C o n te n ts .

C H APTER I .

Int r od uc o t ry
C H APT ER II .

P r eli m i n a ry S u gg e s ti ons

C H AP T ER III .

T h e S to c k Li t s A n al y z e d

C H APT ER IV .

S to p Or d r Tr di g R l E t
e s, a n u es , c .

C H APT ER V .

Vl m
o u d T h i r S ig ifi
es an e n ca n c e

C H APT ER V I .

M rk t T h i q
a e ec n ue

C H AP T ER V I I .

D ll M rk t
u a d T h i r O pp rt
e s an iti e o un es

C H APT ER V I I I .

Th U e f C h rt
se o G id d I di
a s as u es an n ca
t r o s

C H APT ER I X .

D il y T r d
a L g P l l O p r ti
a es vs . on u e a o ns

C H AP T ER X .

V ri
a E x m pl
ou s d S g g ti
a es an u es o ns

C H AP T ER X I .

O t l t b Ov r
b s a c es o m — P ib l Pr fi t
e e co e oss e o s 1 66

C H APT ER X I I .

l r —
C o s mg th e T a d e s S u g g e s ti o n s fo r S tu
d en ts
 S tu d i e s i n T a p e R e a d in g
I . In tr o du cto r y

H E R E is a w idespre a d de ma nd
f o r m or e l igh t on the s u b j ect o f
Ta pe R e a ding T ho u s a n d s o f
.

t r a ders en t erta in th e ide a th a t in

so m e w a y t h e m a r k e t moment a ri l y indi
c a te s its o w n im me di at e f u t u r e ; t h a t
th ese indic at i o ns a r e a cc u r a te ly recorded
o n t he t a p e ; t here fore he w ho c a n inter
pret w h a t is imprin t ed o n the n a rro w
p a per ri bb o n h a s w ithin his re a ch u h
l imit e d we alth .

I t seems t o me t h at s u ch a n O pini o n i s S u c c es s of

full y w a rr a n t ed fo r i t is well k n o wn tha t T a p e R ea d er s

m a ny of th e m os t s u cc es s fu l tra d ers a nd
o p er a to r s o f th e p r es en t d a y b eg a n o p er

a ti o ns by s u cces s fu l Ta pe fi ea d i ng ,
tr a d
i ng i n fr ac ti o na l l o ts o f s to c k w ith a ca p
i ta l o f o nl y a f ew h u n d r ed d o l l a r s .

S pe ak ing o f J oe Ma nning one o f th e ,

shrewdes t a nd mos t s u ccess f ul o f all the

t r a ders o n t he fl o o r o f the N ew Y or k
’

St oc k E xch a nge a f riend o f mine once

,

s a id :
 0
T a pe R ea d i n g
0

J oe use d t o tr a de in t en sh a re
d
t

an I
l ots together H e w a s a n o rdin a ry
J
.

oe Ma n n in g tr a der j u st a s I a m We u sed to h a ng
,
.

over th e s a m e t ic k er
T he spe ak er w a s at t he time he m a de ,

the rem a r k s t i ll t ra ding in ten sh a re l ots

,
-
,

w hi l e I h a ppened t o k no w t h a t J oe s b a n k ’

—
b ala nce his a c ti v e w or k ing c a pit al
a mo u n t ed to a nd th a t this re p
resents b ut a p a r t o f the fort u ne b u i l t on
his a b i l ity to in t e rpre t th e la ngua ge o f
the t a pe .

W hy w a s one o f thes e men a b l e to

a m a ss a fort u ne w hi l e t he other ne v er
,

a cq u ired m o re th a n a f ew tho u s a nd do l
la rs at t h e s a me p u rs it
u ? T heir ch a nces
w ere eq ual at t he s ta r t so fa r a s c a pit al
a nd opport u nity go T he mi ll i o ns were .

there w a iting to b e w o n by either or

bo th .

M e n ta l T he a nswer see m s t o be in t he pec ul i a r

Q ua lifi c a ti o n s ment al q ual i fi c a tions high l y p o tent in ,

the s u ccess ful t r a der b ut u nposses s ed ,

b y the other T here is o f co u rse a sm all

.
, ,

e l emen t o f l u c k in ev ery c a se b u t p u re ,

lu c k co u l d n o t b e so s u s ta ined in Ma n
n in g s c a se a s to c a rry him thro u gh oper
’

a tio n s co v ering a t erm o f ye a rs .

