Tape Reading & Stock Trading (part 1)

There is a widespread demand for more light on the subject of tape Reading or the reading of moment by moment transactions in trading stock. Thousands of those who are trading in the stock market now recognize the fact that the market momentarily indicates its own immediate future; and

That these indications are accurately recorded in trading transactions second by second; and

Therefore those who can interpret what trading transactions take place second by second or moment by moment have a distinct advantage over the general trading public.

Such an opinion is warranted, for it’s well known that many of the most successful people involved in trading began as tape readers, trading in small lots of stock with a capital of only a few hundred dollars. Joe Manning, was one of the shrewdest and most successful of all the traders on the floor of the New York Stock Exchange.

A wise man once said:
"Joe and I were trading in ten share lots together. He was an ordinary trader, just like me. We used to hang over the same ticker." The speaker was, at the time he made the remark, still trading in ten-share lots, while I happened to know that Joe's bank balance - his active working capital - amounted to $100,000, and that this represented but a part of the fortune built on his ability to understand the tapes’ secrets and interpret the language of the tape.

Why was one of these men able to generate a fortune, while the other never acquired more than a few thousand dollars trading?

Their chances were equal at the start of their pursuit as far as capital and opportunity. The trading profits were there, waiting to be won by either or both. The answer seems to be in the peculiar qualifications of the mind, highly potent in the successful trader, but not possessed by the other.

There is, of course, an element of luck in every case, but pure luck could not be so sustained in Manning's case as to carry him through day trading operations covering a term of years.

The famous Jesse Livermore was trading solely on what the tape told him, closing out every-thing before the close of the market. He was trading from an office and paid the regular commissions, yet three trades out of five showed profits. Having made a fortune, he invested it in bonds and gave them all to his wife. Anticipating the 1907 panic, he put his $13,000 automobile up for a loan of $5,000, and with this capital started trading the bear side of the market, using his profits as additional margin. At one time he was short 70,000 shares of Union Pacific stock. His whole lot was covered on one of the panic days, and his net trading profits were over a million dollars!