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What is tape reading ??

  #29 (permalink)

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Price can move without orders being executed, thus price moving does not mean orders were executed.

Also, in many markets (including futures), orders can be executed and not show up in the time and sales or reported volume. So those are two problems I like to exempt myself from. However, if I am watching those things more closely for whatever reason, I just keep in mind that there's no way I will ever completely trust what I see.

Conclusion:
Pice fluctuations = objective data
Volume and T&S = inaccurate/incomplete data (but that doesn't make them useless)

The only fluctuations that you can see when no orders are executed would be limit orders either being added or being pulled from the bid or offer. Such scenario seen on a DOM provides the illusion of price movement, but that does not affect price action per se. It's only at the next trade (i.e. the next order) that you will see the effects of the above.

Say it's NFP time, and it's 5 seconds before the data release. What you would see quite often on 6E is the spread between bid and ask widening considerably. But the chart is not moving because there are no orders being executed.


Last edited by xplorer; October 4th, 2016 at 06:36 AM.
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