B y proper ment al eq u ipmen t w e do no t

me a n the mer e a b i l ity to t ak e a l oss de ,

fi ne the t rend o r to e x ecu te some other

,

move ch a r a c t eristic o f th e pro f ession al

tr a der We re f er to the a ctive or dor
.

m a n t q ual ities in his m ak e u p T he -

.

po w er t o dri ll himse l f into the righ t

men tal att i tu de ; to s t i fl e his emoti o n ,
 I nt r o d u c to r y
f e a r a nxie ty e lat i o n r e c kle ssness t o
, , , ,

t r a in his mind in to o b edi e nce s o t h at it

—
recogni z es b ut o n e m a s t er t he t a pe
these i f p o ssessed w oul d b e a s valuab l e
, ,

in sh a ping t he res ult a s n atu r al a b i l ity ,

or W h at is c alle d t h e si xth s ense in t r a

ding .

Som e peop le a re born m u sici a ns others ,

seeming ly vo id o f m u sic al ta s t e d evel o p ,

t hemse lv es in t o v ir tu os o s It is the .

a mo u n t o f I W I L L in a m a n which
m ak es him medi o cre o r pre emin e n t in — -

W all St ree t p a r la nc e a d u b o r a b ig,

tr a der
J
.

Ja c ob F i el d is a nother e x p o nen t o f acob F i el d

Ta pe R e a ding T hose w ho k ne w
.

“
Jak ey when he bega n his W all S tree t
c a reer w ere i m pressed b y his abi l i ty to
,

re a d the ta pe a nd f o ll o w the t rend H is

,
.

tal en t f or t his w o r k w a s do u b t l ess b 0 n r

in hi m ; t im e a nd e xpe rience h ave in t ensi

fi e d i t u n t i l n o w he is considered by t he
m a j ority o f hi s f e ll ows t he P rinc e o f ,

Flo or T r a d e rs .

Wh at ev er lau re l s M r K eene ha s won .

a s a n oper at or or s yndic a te m a n a ger do

J
,

no t d et r a ct f rom his rep u t a tion a s a Ta pe im K e e n e

R e a d e r H is s cr ut iny o f t he ta pe is so
.

int e ns e that he a ppe a r s t o be in a t r a nce

whi l e his men tal processes a r e b eing
wor k ed out H e s e ems to a n al y z e prices
.
,

v o lu mes a nd flu c tuat i o n s do w n t o the

fi ne s t i ma gin a b l e poin t then t e l eph o nes
,

to the flo or to a scerta in t he ch a r a cter o f

the b u ying or se ll ing in certa in a ct i v e
stoc k s With this a u x i l i a ry in f orm at ion
.
 T p R ea d i n g
a e

he comp l etes his j u dgment a nd make s his

com m itments .

M r K e ene st a n d s to d ay on the pinn a

.
-

c l e o f f a me a s a Ta pe R e a der a nd his ,

d a i l y presence at t he tick er is s u ffi cient

evidenc e t h at th e w o r k pa ys a nd p ay s
we ll .

O ne m igh t s ay : These a re r a re e x
a mp l es T he av er a ge m a n nev er ma k es
.

a s u ccess o f Ta pe R e a ding .
”

R ight yo u ar e " T he a v er a g e ma n
se l do m m ak es a s u cc e ss o f a nything .

Su ccess in this fi e l d u s ually r e s ul ts

f rom ye a rs o f p a inst ak ing e ffor t a nd a b
so lu te c o ncentr at ion u po n the s u bj ect .

It req u ires t h at one de vo te his w ho l e

time a nd att en t ion to th e t a p e He .

sho u l d h av e n o o t her b u s ine ss o r pro

f e s s io n .

“
A ma n c a nn ot serv e t w o ma s te rs ,

a nd t h e t a pe is a ty r a nt .

O n e c a nn ot b ec o me a Ta pe R e a der by
gi v ing the t icke r a b sent t re atmen t ; no r
by r u nning in t o his b ro ke r s o ffi ce a ft er
’

l u nch or seeing ho w the ma r k et c l osed

,
“ ”

f r o m his e v ening ne w sp a pe r H e c a nno t .

st u dy this a r t f r om the fa r en d o f a
te l egr a ph or te l ephone w ire H e sho u l d .

spend t w enty se v en ho u rs a w ee k a t the

-

tic k er a nd m a ny m o re h ou rs a w a y f rom
,

it s tu dying his mist ak es a nd fi nding t he

“
w hy o f his lo ss e s
”
.

