decrement (to drop in size) or drops.
 Keep in mind your real risk and what the underlying
bids are doing
 When a big bid drops then there will be more
slippage than if a regular bid drops and you should
factor that into your trading

What to do when there is a Big Bid
 When there is more size on the bids than there are offers
then it usually indicates that the stock should trade
higher.
 When you see these big bids you usually want to get in
front of them by 1 cent
 You will probably not get filled at the same price of the big bid due to
FIFO, first orders in first orders out, which means the first order at
that price will get filled.
 Exit of these big bids would be if it starts to decrement
(drop in size) or drops.

What does a Big Bid look like on the Level II
 Easy to spot on Level II, stick out like a sore thumb.
 Few bids for 100 shares then one bid for 100,000 then that
is the big bid. It would look like this:
 1 NYSE 30.20
 2 arca 30.19
 1000 nsdq 30.18
 2 edgx 30.16
 Big bid is at $30.18 showing 100,000 shares in size while
the other bids are showing 100 and 200 shares.

 Remember, they
should be noted when
spotted
 Example:
 BBY is showing a big
bid of 20,100 shares at
$25.35 on NYSE

 Remember, they
spotted
 Example:
 GMCR has a big bid of
41,500 shares at $51 on
UBSS.

 Remember, they
spotted
 Example:
 CHK is showing a big
bid of 18,700 shares at
$28.95 on NYSE

 AAPL shows 63,100
shares on NSDQ,
63,100 shares on
UBSS, and 19,900
shares on EDGX at the
price of $540
 Total of 146,100 shares
at $540

Big Bid
 bbyopen35c60cheldoffer40cheldbiddrop 35c
drops
 txnbidbid
 txnopen50bigbidheldbid
 chkheldofferliftsheldbiddropbigbid
 krrefreshbuyerheldbiddropbigbidhiddensellerhel
dofferhiddenbuyer

Flash Bids
 When big bids are flashed at a price and disappear.
 This usually happens when the order is hidden.
 Sometimes shows if they want to see what happens
to the stock when a big bid is being placed.
 These orders can sometimes be fake

Flash Bids
 Sometimes they are fake so you would have to keep track
of the prints to see what happens at that price it flashed
at.
 Keep note of these prices and note the size of the flash
bids.
 It is the same thing as a big bid except it is just flashing
in the level II.
 Watch and take note how the stock reacts to these flash
orders.

Flash Bids

Big Bids Stepping Up
 Sometimes when there is a big order on the bid it will
just stay there and wait to get filled.
 Sometimes these orders will step up in price in order to
get filled. Buyers are getting more aggressive.
 When you see a big order you usually want to step in
front of it, follow the order and exit if it drops or
decrements.
 This is a simple trade that can be very profitable.

Big Bid Stepping Up
 When you spot a big bid you usually want to step in front of
it and exit if it drops or decrements quickly.
 Sometimes that big bid will get hit for some stock and the
stock will trade higher.
 Sometimes that big bid will step up on the bid by a few
cents in order to get filled.
 You want to step in front of these orders and follow them
until they get filled. Once they get filled you exit.
 Simple right?

Big Bids Stepping Up
 When a big bid continues to get hit for size you have to
take note of how quickly it did and at what prices.
 You usually want to follow these big bids and exit if they
drop/decrement.
 When a big bid is filled and drops then you usually want
to be out of your long position (maybe enter short?)
 It indicates that the stock was just hit for size and will
probably trade lower.

Can Big Bids Be Fake?
 Sometimes big bids can be fake.
 You will know if they are real when the stock reaches
that level, you start to see prints come through and
the bid decrements.
 You will know that they are fake if it gets to that
price, it disappears, and it trades through that price
with no volume.

Can Big Bids Be Fake?
 Traders sometimes put big bids in order to see what
the stock does in reaction.
 They also puts these in these orders to fool other
traders or algorithms.

