Tape Reading: A Cool Head Leads to High Profits

by David Jenyns on September 14, 2007

When a Tape Reader has his emotions well in hand, he will play the market like a skilled violinist, and the money will flow into his hands like melted chocolate into a fondue pot.

When anything interferes with this attitude it should be eliminated. If, for example, there is an unusual series of losses, the trader had better suspend operations until he discovers the cause.

For starters, do not overtrade! One may be trading too often. Many opportunities for profit develop from each day’s movements; only the very choicest should he acted upon. There should be no haste. The market will be there tomorrow in case today’s opportunities do not meet requirements.

Next, eliminate anxiety! Anxiety to make a record, to avoid losses, to secure a certain profit for the day or period will greatly warp judgment and lead to a low percentage of profits. Tape reading is a good deal like laying eggs. If the hen is not left to pick up the necessary food and retire in peace to her nest, she will not produce properly. If she is worried by dogs and small boys, or tries to lay seven eggs out of material for six, the net proceeds may be an omelet.

The tape reader’s profits should develop naturally. He should buy or sell because it is the thing to do not because he wants to make a profit or fears to make a loss.

When it comes to trading, don’t trade when the market isn’t acting right! The market may be unsuited to tape reading operations. When prices drift up and down without trend, like a ship without a rudder, and few positive indications develop, the percentage of losing trades is apt to be high. When this condition continues it is well to hold off until the character of the market changes.

If you want to minimize anxiety, get a broker you can trust! One’s broker may be giving poor service. In a game as fine as this, every fraction – every second counts. Executions of market orders should average not over one minute. Stop orders should be reported in less time as such orders are on the floor and at the proper post when they become operative. By close attention to details in the handling of my orders, I have been able to reduce the average time of my executions to less than one minute. The quickest report obtained thus far required but 25 seconds.

A considerable portion of my orders are executed in from 30 to 40 seconds, varying according to whether my broker is near the phone or in a distant crowd when the orders reach the floor and how far the identical “crowd” is from his “phone.”

Trusting your broker is important, but do not leave orders to the discretion of the broker! Make your orders clear and firm. Do not say, “Try to sell better than the bid and let me know what happened”- say, “Tell at the bid price and report instantly!”

He cannot “Do better” than the momentary bid or offered price. Ordinarily it is expected and is really an advantage to the general run of speculators to have the broker use some discretion; that is, try to do better, providing there is no chance of losing his market. But I do not wish my broker to act like that for me. My indications usually show me the exact moment when a stock should be bought or sold under this method, and a few moments’ delay often means a good many dollars lost.

In order to become a successful day trader, it is necessary to always keep one’s emotions in check. Take a moment during the most stressful periods of the day to assess your situation and examine your decisions. Remember, the answer to lost profits is not to trade more! Keep your head about yourself and rely upon your trusted broker, and the money will come — if not today, perhaps tomorrow.

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