Recommended Books

Studies in Tape Reading

Studies in Tape Reading by Richard D. Wickoff was the first detailed written study on Tape Reading in the world.

It was first published in 1910, more than 100 years ago.

Still, I can tell you it’s the best day trade book I’ve ever read to date.

Many must think that this is a very old tape reading book and has no value for the present day, right?

Big mistake!

This day trade book remains relevant to be read today.

In this article you will understand why you need to know and study tape reading, with this timeless work by Richard. D. Wickoff.

I prepared a summary in Portuguese, chapter to the chapter, highlighting the ideas and contents addressed.

Continue and be asurprise yourself with the depth of Studies in Tape Reading!

The Author of Studies in Tape Reading

First, I want you to meet the author of this masterpiece, nicknamed “The Bible of the Day Trader”.

Studies in Tape Reading was written by Richard D. Wickoff (1873-1934), an exceptional trader who made his fortune operating day trade using tape reading on the American stock exchange, the New York Stock Exchange (NYSE).

He was also a successful businessman, being founder of The Wall Street Magazine and owner of brokerage.

Besides being a real and very successful trader, he had a passion for teaching his techniques and his deep market knowledge.

Richard Wickoff's Mansion - Studies in tape Reading
Image of Richard Wickoff’s Mansion – Extracted from the www.wickoffsmi.com

Richard D. Wickoff was a contemporary and friend of great traders and financial market personalities, among them Jesse Livermore, J.P. Morgan, James R.Keene and others.

He used to interview these famous traders for information and market insights to commake his educational works including this classic of trading literature which is Studies In Tape Reading.

He himself founded the Wickoff Stock Market Institute that exists to this day and continues the dissemination and application of his methodology.

Far Beyond Tape Reading

Studies in Tape Reading is an extremely detailed and practical book on the techniques used in “tape reading”.

However, the work also presents a mature and realistic view of issues related to the trader’s psychology and on the “mental state” suitable to operate, what we now call Mindset.

This shows how much certain trading issues we face today were already relevant to the day trades of the beginning of the last century.

Tape Reading is hard work, and those who are mentally lazy should not apply. Nor anyone who’s worried yet about how to guarantee their “bread and butter.” Concern about money is not conducive to clear thinking. Too much anxiety disturbs a trader’s balance more than anything else.

Richard D. Wickoff, author of Studies in Tape Reading

Studies in Tape Reading Summary

And in to give you a complete overview of the depth and importance of this book, we have prepared a short summary of each chapter.

Chapter 01 – Introduction

The author begins the book reinforcing the importance of the trader’s willpower and mental attitude as extremely relevant aspects for success.

He compared some real cases of traders friends of his who have succeeded in relation to those who have failed.

It is in this first chapter that he makes his definition of what tape reading really is and, mainly, of what tape reading is NOT.

Richad D.Wickoff uses some brilliant analogies to describe the trader’s situation and reveals the imposingness of a deep market knowledge as a fundamental factor in the formation of the market operator.

(I prepared an exclusive pdf with the unpublished translation of the first chapter for Portuguese. Download HERE.)

Chapter 02 – Preliminary Suggestions

The author gives practical tips on how much capital should be available and also how to manage this capital during our evolution in the market.

He puts the novice trader “on the wall” asking the questions everyone should ask when starting a career.

For example, among others, he asks:

“Do you have at least $1,000 (thousand dollars) or more that you agree to lose in the learning process and while you are proving yourself in the market?”

(Something very similar with our article The 5 Truths About Day Trade)

In addition, it gives practical tips on how to choose a broker and operational tips on how to open and close a trade.

Chapter 03 – Analysis of the List of Actions

One of the curiosities revealed in this chapter is that “the tape” brought the history of all trades, of several actions simultaneously, unlike today that we have only one history for each asset.

Thus, the author gives tips on how to select the best actions to operate, among the actions of a given segment and shows how he did it.

It is interesting to note how the day trader of the time had an overall view of the market through Tape Reading.

Chapter 04 – Stop Orders, Operational Rules and More…

As its name says, the author gives detailed tips and suggestions on how to use stop orders, how to enter and exit the market.

Below is an image taken from this chapter where he explains the still used and modern trailing stop technique:

Studies in tape reading - Richard D. Wickoff
Image taken from the original from 1910

Chapter 05 – Volumes and Their Meanings

Volume analysis is one of the subjects in which Richard Wickoff can be considered one of the pioneers and visionary.

