GBC Playbook: Volume IV
Smart Money Leaves Clues: Learning to Read the "Tape"
What Price Won’t Tell You: The One Indicator Institutions Can’t Hide
“Pushing each other to get into these narrow quarters, yelling out the prices at the door and rushing back again for later ones, the bustle made this doorway a most undesirable refuge from an April shower, I was simply whirled into the street”
Edward A. Calahan
Previous Chapters:
Before Bloomberg terminals and Level II quotes, there was a machine that changed everything: the ticker tape. It clicked, ticked, and printed fortunes on narrow strips of paper. Learning to read it separated legends from losers.
“Your business with the tape is now, not tomorrow. The reason can wait. But you must act instantly or be left.”
Jesse Livermore
The technology changed. The principle didn’t.
Every trade still prints: price, volume, time. Smart traders still watch the “tape” to see what institutions are actually doing, not what they’re saying.
Price lies. Volume tells the truth. And the tape never stops talking.
The Signal in the Noise
By now, you’ve developed an ability to “read” price. You have also established a discipline of waiting. Now, let’s delve into the market’s second language—one many traders hear, but few truly understand.
Volume doesn’t lie. It cannot be manipulated through creative storytelling or after-hours tactics. When a stock moves on high volume, someone has decided with actual money. Conversely, when a stock moves with low volume, you’re viewing a market that simply doesn’t care. The issue isn’t whether volume matters; it’s whether you can interpret what volume is saying to you.
As I’ve written before, trading is as much about knowing yourself as it is knowing the markets. This concept of self-understanding will be crucial when using volume analysis. While you may be able to deceive yourself about your reasoning for entering a trade, the volume tape will tell you exactly what the market, and more importantly, the smart money, is actually doing.
In this example, ASTS registers a dramatic surge in monthly volume after a major news event broadened the company’s media coverage and prompted institutional investors to take notice and establish positions. Over the ensuing roughly 18 months, the share price climbed from $3.00 to $100.00.
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