Tape reading and forex?

Beginner Questions
1

Hi
What is Tape reading and how can it be used to trade forex?
In MetaTrader in marketwatch when i select a pair and then click “Tick Chart” I see a line. Do traders actually use this line (Only / Mainly) to enter/exit trades?
I searched on amazon, books on the subject and found the following:

  1. Techniques of Tape Reading by Vadym Graifer and Christopher Schumacher
  2. Studies in Tape Reading by Richard D. Wyckoff
  3. Tape Reading & Market Tactics by Humphrey B Neill

Can somebody give me a recommendation?
Thanks
Rafael

2

Hey, Rafael

[B]Tape reading[/B] is an old stock market term from the days of ticker-tape machines, which spit out miles and miles of paper tape showing price and volume for each stock traded. In those days, it was the closest thing to real-time information available to most traders. [B]Reading the tape[/B] essentially meant studying [B]price action[/B] (together with information on trading volume).

In the forex market, many of us rely on price action as our primary source of information. But, we read it from charts, instead of ticker tape; and volume is not one of the metrics available to the retail forex customer.

There is a lot of information on this Forum about price-action trading, as well as some lively debates (and fights) between traders who rely on price action and traders who rely on indicators. Do some searching, and you will find dozens of posts on these topics.

Here’s an excerpt from an article written by Linda Raschke on tape reading and price action:

"Learn to follow the market�s price action and read the signals it gives. This can become a strict discipline in itself
and the result will be greater confidence that a trade is or is not working.

Tape reading long ago referred to the practice of studying an old-fashioned ticker tape and monitoring prices, volume,
and fluctuations, in order to predict the immediate trend. (It does not mean you have to have the ability to read the
prices scrolling across the bottom of the screen on CNBC!) Tape reading is nothing more than monitoring the current
price action and asking: Is the price going up or down right now? It has nothing to do with technical analysis and
everything to do with keeping an open mind.

If you can learn to follow the price action, you will be two steps ahead of the game because price is faster than any
derivative. You may have heard the saying, �The only truth is the current PRICE.� Your job as a trader will become ten
times easier once you accept this. This means ignoring news, opinions, and personal biases."

(Source: eTalkForex, June 14, 2006)

Clint

1 Like
3

Hi Clint
Thank you for the reply it helped to clarify things.
After previewing “Techniques of Tape Reading by Vadym Graifer and Christopher Schumacher” i see that he also use price action as you said and not a tick line.
Thanks
Rafael