Basic Techniques  |  MAY 1997

Tape Reading And Daytrading Stock Index Futures by Gary Smith

Tape Reading And Daytrading Stock Index Futures by Gary Smith Tape reading isn’t terribly complicated. In Reminiscences of a Stock Operator, Edwin LeFèvre said it best: “This matter of tape reading is not so complicated as it appears. Of course you need experience. … The object of reading the tape is to ascertain, first, how and next when to trade — that is, whether it is wiser to buy than sell. … You watch the market — that is, the course of prices as recorded by the tape — that is, the price tendency.” Two key issues for traders here. First, the objective of reading the tape is to discover whether you should buy or sell. But in an understated, yet equally important manner, LeFèvre avers that you need experience to become a profitable tape reader. Here, a professional trader walks us through a recent trade he made and details the reasoning behind his decisions. He also shows that trading skills don't need to be complicated, but they do have to be well practiced.

by Gary Smith