I f Ta p e R e a ding w ere a n e xa c t s c r
ence one wo u l d s imp ly h a v e to a ssem b l e
,

the f a ct ors c a rry ou t t he o per at ions i n

,

d i ca ted a nd tr a de a ccordingl y
,
But the .

—8
 r o d u c to ry
Int

fa ctors in flu encing the ma r ket a re in

fi nite i n their n u mb e r a nd ch a r a ct er a s ,

w e ll a s in t heir e ff ect u pon the m a rk et ,

a nd to at tempt the cons t r u ction o f a

Ta pe R e a ding f orm u la w o u l dPS E em to b e
f u ti l e
. H o w ever s o mething o f the k ind
,

( in t he ro u gh ) m a y de v e l o p a s we pro
gress in this inv estigat ion so l e t u s pre ,

serve open minds .

Wh a t is Ta pe R e a ding ?
T his q u es t ion m a y b e b est a ns w ered b y
fi rst deciding w h at i t is no t .

Ta pe Rea ding is n ot m e re l y look ing at

t he t a pe to a scert a in h o w pric e s a re
r u nning .

I t is no t r ea ding the ne ws a nd th en
b u ying or se ll ing i f t he s t oc k a cts
“

right .

I t is n ot t r a din g o n t ips opinion s or , ,

i n for ma ti o n .

It is no t b uying bec au se they a r e g o

ing u p o r s ell ing b ec a use th ey loo k
,
” “

we ak .

It is n ot t r a ding o n ch a r t indic at i on s
o r b y other me ch a nic al me thod s .

It is n ot b u ying o n dips a nd se ll ing o n

“
-

b ul ge s .
”

N or is i t a ny o f t he h u ndred other
f oo l ish things pr a ctised by the m i ll ions
o f peop l e w i t h out m ethod fo reth o u ght or
,

c al c ulat ion .

Ta pe R e a ding seems t o u s : T he Ta pe R e d i g
a n
D efi n ed
science o f de t ermining f ro m the t a p e the
im m edi a te trend o f prices .

I t is j u dgi n g f rom w h a t a ppe a rs o n

 T a p e R ea d i n g
the ta pe n o w ,
w h a t is l i k e l y to b e sho w n
in fi ve min u tes or more .

It b e a rs no re lat ion to c la ir v oy a ncy

a nd w e do no t b e l ieve th a t spirits o f de
p a rted f riends c oul d b e o f a ssis ta nce to
st u dent s .

Ta pe R e a ding is r a pid fi e horse sense -

r .

Its o b j ect is to determine w hether U nion

Pa ci fi w hich is n o w 1 5 9 wi ll se ll a t 1 60
c, ,

b e fore 1 5 8 or v ice vers a ; t o m ak e de

,

d u c tio s f rom e a ch s u cceeding tr a n s a c

n
—
tion every shi f t o f the m a r k e t k a l eid o
scop e ; t o gr a sp a ne w sit u at ion force it ,

l ightning l i k e thro u gh t he w eighing m a

-

chine o f the b r a in a nd t o re a ch a deci

,

sion w hich c a n b e a cted u pon w i t h coo l

—
ness a nd precision all within the s pa ce
o f a f ew seconds .

p
S u p ly a n d It is ga u ging the mom e nt a ry s u pp l y
D em a n d
a n d dem a nd in p a rtic u la r stoc k s a nd in

the w ho l e m a rk et comp a ring th e f orces

,

b ehind e a ch a nd th e ir re la tionship e a ch ,

to the other a nd to all .

A Ta pe R e a der is l i k e the m a n a ger o f

a dep a r t ment store ; int o his o ffi c e a re
po u red h u ndreds o f reports o f s al es
m a d e b y the v a rio u s dep art ments H e .

notes the gener al trend o f b u siness

whether dem a nd is he av y or l igh t
—
th o u gho u t th e store b ut l ends speci al
r

a ttention t o th e l ines in w hich dem a nd is

a b norm all y s t rong or w e ak When he .

fi nds di ffi c u l ty in k eeping his she lv es full

in a certa in dep a rtment he ins t r u cts h is ,

b u yers a nd t hey incre a se their b u ying

,

or d ers w hen c e rta in goods do not mo v e

_1 0_
 Int r o d u c t ry o

he k no w s there is l ittl e dem a nd ( m a r k et )

f or them t here f ore he l o w ers hi s prices
—o ff ers ind u c e men t s to p o ssi b l e p u r
, ,

C h a sers .

