Tape Reading
The practice of analyzing real-time price, volume, and order flow data to infer short-term market direction.
What is Tape Reading?
Tape reading is a trading technique that involves closely observing the continuous stream of real-time transactions — originally printed on a ticker tape, now displayed electronically — to identify patterns in price movement, trade size, and velocity that signal near-term supply and demand imbalances. Skilled tape readers look for clues such as large blocks trading at the ask (aggressive buying), repeated failure to break a price level despite multiple attempts (absorption), or a sudden increase in speed of execution. Modern tape reading uses time-and-sales data, Level 2 quotes, and the order book. It is primarily used by day traders and scalpers who hold positions for seconds to minutes rather than hours or days.
Example
A tape reader watching a stock at $100 notices a series of 10,000-share prints at the ask price in rapid succession with no corresponding drop, suggesting a large buyer is absorbing supply. The trader interprets this as a bullish signal and enters a long position anticipating a breakout above $100.
Source: Investopedia — Tape Reading