In this lesson, I’m going to share my “Tape only” setup. Yours doesn’t have to be like this but it will help to see what another trader uses and why.
This setup is one I will use on less liquid markets such as Crude Oil, NQ, YM. It is also the setup I use for US Equities where the DOM format doesn’t work that well because of the large gaps between prices. In this case, I am focused mostly on trade execution and not so much on depth above and below but I do still show the Depth for the inside bid/ask on the top row, which I glance at occasionally. The focus here is reading the Tape only.
Note that this is my preference only. I advocate the use of EITHER Depth & Sales OR Summary Tape for any particular market. Which one you use is entirely down to your personal preference. This is why we give a free trial so that you can start to figure out which tools suit you.
The Reconstructed Tape is always used, regardless. My main focus when Tape Reading is on the Summary Tape but I will glance at Reconstructed Tape from time to time to see which side the larger players are on. After a while, you will be able to see the Reconstructed Tape in your peripheral vision anyway. The Summary Tape is used to guage the flow of trades and who is in control, the Reconstructed Tape is used to see what side the big players are trading.
Here is a short video explaining what I have in my setup and when I’ll focus on the various parts.
Summary Tape Settings
Reconstructed Tape Settings (small trades)
Note that small/large trades are relative. For Crude (CL), 10 contracts would be a large trade. Adjust the filter size relative to what is large for that instrument.
Reconstructed Tape Settings (Large Trades)
That’s the end of Lesson 4. Click Here to go back to the lesson plan.