A fl oor t r a der who s ta nds in one cro w d

all d a y is l i k e the b u y er f o r one dep a rt
—
ment h e sees m o re q u ickl y th a n a nyone
e l se the dem a nd f or t h a t c la ss o f goods ,

b t h a s n o w a y o f comp a ring it t o th a t
u

p ev a i l ing in other p a r t s o f the s tore

r .

He m a y b e t r a ding on t he l ong sid e o f

U nion P a ci fi c w hich h a s a strong u p
,

w a rd t rend w hen s u dden l y a b re ak in

,

a other s t oc k w i ll demor al i z e the m a r k e t

n

in U nion P a ci fi c a nd he w i ll b e forced
,

to compe t e w ith o thers w ho h av e stoc k s

to se ll .

T he Ta pe R e a der on t he other h a nd , ,

from his perch at the tic k er enj o ys a ,

b ird s eye v ie w o f the w ho l e fi e l d When

’
.

serio u s we aknes s dev e l ops in a ny q ua r

ter he is q u ic k to note w eigh a nd a ct
, , .

A nother a d va n ta ge in f av or o f the
Ta pe R e a der : T he ta p e t e ll s th e ne w s
min u t es ho u rs a nd d ays be f ore the news
,

tic k ers o r newsp a pers a nd b e fore it

, ,

c a n b eco me c u rren t gossip E v erything

.

f rom a f oreign w a r t o the p a ssing o f a

d iv idend ; f rom a Su pre m e C o u rt d e ci s i o n .

to t h e r a v a ge s o f the b o ll Wee v i l is r e
fl ec ted prim a ri l y u p o n the t a pe .

T he insider w h o k no w s a di v idend is
to b e j u mped f rom 6 per cen t to 1 0 per .

c ent sh o w s his h a nd on the t a pe w h e n he

.

a ttempts to t u rn hi s k no w l edge in t o do l
la rs a nd the inv es to r with 1 00 sh a r e s to
,
 T a p e R ea d i n g
se ll m ak es his f r a ct i o n al impress u p o n its
ma r k e t price .

T h e m a r k e t is l i ke a s l ow ly r ev o l v m g
whee l Whe ther th e wh e e l wi ll con t in u e
.

to revolv e in t he s a me d 1r ectio n st a nd ,

sti ll or re v erse dep e nds entire l y u pon the

f orces which com e in cont a ct wi t h its
h u b a nd tre a d Eve n w hen th e cont a ct
.

is b ro k en a nd nothing rem a ins to a ff ect

,

i t s co u rse the whee l ret a ins a cer ta in im

,

p u l se f r o m th e m os t recent do m in a ting
f orce a nd r e v ol ves u n t i l it c o mes t o a
,

st a ndsti l l o r is s u b j ect ed t o other ih

fi u enc e s .

T he e ngineers wh o h a rne ss e d N i a g a r a
h a d a simp l e ta s k comp a red to th a t o f
the Ta pe R e a der T he c a t a r a c t which
.

he u nder tak es t o c o ntro l seemingl y h a s

cross c u rren t s a nd m a e l stroms rev ersing
-
,

its direction a nd de fying t he la w s o f

gr av ity T o di v ert a p o rtion o f this u n
.

r ul y W all St ree t stre a m to s u bj ec t i t t o

,

his w i ll seems l i k e a ta s k fo r a s u per

,

m a n Y e t it c a n b e don e fo r ot h e r s
.
,

h ave done i t ,
M a n i p u l a ti o n T h e eleme n t o f ma nip u lat i o n n ee d no t
disco u r a ge a ny one Ma nip ula tors a re.

gi a nt tr a ders we a ring s ev en l e a gu ed
,
-

b oo t s T he t r a in e d ea r c a n de t ec t t he
.

ste a dy c lum p c lu mp a s they p rogress

‘‘ ”
, , ,

a nd t h e f oo t prin t s a re recogni z ed in
enormo u s q ua n t ities o f s t oc k a ppe a ring
on the t a pe L i t t l e f e ll o w s a re at l ib erty
.

to tiptoe w herever the f ootprints l e a d ,

b ut t h ey mu s t b e w a ry that th e gi an t s do
not tu rn qu ickl y a nd cr u sh t h em .

