Studies in Tape Reading

This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1910 edition. Excerpt: ... V. Volumes and Tkeir Significance S the whole object of these stud- ies is to learn to read what the point which should be known and understood before we proceed, otherwise the explanations cannot be made clear. First of all, we must recognize that the market for any stock--at whatever level it may be--is composed of two sides, represented by the bid and the asked price. Remember that the "last sale" is something entirely different from the "market price." If Steel has just sold at 50, this figure represents what has happened. It is history. The market price of Steel is either 49^$@50 or 50@50J^. The bid and asked prices combined form the market price. This market price is like a pair of scales, and the volume of stock thrown out by sellers and reached for by purchasers, shows toward which side the preponderance of weight has momentarily shifted. For example, when the tape shows the market price is 50@%, and the large volumes are on the up side. "Market Price" Defined now explain a In these four transactions there are 700 shares sold at 50 against 2500 taken at 50%, proving that at the moment the buying is more effective than the selling. The deduction to be made from this is that Steel will probably sell at 50J4 before 49%. There is no certainty, for supply and demand is changing with every second, not only in Steel but in every other stock on the list. Advantage of Here is one advantage in trading in the Leaders the leaders. The influence of demand or pressure is first evidenced in the principal stocks. The hand of the dominant power, whether it be an insider, an outside manipulator or the public, is shown in these volumes. The reason is simple. The big fellows cannot put their stocks up or down without trading in large amounts. In an...