Big Offers

What are Big Offers and why are they important?
 It is a offer that is way bigger than the normal offers that
are shown and represent institutional size.
 At least 10x larger than what the offers have previously
been showing (Relative)
 They are institutional orders and you want to follow what
institutions are doing
 Institutions are the big money and are the guys that move
stock prices

Big Offer
 If this big offer gets filled and holds then that means the stock
will probably trade lower.
 If it lifts, then it is probably strong.
 You should also notice what happens to the stock when the
big offer is placed.
 A Big offer is when there is an offer that is noticeably bigger
than all of the other offers, usually over 10,000 shares in size.
 All is relative to what the other offers have been showing and
the volume in the stock.

Big Offer Example
 LLY at $39 big offers show:
 16,400 shares NSDQ
 12,200 shares EDGX
 7,000 shares NATX
 etc
 Total of 52,700 on the offer
 Watch and keep note of that
level to trade off.

Big Offer Example
 What does it mean when
there is 52,700 shares on
the offer and 3,700 on the
bid?
 It means that the stock will
probably trade lower
 Keep note of these offers
and to remember the levels
of where they are at.

Big Offer Example
 CAT has a big offer of
48,200 shares at $113.07

Big Offer Example
 FTNT has a big offer of
98,300 shares at $25.15

Big Offer
 llydecrementing_reoffer
 grpnipobigofferheldofferlifts
 grpnipoheldofferbigofferdecrementliftsheldbid

What is Offer Decrementing?
 When a offer is reduced in size.
 This usually happens when the offer is getting filled
and the level II is representing that in real time.
 The faster an offer is decrementing then the more
important it is.
 You should take note of this and trade off of this
information.

What is Decrementing?

What do you do when a Big Offer is Decrementing?
 When a big offer decrements then you should think about exiting the
position, if you are trading in front of that big offer.
 If it is decrementing quickly then you should really consider exiting the
position because the chances of the order lifting are high.
 When a big offer decrements, or decrements quickly, you should
consider exiting your short position or consider entering a long
position.
 Remember that all of your other indicators should line up for a higher
probability trade.

What do you do when a Big Offer is Decrementing?
 Sometimes there will be a stock on the verge of a
break out.
 If there is a big offer at the whole number and it
starts to decrement quickly then that can mean the
stock is about to break out and might be a decent
spot to enter long.

Decrementing
 llydecrementing_reoffer 39

What to do when there is a Big Offer
 You usually want to step in front of that offer and
exit if it starts to decrement (to drop in size) or lifts.
 Keep in mind your real risk and what the underlying
offers are doing
 When a big offer lifts then there will be more
slippage than if a regular offer lifts and you should
factor that into your trading
 Remember, they should be noted when spotted

What to do when there is a Big Offer
 When there are more size on the offers than there are
bids then it usually indicates that the stock should trade
lower.
 When you see these big offers you usually want to get in
front of them by 1 cent
 You will probably not get filled at the same price of the big offer due
to FIFO, first orders in first orders out, which means the first order
at that price will get filled.
 Exit of these big offers would be if it starts to decrement
(drop in size) or lifts.

What does a Big Offer look like on the Level II
 Easy to spot on Level II, stick out like a sore thumb.
 Few offers for 100 shares then one offer for 50,000 then
that is the big offer . It would look like this:
 2 arca 40.40
 500 nyse 40.41
 1 nsdq 40.42
 Big offer is at $40.41 showing 50,000 shares in size while
the other offers are showing 100 and 200 shares.

Flash Offers
 When big offers are flashed at a price and disappear.
 This usually happens when the order is hidden.
 Sometimes shows or if they want to see what
happens to the stock when a big offer is being
placed.
 These orders can sometimes be fake

Flash Offers
 Sometimes they are fake so you would have to keep track
of the prints to see what happens at that price it flashed
at.
 Keep note of these prices and note the size of the flash
offers.
 It is the same thing as a big offer except it is just flashing
in the level II.
 Watch and take note how the stock reacts to these flash
orders.

Flash Orders

Big Offers Stepping Down
 Sometimes when there is a big order on the offer it
will just stay there and wait to get filled.
 Sometimes these orders will step down in price in
order to get filled. Sellers are getting more aggressive
 When you see a big order you usually want to step in
front of it, follow the order and exit if it lifts or
decrements.
 This is a simple trade that can be very profitable.