_1 2 _
 r o d u c to ry
I nt

T h e Ta p e Rea der h a s ma ny a d v a n
ta ge s ove r th e l ong s win g o p e r a t o r H e .

ne ve r ve n tu r e s fa r f rom s h o re ; th a t is ,

he p lays wi t h a c lo s e s to p n ev er laying ,

himse l f o pe n to a la rg e lo ss A cci d ents .

or c a t a s t rophes c a nn ot s e rio u s l y inj u re

hi m b e c au se h e c a n reve rse his p o sition
in a n ins ta n t a nd foll ow th e new f ormed
,
-

stre am f r o m s ou rce to mouth A s his .

po s i t i o n o n e i ther t h e lo ng o r s hort side

is c o n fi rm ed a nd e mpha si z ed he in ,

cr ea s es h is l in e t h u s f o ll o w ing u p a nd
,

c umula ti ng the a d va n ta ge ga ined .

A si mo n p u re Ta p e R e a der d oe s no t
-

c a re to c a rry s to c k s o v er night T he .

t a pe is t h e n si l en t a nd h e on l y k nows
,

w h at to d o wh e n i t t e ll s hi m So mething .

m ay occ u r a t midnigh t which ma y

cr um p le u p hi s di a gr am o f the ne x t
d ay s m a r k et H e l e ave s n o thing to
’
.

ch a nc e ; h e nc e he p r e fe r s a c lea n s heet
w hen th e 3 o c lo c k go ng s t ri k es
’
.

B y t hi s meth o d in te r e s t c ha rge s a re
av oided red u cin g t h e p ercent a ge a ga in s t
,

him to a c onsider a ble e xt en t .

T h e Tape Rea d e r i s l i ke a v endor o f

f r u i t w ho ea c h mo rning pro v ides hi m
, ,

se l f with a s t o c k o f the choices t a nd

mo sg s ea so n a b l e pr o d u cts a nd fo r w hich
,

there is the gre ate s t dem a n d He p ays .

his c a sh a nd dispo ses o f th e goods a s t

q u ickl y a s possi b l e at a pro fi t va rying

,

f rom 5 0 t o 1 00 per cen t on cost . To " .

c a rry his stoc k o v er night c au se s a l oss

on a cco u n t o f spoi la ge T his c o rrespo nds
.

w ith the in t er e s t cha rge to t h e t r a d e r .

 T p e R ea d i n g
a

Th e f r u it vendor is s u ccess ful b ec au se

he k no w s wh at a nd w hen to b u y al s o ,

where a nd ho w to se ll B u t there a r e
.

stormy d ays w hen he c a nno t go ou t ;

when b u yers d o not a ppe a r ; w hen he is
a rreste d fi ned or lo c k ed u p b y a b lu e
, ,

co a ted d espot or his w a res a re sc a ttered

a b ro a d by a c a re l ess tr u c k m a n .

W all S treet w i ll re a di l y a pp ly t hese

sit u a tions to t he va rio u s a tt i tu des in
which t he Ta pe R e a der fi nd s him s e l f .

H e v ent u res $ 1 00 to m ak e $2 00 a nd a s ,

the m a r k et goes in his f avo r his ris k is

red u ced b u t th e re a re t i m e s w hen he
,

fi nds himse l f a t se a w ith hi s s t oc k de t e

,

r io a ti n g
r . O r the ma r ket i s so u nset tl ed
th a t he does no t know how t o a c t ; he is
c a u gh t on s t op o r he l d mot ion l ess in a
de a d m a r k et ; h e tak es a series o f l o s ses ,

or is o b l iged to b e a w a y f rom the ta pe

w hen opportu nities o cc u r H is c al c ula
.

tions a re comp l ete ly u pse t b y so m e u n

f oreseen e v ent o r hi s c a pit al is im pa ired
by overtr a ding or poor j u dgm en t .

