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.

RELATED TERMS
  1. Broad Tape

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

    A ticker tape is a computerized device that relays financial ...
  3. Manipulation

    Manipulation is the act of artificially inflating or deflating ...
  4. Taping Rule

    The taping rule requires special monitoring of FINRA registered ...
  5. Fast Tape

    A type of futures market that occurs when a single traded price ...
  6. Bid Support

    Bid support has many meanings within the financial industry, ...
Related Articles
  1. Investing

    Tape Reading Can Improve Your Investing

    Tape readers interpret complex background data during the market day to gain an edge.
  2. 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.
  3. Investing

    TD Ameritrade Adds New Tools to Its Ticker Tape Platform

    TD Ameritrade has overhauled its Ticker Tape platform to provide more data and information to its customers.
  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. Investing

    5 Reasons Why Currency Manipulation Matters for Average Investors

    Find out why the Treasury Department identified five potential offenders of currency manipulation, and see how this affects investors in the United States.
  6. Investing

    Is Sherwin-Williams' Bid for Valspar in Trouble?

    The $9.3 billion merger of Sherwin-Williams (NYSE: SHW) and Valspar (NYSE: VAL) may be in trouble with antitrust regulators. A report by The New York Post said the Federal Trade Commission is ...
  7. Tech

    Auction to Offer Fractional Stake in Warhol Work

    A blockchain platform is offering a Warhol painting to investors interested in partial ownership.
  8. Investing

    Spotting Creative Accounting on the Balance Sheet

    Companies have used creative accounting as a way of manipulating their balance sheets.
  9. Insights

    Yuan Stronger in Q1 ahead of China President Xi's US Visit

    Has the recent appreciation of the yuan been a PR game to keep Trump from tagging China a manipulator?
RELATED FAQS
  1. What determines labor productivity?

    Examine the two primary components of labor productivity, applied technical efficiency and available capital goods, and learn ... Read Answer >>
  2. 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 >>
  3. What's the difference between primary and secondary capital markets?

    In the primary market, investors buy securities directly from the company issuing them, while in the secondary market, investors ... Read Answer >>
  4. How does quantitative easing in the U.S. affect the stock market?

    Read about the impacts of quantitative easing, or QE, on prices in the stock market, and learn some of the possible implications ... Read Answer >>
Hot Definitions
  1. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  2. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  3. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  4. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  5. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  6. Money Market

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