Reading the tape used to be the way all day traders traded. The “tape” in question refers to the “ticker tape”, which was fed through a stock ticker machine and transmitted stock quotes over telegraph.
When you hear the term ticker-tape parade — and you see photos of all that paper flying out of office buildings — that’s where that paper originally came from. Can you imagine?
Today, being a tape reader means that you focus on the price movement of a stock by watching a time and sales window, coupled with a level 2 window. Those two windows together give you an idea about levels of support and resistance and may give the added edge you need.
Sounds confusing? It was to me at first, as well. Luckily, there’s YouTube, and a trader who puts up a lot of great content there is Anand Sanghvi, the guy behind SangLucci.com. If you don’t know about him, Anand took $5,000 and turned it into $2.4 million trading options and he’s created a great free video about how to profit from reading the tape.