What is 'Painting The Tape'

Painting the tape is a form of market manipulation whereby market players attempt to influence the price of a security by buying and selling it among themselves to create the appearance of substantial trading activity. Painting the tape is an illegal activity that is prohibited by the Securities and Exchange Commission because it creates an artificial price. The term originated in a bygone era when stock prices were largely transmitted on a "ticker tape."

BREAKING DOWN 'Painting The Tape'

Two common objectives of painting the tape are to lure unsuspecting investors into a security and to achieve a high closing price for it.

Market manipulators know that high trading volumes in a security often attract the attention of investors. Painting the tape increases volume and attracts investors, who then may push a price higher. The market manipulators who have painted the tape will then sell their holdings — often acquired at much lower prices — to investors unaware of the manipulation. These investors are left "holding the bag" once the manipulation ceases and the price of the stock declines steeply. 

Market manipulators may paint the tape near the market's close in an attempt to boost a stock's price substantially at market close. Closing prices are widely reported in the media and are closely watched by investors, and since most securities are valued on the basis of their closing prices, manipulators use this tactic to achieve a higher market value for their holdings.

  1. Broad Tape

    A modern version of the ticker tape produced by the Dow Jones ...
  2. Fighting The Tape

    The action of placing a trade or trades that go against the ticker ...
  3. Ticker Tape

    A computerized device that relays financial information to investors ...
  4. Consolidated Tape

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

    Manipulation is the act of artificially inflating or deflating ...
  6. Tape Is Late

    A situation on the trading floor where trading volume is so heavy ...
Related Articles
  1. Investing

    Understanding The Ticker Tape

    We explain the meaning and use of that reel of symbols whizzing across your TV or computer screen.
  2. Investing

    Tape Reading Can Improve Your Investing

    Tape readers interpret complex background data during the market day to gain an edge.
  3. Investing

    Financial Statement Manipulation An Ever-Present Problem For Investors

    The SEC has taken steps to eliminate this type of corporate fraud, but it remains a real risk for investors.
  4. Investing

    How Deutsche Bank Market Manipulation Impacts Investors (DB)

    Explore the ramifications of Deutsche Bank's admission that it manipulated gold and silver from 2007 to 2014, including its similarities to other schemes.
  5. Trading

    5 Ways To Adapt To Tough Markets

    Tough markets undermine profitability and lower self-confidence. Fight back with five simple but powerful rules of engagement.
  6. Insights

    Is Donald Trump’s Biggest Leaker Donald Trump?

    Even as he mucks through the Clintons’ past, he's trying to keep his own out of sight.
  7. Investing

    Market Speculators: More Help Than Harm?

    Speculators often get a bad rap, but remember that they only observe trends, not manipulate them.
  8. Investing

    Short and Distort: Bear Market Stock Manipulation

    Here's how to avoid getting caught by short and distort scams.
  9. Investing

    Creative Accounting: When It's Too Good to Be True

    Accounting has matured, but there are still plenty of ways companies disguise financial results.
  1. What is comparative advantage?

    Comparative advantage is an economic law that demonstrates the ways in which protectionism (mercantilism, at the time it ... Read Answer >>
  2. What determines labor productivity?

    Examine the two primary components of labor productivity, applied technical efficiency and available capital goods, and learn ... Read Answer >>
  3. Why is overhead cost allocation sometimes manipulated on an income statement?

    Learn why companies sometimes manipulate overhead costs to boost the appearance of overall profitability, and other reasons ... Read Answer >>
  4. Do hedge funds manipulate stock prices?

    Learn how authors of a 2012 study say they found evidence of manipulation of stocks by hedge funds on the last trading day ... Read Answer >>
  5. What does churning mean?

    A. Trading with yourself, or with someone else in attempt to make the tape appear more active than it really is.B. Trading ... Read Answer >>
Hot Definitions
  1. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  2. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  3. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  4. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  5. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  6. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
Trading Center