Guide 3.6
Intermediate, 6 min read. Checked with Scalpel 1.12.8 on .
In short
The read line under the Level 2 summary says in plain words what the book and the tape are doing, such as Bid-heavy book, buyers lifting; the read bar above the chart states the facts of the recent candles, such as Above VWAP, EMAs up. Both describe, they do not predict. Only three reads held up when replayed over recorded sessions, so only those are coloured: an ask-heavy book (gold), a Bull trap (red) and Lost VWAP (salmon). With a long open, a bull trap on the 1-minute chart also gives you a toast and a voice warning.
When you are in a trade there is no time to add up the book, count candles and check VWAP. The two read strips do that bookkeeping and put it in a few words. They were also tested: every call was replayed over recorded sessions to see what price did next, and the calls that turned out to be coin flips were removed or turned into plain facts.
The read line is the bottom line of the strip under the Level 2 summary bar, under the IMBALANCE gauge and the DELTA numbers. It combines two things: which side of the book is heavier near the inside, and which side is taking on the tape.
Every line it can show (plain means the panel's normal text colour):
| Read line | When | Colour |
|---|---|---|
| Hidden seller refilling at the offer | An iceberg on the ask (guide 3.2). Comes first, with a cyan layers icon. | Plain |
| Hidden buyer refilling at the bid | An iceberg on the bid. | Plain |
| Bid-heavy book, buyers lifting | Imbalance above +12% and buyers taking more than sellers. | Plain |
| Bid-heavy book, sellers hitting | Bids heavier, but sellers are the ones trading. | Plain |
| Bid-heavy book | Bids heavier, flow balanced. | Plain |
| Ask-heavy book, buyers lifting | Imbalance below -12%, buyers taking. | Gold |
| Ask-heavy book, sellers hitting | Asks heavier and sellers taking. | Gold |
| Ask-heavy book: offers tend to cap price | Asks heavier, flow balanced. | Gold |
| Buyers lifting | Book balanced, buyers taking more. | Plain |
| Sellers hitting | Book balanced, sellers taking more. | Plain |
| Balanced book and flow | Neither leans more than 12%. | Plain |
The imbalance and flow are smoothed over a few seconds so the line settles instead of flickering with every tick. Switch the whole strip off with Inferred read in the LEVEL 2 cog.
Why only the ask-heavy book is coloured. When the reads were replayed, a book stacked with offers was the one pattern followed by anything: price tended to stay capped. Everything else, including the old "leaning up" and "leaning down" calls, did no better than a coin flip, so those calls were removed and the rest are shown as descriptions.
The read bar sits beside the timeframe buttons above the chart and reads the candles of the timeframe you are looking at. Normally it states facts in plain text: a headline about VWAP and the EMAs, and a short detail about the last bars. It raises only two warnings.
Bull trap (red), with the detail False break, closed back under: tends to dip in the next minute. One of the last two bars poked above the highest high of the 10 bars before them, and the latest bar closed back under that high on a red bar. In replay, price tended to dip over the next 30 to 60 seconds; by 5 minutes the effect was gone.
Lost VWAP (salmon), with the detail Closed back under VWAP: tends to keep falling. The latest bar closed below VWAP right after a close at or above it. In replay, price tended to keep falling.
Switch the read bar off with Verdict bar in the chart's cog.
When you hold a long, Scalpel also watches for a bull trap on its own, on closed 1-minute bars, whatever timeframe your chart shows. When one appears it shows a toast and speaks a warning:
The toast reads, for example, PQRS: bull trap, tends to dip in the next minute. It fires once when the pattern appears, not again until it has cleared, and never more often than every 12 seconds. Switch it off with Exit alert (long weakening) in the LEVEL 2 cog.
It is a warning, not an order: Scalpel does nothing to your position. What you do with it is your plan: many scalpers take some off, move the stop up to breakeven, or tighten it (guide 5.3).
Earlier versions of Scalpel made calls: Continuation / breakout likely, Breakdown, Reversal warning, traffic-light dots, and read lines that said the book was "leaning up" or "leaning down". When every one was replayed over recorded sessions, the bullish calls were wrong more often than right, and the rest did no better than a coin flip. A call that sounds confident but is a coin flip is worse than no call, because it gets you into trades. So they went. What is left is either a plain fact or one of the three reads that showed follow-through. The numbers are in the blog post Reading the Level 2 montage.