 When you spot a big offer you usually want to step in front
of it and exit if it lifts or decrements quickly.
 Sometimes that big offer will get hit for some stock and the
stock will trade lower.
 Sometimes that big offer will step down on the offer by a
few cents in order to get filled.
 You want to step in front of these orders and follow them
until they get filled. Once they get filled you exit.
 Simple right?

 When a big offer continues to get hit for size you have to
take note of how quickly it did and at what prices.
 You usually want to follow these big offers and exit if
they lift or decrement.
 When a big offer is filled and lifts then you usually want
to be out of your short position (maybe enter long?)
 It indicates that the stock was just hit for size and will
probably trade higher.

 You usually want to step in front of them and follow
them until it lifts or decrements.
 You want to follow these orders because it is what
the institutions are doing and they dictate where the
stock is going to go.

 If there is a big offer, gets hit for some size, then
steps down, then that means the seller wants to get
rid of the stock even if its at lower prices.
 If the big offer then gets filled and lifts then you
should exit your short position (maybe enter long?)
 It shows that there is more demand for that stock at
that level.

Can Big Offers Be Fake?
 Sometimes big offers can be fake.
 You will know if they are real when the stock reaches
that level, you start to see prints come through and
the offer decrements.
 You will know that they are fake if it gets to that
price, it disappears, and it trades through that price
with no volume.

Can Big Offers Be Fake?
 Traders sometimes put big offers in order to see
what the stock does in reaction.
 They also puts these in these orders to fool other
traders or algorithms.

Held Bids

What are Held Bids and why are they important?
 One of the most used indicators in tape reading
 Spotting them will provide great trade opportunities
 Risk can literally be 1 cent sometimes
 Very important because it will provide opportunities
that are not on the chart
 Will give you great entries with low risk

What are Held Bids and why are they important?
 During the open there isn’t much of a chart, can use held
bids to find great opportunities---some you won’t be able
to spot on the chart
 When a stock does a lot of volume at a price you want to
keep track and trade around that price because it is a
level
 Very important information to keep track of intraday
 All volume is relative, has to be a lot of volume compared
to what has been trading at every price

What is a Held Bid?
 When there is at least 2 to 3 times more volume traded
on the bid than it shows on the Level II or more than you
expected and it holds that bid
 Remember that all volume is relative
 The more volume at a level the more important it is
 Great to use on the open with a stock trending up – high
probability trade
 Should always be considered when spotted, whether long
or short

What is a Held Bid?
 If you are short already, it might be a reason to cover
some or even add if the bid drops
 Need more than just this indicator in your favor for a
trade
 When there is at least 2-3 times more volume traded on
the bid than it shows on the Level II or than you expect
and holds that bid– all relative
 The more volume traded at that level and holding then
the more important it is.

Supply & Demand dynamics of a held bid
 You should also keep in mind the supply and demand
dynamics of a held bid.
 When the Held Bid drops that means that the sellers are
in control
 There is more supply than demand and the stock should see lower
prices
 If the bids hold that means the buyers are getting more
aggressive
 There is more demand for stock at that price and it should see higher
prices.

What do you do when a bid holds? When a bid drops?
 Its simple
 When a bid is holding you should get long
 Higher probability if other indicators are in your favor
 When a bid drops you should not be long, maybe short
 Depends how the stock is trading and what the other indicators are
saying
 Repeat this over and over and over again
 Make it an instinct

 Reason behind getting long a held bid?
 Someone is supporting it at that level
 If the bid drops then you no longer have a reason to be in
the stock so you should hit out of it
 If you are long the stock at the held bid and if that was apart of your
trade plan
 Gather information
 Every trade you make gives you information about a
stock, use it to your advantage
 How were your orders taken? Quickly? Took a while?

