Tape Reading 101: How to Use Time & Sales + Level 2 to Predict Breakouts Before They Happen
Tape Reading 101: How to Use Time & Sales + Level 2 to Predict Breakouts Before They Happen
Tape reading is one of the oldest — and most underrated — skills in trading. Long before indicators existed, traders made decisions using only two things: Level 2 and Time & Sales (the tape).
Today, tape reading remains one of the most powerful tools for predicting momentum before the chart confirms the move. New traders often ignore it, while advanced traders use it as their competitive edge.
In this guide, you'll learn how to interpret the tape from beginner to advanced levels, how to detect hidden orders, how to spot liquidity traps, and how to combine everything into a complete trading system.
🔹 What Is Tape Reading?
Tape reading is the skill of analyzing real-time order flow — the actual buy and sell transactions hitting the market. It answers two critical questions:
- Who is in control — buyers or sellers?
- Is momentum increasing, slowing, or reversing?
Charts show you the past. Tape tells you the present.
🔹 Part 1: Time & Sales (The Tape)
Time & Sales shows every executed trade — price, size, and speed. It reveals real demand and real aggression.
What Beginners Should Watch:
- Speed of prints — fast = momentum is building.
- Color of prints — green = buyers hitting ask, red = sellers hitting bid.
- Consistency — repeated green prints often precede breakouts.
What Advanced Traders Watch:
- Absorption: large orders getting filled without price moving — a sign of hidden whales.
- Print sequencing: price stays flat while size builds → pressure is loading.
- Speed shifts: sudden acceleration = breakout signal.
- Iceberg orders: hidden size refreshing at a level until it breaks.
Hidden gem: The tape often turns green BEFORE a breakout candle appears on the chart.
🔹 Part 2: Level 2 (The Order Book)
Level 2 shows bids and asks across market makers. It reveals intention — but NOT execution.
What Beginners Should Watch:
- Thick bid walls — support.
- Thick ask walls — resistance.
- Spread tightening — price preparing for a move.
What Advanced Traders Use:
- Bid stepping: market makers repeatedly raise the bid → buyers chasing.
- Ask pulling: big asks vanish right before a breakout → trap releasing.
- Liquidity sweeps: large prints clearing a level in one hit.
- Fake walls: market makers place big size to scare retail, then pull it.
Hidden gem: If the tape is bullish but Level 2 is stacked with walls, those are often fake — meant to trap shorts.
🔹 Part 3: Hidden Orders & Liquidity Clues No One Talks About
- Icebergs: size that refreshes automatically — can indicate a whale accumulating.
- Spoofing: giant walls that disappear right before the move.
- Liquidity pockets: thin areas in Level 2 where price will move FAST.
- Bid sweeps: aggressive buyers wiping the entire ask ladder.
- Trap candles: price dips into liquidity only to reverse instantly.
Advanced traders thrive by recognizing these “tells.”
🔹 Part 4: Combining Tape, Level 2 & Price Action
This is where the edge becomes obvious. When:
- Time & Sales shows aggressive buying
- Level 2 shows asks pulling and bids stepping up
- The chart is at a key level (VWAP, premarket high, trendline)
→ The breakout is about to happen seconds BEFORE the candle forms.
This is why experienced traders seem to “enter early.” They’re reading the tape — not guessing.
🔹 How Prodigy Trading Team Uses Tape Reading Daily
Inside the Prodigy Trading Team, our analysts use tape signals every single morning to:
- Identify early breakout pressure
- Spot fakeouts and liquidity traps before retail sees them
- Locate whales accumulating or distributing
- Confirm scalp and breakout entries with precision
- Call out real-time tape shifts during momentum
Tape reading is a skill that compounds — and our team helps you master it.
🔹 Level Up With the Gold Membership
If you want hands-on guidance, real-time breakdowns, and access to the same tools our analysts use, you can join the Prodigy Trading Team's Gold Membership and get:
- Real-time trading floor chat
- Algo signals + volume alerts
- Daily watchlists and breakdowns
- Scanner access and market prep
Join here: Prodigy Trading Team - Gold Membership
Disclaimer: All content is for educational purposes only. Always perform your own due diligence and never trade based solely on someone else’s ideas.