Fighting the Tape and Painting the Tape

Both fighting the tape and painting the tape are trading practices to be avoided. Fighting the tap is a trading practice where traders act against the ticker tap. That is they buy when stock prices are falling (bearish market) and sell when stock prices are rising (bullish market).

In opinion of experts fighting the tape is a deadly sin which can destroy a trader’s future. Major reasons for fighting the tape are over-optimism, over-confidence, greed, fear of loss, unavailability of inadequate data, using of wrong tools for technical analysis, and wrong interpretation of news and info.

Painting the Tape is an illegal trading practice where some traders manipulate stock price to profit from it. They buy and sell stocks in high volumes and high prices. On ticker tape report this scenario creates a feeling on other (unsuspecting) traders that the stock is good to trade or invest. As a result the stock price moves to even higher levels and the original traders profit from this. At some time later, when traders realize the stock is an over-valued, price drop considerably resulting in heavy loss to traders holding them. The increased use of automated trading systems to generate buy and sell signals by traders also helps painting the tape traders considerably. Technical analysis and rightly interpreting info are measures of avoiding painting the tape stocks.

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