 Doesn’t mean you should short it if the bid drops
 Remember about the other indicators
 If a stock looks like its going to go lower then a good
position would be to add short when the held bid drops
or initiate a position
 Again, with all the other indicators
 Buying on a bid being held is a good technique for up
trending stocks, great risk/reward
 Same thing goes for adding/entering short on a held bid
drop in a down trending stock, great risk/reward

Supply & Demand Dynamics of Bids holding and dropping
 Remember
 If the bid drops then there is more supply
 If the bid holds then there is more demand for the
stock at that level

Supply & Demand Dynamics of Bids holding and dropping

What does a Held Bid look like on the Prints & Level II?
 Easy to spot when focused
 Remember, a held bid is when there is at least 2 to 3
times more volume traded on the bid than it shows
on the Level II or more than you expected and it
holds that bid– volume is relative
 Also, the more volume traded at a level the more
important that level is

 Example:
 AAPL just went up from $400 to $400.25 and it is in an
uptrend
 The bid drops to $400.17 and at that price there is an
NYSE bid for 300 shares on the Level II
 AAPL has been trading about 600 shares per price level
 You see a bunch of prints for about 1,900 shares total at
$400.17 on the bid and never drops below that bid

 Means there is a buyer there buying a lot of stock that he
is not showing
 You notice that there is an underlying bid at $400.16, so
the play would be you get long at $400.17 on a different
ECN or long at $400.18 and you get out of the stock if the
bid drops to $400.17.
 A stock shows a certain amount of stock on the Level II at
a certain price and prints at least 2-3 times that amount
at that same price or at least 2-3 times more than you
expected it to print at that price and holds.

 Before, you see that $30
has about 1,500 shares
at the bid
 Stock has been trading a
few hundred shares per
price
 Notice that it printed
about 5,000 shares on
the bid at $30 at this
point

 After, you see that $30 has
about 200 shares at the
bid
 Stock has been trading a
few hundred shares per
price
 Notice that it printed
about 7,100 shares on the
bid at $30 at this point
and holding
 That is a held bid

 This upcoming
reason is why you
do not only get long
because a bid is
holding
 DANG was weak
and down 8.5% that
day

 It was weak, gapped
down, weak
bounces, and down
trended most of the
morning.
 There was a held bid
at the $30 level and
it dropped

 $19 is showing about
2,400 shares on the bid
 Prints are showing that
its printing a lot more
than 2,400 shares on
the bid and holding

Held Bid After

What do held bids look like on a chart?

Video Examples of Held Bids
 19 crkheldbidheldbidbhigher
 25c driheldbid
 potheldbidaccumalation
 rigbidholddrop
 righeldbidaccumalation
 rimmheldofferandbid

Video Examples of Held Bids
 txn18cheldoffer10cheldbid
 txn80cheldbidaccumalation
 txnopen50bigbidheldbid
 chkheldofferliftsheldbiddropbigbid
 sbuxheldofferhiddensellerheldbid refreshseller
 krrefreshbuyerheldbiddropbigbidhiddensellerhe
ldofferhiddenbuyer

Held Offers

What are Held Offers and why are they important?
 Same as held bid except with the offer
 One of the most used indicators in tape reading
 Spotting them will provide great trade opportunities
 Risk can literally be 1 cent sometimes
 Very important because it will provide opportunities
that are not on the chart
 Will give you great entries with low risk

What are Held Offers and why are they important?
 During the open there isn’t much of a chart, can use held
offers to find great opportunities---some you won’t be able
to spot on the chart
 When a stock does a lot of volume at a price you want to
keep track and trade around that price because it is a level
 Very important information to keep track of intraday
 All volume is relative, has to be a lot of volume compared to
what has been trading at every price

What is a Held Offer?
 When there is at least 2 to 3 times more volume traded
on the offer than it shows on the Level II or more than
you expected and it holds that offer
 Remember that all volume is relative
 The more volume at a level the more important it is
 Great to use on the open with a stock trending down–
high probability trade
 Should always be considered when spotted, whether long
or short

What is a Held Offer?
 If you are long already, it might be a reason to sell some
or even add if the offer lifts
 Need more than just this indicator in your favor for a
trade
 When there is at least 2-3 times more volume traded on
the offer than it shows on the Level II or than you expect
and holds that offer– all relative
 The more volume traded at that level and holding then
the more important it is.

Supply & Demand dynamics of a held offer
 You should also keep in mind the supply and demand
dynamics of a held offer.
 When the Held offer lifts that means that the buyers are
in control
 There is more demand than supply and the stock should see higher
prices
 If the offer holds that means the sellers are getting more
aggressive
 There is more supply for stock at that price and it should see lower
prices.

