What is time and sales data, and how do you read it? It tells you the volume, price, direction, date, and time. In other words, it’s an overview of the market. You’re getting recent highs and lows with the last traded price. Hence, scalping is a style that would use this. You have the detailed information you need.
Time and sales can be used for any trading, such as day trading, swing trading, or long-term investing. However, day traders typically find it the most helpful because of its function. Why is this more helpful for scalping than swing trading? Time and sales show real-time trades. When you’re scalping, you’re in a trade for seconds, in and out, as quickly as possible. Meanwhile, swing trading is holding a stock for more than a day.
With swing trading techniques, you don’t necessarily need to know the trades made in real time. It won’t be the same the following day.
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How Do You Read Time and Sales Data?
Four things make up time and sales data. Those are date and time, direction, price, and volume. Let’s break it down.
The date and time are exactly what it sounds like. It’s the date and time the trade occurred. For example, if someone placed a trade on 6/1/18 at 9:31 and sold and sold at 9:35, the closing time would be the time you’d see.
Direction is whether the trade was a buy or sell. You would see both long and short trades as well as the cover. In other words, you see the buy orders and sell orders.
Price is the price the trade happened at. In other words, you’d see the price the trade closed as not when it was opened.
Volume is the number of shares that were traded. If someone bought 866 shares, you’d see the sold shares. Let’s say they only closed half of their position. You’d see 433 on time and sales.
Time and Sales Example
This is an example of time, sales, and level 2 using the ThinkorSwim platform. They have a solid platform, and reading the tape is easy. ThinkorSwim also allows users to customize their platform. LightSpeed and TradeStation are better platforms to use for day trading, though. Their level 2 is much more in-depth. Das Trader is also a platform many traders use to integrate with other trading platforms.
Where Do I Find This Information?
Time and sales data are typically included in the platform you use. Using it in conjunction with charts is the most effective way to utilize it. If you’re new to trading, you want to ensure you know how to read charts before utilizing this tool.
There is a window set aside for this use. All you have to do is add it to your charts. It’s not something that’s already there for you. In this case, you want to ensure a good day trading computer setup.
You can only have a few windows up with a small computer screen. That can take away from the tools at your disposal.
This is the time and sales data on Thinkorswim. You can see the time, price, and size of each trade placed. The green are buy orders, and the red are sell orders.
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What Do the Colors Mean on Time and Sales Data?
- Here’s what the colors mean on time and sales data:
- Green means that orders are getting filled on the ask.
- Red shows that trades are being filled on the bid.
- White orders are filled between the bid and the ask.
Don’t Use It Alone
Time and sales data are great, but you don’t want to use just that information to trade. Candlesticks, patterns, and technical indicators will go a long way, especially when trading penny stocks.
You may see buy orders and sales coming in on time, but the charts show dark cloud cover patterns. Either someone knows something you don’t, or they don’t know patterns.
That in and of itself is disastrous. You can compare Tweezer bottom patterns to the time and sales data to see if they match up. If you’ve spent any time trading, you know that candlesticks and patterns are the name of the game.
All the other tools are just that: tools. They’re there to confirm what you’re seeing.
Practice Using Time and Sales
Time and sales data are a lot going on. It sounds easy to use but can be overwhelming when you’re a new trader. The important thing to do is practice.
Open up a paper trading account and make thousands of practice trades. Everyone wants to jump in and start making money, but that’s unrealistic. When you practice using these tools, you can hone your craft.
Just like a doctor has to study for a long time before going out on their own, trading is no different. You need stock training to study, practice, and study some more. Only then will you become a successful trader.
If you need more help, take our day trading course.
Frequently Asked Questions
The most common colors on time and sales data are green, red, and white. Orders that happen on the bid are typically red. Orders on the offer are typically green. Ones that happen in between are white.
Level 2 shows the open orders with the best bid and ask prices available for a specific security. Time and sales show the executed orders that have taken place. Level 2 also shows the different market makers.
Time and sales show the executed orders, whereas level 2 shows the open orders and bid/ask differentials. Time and sales orders cannot be manipulated like Level 2.
The bid price is the highest amount a buyer can pay for a stock. The ask price is the lowest amount a buyer will pay for a security.