He explains in this brilliant chapter how he did his volume analysis using “the tape”. It discusses how you identify the performance of the “Great Players” and their ways of manipulating the market.

For his collaborations in the study of processes and accumulation and distribution, the author is also known as one of the fathers of Modern Technical Analysis.

Chapter 06 – Market Techniques

Another chapter the author demonstrates, with detailed examples, his refined technique of selecting stocks and reading market movements.

Discusses trending markets, the impact of news and how to behave in these situations.

Chapter 07 – Markets For ALikes and Their Opportunities

An entire chapter dedicated to the study of markets when they present themselves in a lateralized situation or with a “balance of forces”.

Still, according to Richard Wickoff, it is possible to find opportunities and one should be aware of a possible large explosive movement when the market comes out of this situation.

Chapter 08 – Using Charts as Guides and Indicators

This is a chapter dedicated to showing how to use graphics in a correct way.

It shows how he used point and figure charts to detect accumulation situations and alerts how the charts can give a false feeling that it is possible to get, mechanically, good entries by looking at the past in the charts.

The charts could report the movement of some stocks, but not from the “market as a whole” that was only possible to be observed through tape reading.

Graphics can give us the direction of movements: Tape tells us “when”

Chapter 09 – Long Term Day Trades x Trades

In addition to showing how to identify a real trend in markets and reversal movements with examples of trades, the author stresses the importance of keeping detailed reports of all operations so that bringing you has a real view of your performance.

Chapter 10 – Various Examples and Suggestions

A chapter dedicated to a few more brilliant and genuine suggestions derived from your huge experience with tape reader.

The author discusses the issue of operating sold in one stock and bought in another and also the importance of not letting a winning operation turn negative.

You shouldn’t never leave an operation that’s profitable, turn into a loss(…)

Chapter 11 – Obstacles to Overcome – Potential Profits

An exceptional chapter where Wickoff reveals his 7 Tape reader commandments.

The author has an extensive commentary on each, but I will list them here so that you know the depth and timeliness of this work:

  1. Don’t Overoperate! (overtrading)
  2. Eliminate your Anxiety!
  3. Do not operate when the Market is not Conducive!
  4. Find a Broker You Can Trust!
  5. Be Objective in your Orders! (in this case he talks about verbal communication with his broker)
  6. Stay Alert and Calm after a Loss!
  7. Be Well, Mentally and Physically!

Chapter 12 – Closing Trades – Student Suggestions

More operational tips on how to close your trades seeking to absorb the maximum of each move.

In addition, Richard discusses how each trader had to develop their own way of trading, and always study hard.

He criticizes those who operate only based on tips and gossip and do not develop a vision and operational own and independent.

Surprisingly, modern and current!

Chapter 13 – Two Days Operating

Here the author “shows the boleta”, as we usually speak today.

It describes your actual operations and shows the details confirming the efficiency of your Tape Reading method in practice.

Chapter 14 – The Principles Applied in Swing Trades

In this final chapter, the author reaffirms his method and finds that its efficiency in the face of different types of market.

It encourages readers to delve deeper into the study of tape reading as one of the best ways to achieve success in the market, including capturing long trends.

How to Read Studies in Tape Reading

Unfortunately, there is not yet a full translation of the book Studies in Tape Reading for Portuguese.

However, the original edition, in English, is already in the public domain and can be read online here

Why You Should Read “Studies in Tape Reading” Today

The aim of this article is also to show how a historical view of the evolution of tape reading, and day trading itself, can greatly enrich your view of the market as a whole.

And in this way, help you win as a day trader.

In particular, I am always rereading this amazing work that has helped me understand how certain issues relating to our day trader activity are universal and time-timed.

With each new reading I discover some new insight that I can adapt for my operating system today, isn’t this fascinating?

For me, reading book Studies in Tape Reading was and remains a huge source of inspiration.

We need to “lean on the shoulders of giants” if we are to achieve great goals.

The study of the life and work of these great successful traders fulfills this important role in our process of seeking consistency.

I sincerely hope that this article has succeeded in conveying the importance of this work of the great trader Richard D. Wickoff and has served as a stimulus for you to seek your excellence as a trader.

Big hug and good trades!