GLOSSARY // Day Trading
Tape Reading
Tape reading is inferring buyer and seller behavior from raw prints and quotes instead of chart patterns. The tape reader watches time and sales against the Level 2 book, asking one question continuously: is aggression coming from buyers lifting offers or sellers hitting bids, and is it growing or fading?
The craft predates screens — it began with ticker tape in the 1900s — but the modern version centers on a few repeatable reads: offers refreshing at one price (a hidden seller), bids stepping up without prints (buyers positioning), volume surging as a level breaks (confirmation) or drying up at highs (exhaustion). It matters most in fast-moving small caps, where by the time a candle closes on the chart, the tape has already told the story three seconds earlier.
A momentum stock approaches $9.00 for the third time. On the first two tests the tape showed 40,000+ shares hitting the bid as it touched the level. This time the pullback prints only 6,000 shares of selling and bids hold at $8.94 — sell pressure has thinned, and the third test breaks through on a burst of offer-lifting prints.
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.