Tape Reading


DEFINITION of 'Tape Reading'

An old investing technique used by day traders to analyze the price and volume of a particular stock in order to execute profitable trades. Tape reading involves evaluating the size of stock orders, order speed, order price, and order condition (at ask, at bid, between ask and bid) to identify trends in trading behavior by insiders, professionals and the general public. These trends help a trader recognize good times to buy or sell.

BREAKING DOWN 'Tape Reading'

The term gets its name from the old method of displaying trade, bid and ask information on paper printed by ticker tape machines (today, it is displayed electronically). Investors read the tape numbers to create an unemotional analysis and capitalize on the behavior of the market. This technique can be profitable whether the market is bullish or bearish.

  1. Ticker Tape

    A computerized device that relays financial information to investors ...
  2. Day Trader

    A investor who attempts to profit by making rapid trades intraday. ...
  3. Ask

    The price a seller is willing to accept for a security, also ...
  4. Consolidated Tape

    An electronic program that provides continuous, real-time data ...
  5. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
  6. Volume

    The number of shares or contracts traded in a security or an ...
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