What do you do when a offer holds? When a offer lifts?
 Its simple
 When a offer is holding you should get short
 Higher probability if other indicators are in your favor
 When a offer lifts you should not be short, maybe long
 Depends how the stock is trading and what the other indicators are
saying
 Repeat this over and over and over again
 Make it an instinct

What do you do when a offer holds? When a offer lifts?
 Reason behind getting short a held offer?
 Someone is selling it at that level
 If the offer lifts then you no longer have a reason to be in
the stock so you should get out of it
 If you are short the stock at the held offer and if that was apart of
your trade plan
 Gather information
 Every trade you make gives you information about a
stock, use it to your advantage
 How were your orders taken? Quickly? Took a while?

What do you do when a offer holds? When an offer lifts?
 Doesn’t mean you should get long it if the offer lifts
 Remember about the other indicators
 If a stock looks like its going to go higher then a good
position would be to add long when the held offer lifts or
initiate a position
 Again, with all the other indicators
 Shorting on a offer being held is a good technique for
down trending stocks, great risk/reward
 Same thing goes for adding/entering longs on a held
offer lift in a up trending stock, great risk/reward

Supply & Demand Dynamics of offers holding and lifting
 Remember
 If the offer lifts then there is more demand
 If the offer holds then there is more supply for the
stock at that level

What does a Held Offer look like on the Prints & Level II?
 Easy to spot when focused
 Remember, a held offer is when there is at least 2 to
3 times more volume traded on the offer than it
shows on the Level II or more than you expected and
it holds that offer– volume is relative
 Also, the more volume traded at a level the more
important that level is

 Example:
 NFLX just went down from $68 to $67.75 and it is in an
downtrend
 The offer lifts to $67.89 and at that price there is an
NYSE offer for 100 shares on the Level II
 NFLX has been trading about 800 shares per price level
 You see a bunch of prints for about 2,600 shares total at
$67.89 on the offer and never lifts above that offer

 Means there is a seller there selling a lot of stock that he
is not showing
 You notice that there is an overlying offer at $67.90, so
the play would be you get short at $67.89 on a different
ECN or short at $67.88 and you get out of the stock if the
offer lifts to $67.90
 A stock shows a certain amount of stock on the Level II at
a certain price and prints at least 2-3 times that amount
at that same price or at least 2-3 times more than you
expected it to print at that price and holds.

What do held offer look like on a chart?

Conclusion

What are some good tape reading stocks?
 Some good tape reading stocks are stocks that are
going to be active during the day and in play.
 You can tell which stocks these are because they are
moving in the premarket with more volume than
usual, gapping up or down, or have news.

What are some good tape reading stocks?
 These stocks are the ones you should actively be trading
because they will present to you high probability trades
and have a cleaner tape to read than non active stocks.
 Like I said earlier, these stocks are stocks that have news,
are gapping up or down, have a lot of volume, have tight
spreads, and are volatile enough to trade. They can also
have a nice technical setup that will make the stock
move.

Boosting your experience and learning curve
 There are a few ways to boost your experience and shorten your learning
curve.
 You can start by reviewing your trading tape of your trading every day.
 This will let you see what trades you did in real time without the emotion
that is attached to it.
 Bidhitter.com Tape reading achieve
 Without those tools you would be subject to what you did during the
trading day and sometimes your mind clouds your judgment when you’re
in a trade.
 This wouldn’t allow you to see the clear picture the tape paints sometimes
due to your position in a stock.

Boosting your experience and learning curve
 Now you should know the basics to tape reading,
 Remember that it is not something you can learn
overnight.
 You must practice and practice your tape reading
stills day in and day out if you want to improve.
 You should also use tape reading along with charts
and market psychology for higher probability trades.

Putting it all together
 We are going to go over some raw trading tape with
audio commentary
 Watch and follow what is being dictated about the
tape

W W W . B I D H I T T E R . C O M
A N Y Q U E S T I O N S E M A I L M E A T
J O S E @ J O S E C A S A N O V A . C O M
The End

Reading The Tape 101 - Learn How To Read The Tape For Day Trading

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