Tape reading is the ability to look at the numbers on tape, with out looking at charts and be able to predict the immediate outcome in the market prices.
How to begin Tape Reading
When you are tape reading, the first thing you want to do is get your market bracket. If you are at 58 — 59 that is too tight for a bracket for tape reading right now. Now you are at 57 with a 3 point range and that is a little more of a bracket for tape reading. Right now, you are trading at 57, your top is at 59, In tape reading, now you have to decide if you are a trin trader or a counter trin trader. Are you going to buy pull back or buy break outs? You have to decide this for yourself first. Say you are a trin trader and you are going to be buying pulls back. In this example, you are a buyer at 57, because you got your bracket there. If you have it got it pegged as down and you are tape reading, then you are going to short it at 59. The bracket is still really tight (3 points), you will want at least 5 points. This how you gauge a retracement and see whether or not it going to last. If you shorted at 59, you have to cover a half or ¾ of you position at 55. Is 55 going to hold? No. This s how know where to short the retracement. Click here to find out more about other trading strategies.
FAQs
Q: What does reading the tape mean in trading?
A: Tape reading is the ability to look at the numbers on tape, with out looking at charts and be able to predict the immediate outcome in the market prices.
Q: How to read tape trading?
A: Before reading the tape you need to get your market bracket, determine if you are a trin trader or a counter trin trader, and decide if you are going to buy pull back or buy break outs. Then you gauge a retracement to see if it is going to last.
Q: What should I look for when reading a tape?
A: “Using an example: if you are buying pulls back, have you bracket at 57, then you are going to short it at 59. The bracket is still really tight (3 points), you will want at least 5 points. “
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