Tape Reading 101

by EquityScholar.com
(NY ,NY, USA)

Tape reading used to refer to the procedure of studying the antiquated ticker tape and carefully watching prices, volume, and change in order to predict the current trend. Today tape reading refers to keeping track of price action and asking yourself if the price is going up or down at the time.

Even beginners have the ability to see when prices are going up or down at a specific time period and they can also tell when price action is going sideways. It is also easy to tell when the prices action stops, even if it’s just for a brief moment, after going up or down. Many traders who use this strategy implement some kind of caution that always involves watching price action, if only to adjust stops. You will have an advantage over other traders if you can grasp the concept of price action.

Following price action can be very confusing. One of the main ways to follow price action is to examine the price compared to an indicated point. Many traders use pivot points because they work. This is the simplest way to tell if your position is approaching or moving further away from a specific point. This lends itself to the trader getting a feel for what’s happening in the market once their position is initiated. The indicated point more than likely is your entry price. Some points have more importance such as opening price, new highs, or new lows. So when examining price action, you want to acknowledge how fast it’s moving and how much it’s gone up or down. To evaluate this you need two points: your indicated point and the price it’s trading at the time. A second thing to observe when following price action is to watch the market’s reaction to a specific situation. Learning price behavior and acquiring experience is a result of learning what to anticipate. You should learn what the market’s most likely reaction or response should be. Recognizing when an indication or most likely response has failed, can make this a profitable strategy.

Disciplined trading

The Equity Scholar Team
www.equityscholar.com