T he v end o r does n o t h ope t o b u y a

b a re l o f a pp l es fo r $3 a nd se ll them
r

the s a me d ay fo r $300 H e e x pect s t o

.

m ak e f rom nothing t o $3 a d a y H e d e .
f

pen d s u pon a sm all b u t cert a in pro fi t ,

w hich w i ll av er a ge eno u gh o ver a w ee k

or a month to pay h im f o r hi s t ime a nd
la b or.

T his is the o b j ec t i v e poin t o f the Ta pe

—
R e a der t o m ak e a n av er a ge pro fi t In .

a month s oper a tions he m a y m ak e

’

a nd lo se — a ne t pro fit o f $ 5 00 to

_1 4_
 I nt r o d u c to ry
sho w f o r his w or k I f he c a n k eep this .

av er a ge u p tr a d ing in 1 00 sh a re l o t s
,
-
,

thr ou gho u t a ye a r he h a s on l y to incr ea se

,

his u ni t to 2 00 300 a nd 5 00 sh a res or

, ,

m o re a nd th e r e s ult s w i ll b e tr e mendo u s
, .

T he a m ou n t o f ca p ita l o r th e s i z e o f
the o rder is o f second a ry import a nce t o
th i s qu es t ion : Ca n yo u tr a de in a nd o u t
o f all k inds o f m a r k e t s a nd show a n
av er a ge pro fit o f s a y per cen t per .

d a y I f so yo u a re pro fi cie nt in the a rt

?
, . .

I f yo u c a n tr a de w i t h on l y a sm all av er
a e l oss per d a y or come o u t e v en yo u
g , ,

a re r a pid l y getting there .

I n th é D ec emb er T I C KE R there w a s se t
’
‘

f orth t he record m a de b y a t r a der w hos e

oper at ions sh o w e d 4 2 pro fi ts o u t o f 7 1
tr a d e s the gross p o ints pro fi t b eing
,

a ga inst 3 7 % gross points l oss T his w a s .

good wor k altho u gh the commis s ions

,

a nd tax t hre w the n e t r e s ul t o v er into a

l oss o f 6 poin t s W e mention this mer e
.

l y t o sh o w t he s ta nd a rd b y w hich s u cc e ss
in Ta pe R e a di ng sho ul d b e me a s u r e d .

T he t r a d e r wh o th e re disc l osed the

o u tcome o f his e ff orts w a s not a Ta p e
R e a der H e oper at ed la rge l y u pon i n
.

for mat i o n a nd h a d n o fix ed method .

A Ta pe R e a der a b hors in form at ion

a nd foll ow s a d efi nite a nd thoro u gh l y
test ed p la n w hich a ft er months a nd
,

ye a rs o f pr a ct ice b ecomes sec o nd n a t u r e

to him H is mind forms h ab i t s w h ich
.

oper a te au to m a ti cally in gu iding his m a r

ket v en tu r e s .

N o in t e ll i gent h u m a n need b e t o l d th at
 Ta pe Rea d i n g
wh en the s ky d a rk ens a nd t h e th u nd e r
ro ll s there s l i k e l y to b e a sh o w er H e
’
.

u nconscio u s l y no t es t he pre l imin a r y

signs d o n s a r a inc oat a nd t ak es a n um
,

b re lla .

L ong pr a ctice w i ll m ake t h e Ta pe

R e a der j u s t a s pro fi cien t in fo reca s ting
stoc k m a rk et events b u t his in tu i t i o n w i ll ,

b e rein f orced by l ogic re a s on a nd a n a ly ,

sis .

Th e S cal per H ere w e fi nd t h e cha r a ct e ris t ics which

d istingu ish the Ta p e R e a der f ro m t he
S c al per T he latte r i s essen t i ally o ne
.

w ho tries t o gr a b a po in t or tw o p r ofit
“
—
witho u t rhym e or re a son h e d o n t ” ’

c a re ho w so l ong a s he get s it
, .

A S c al per wi ll t ra d e o n a tip a look , ,

a gu ess a he a r s ay on w h a t he t hin k s o r
, ,

w h at a f riend o f a friend o f Mo rga n s ’

s ays .

T he Ta pe Rea d e r evolv es him s e l f in to

a n au tom at on which take s note o f a s i t
n at ion w e ighs it decid e s u po n a c ou rs e
, ,

a nd gi v es a n o rd e r The re is n o q u ic k .

en i n g o f the p ul s e n o n e r v es n o h o pes
, ,

o r f e a rs T he re s u l t prod u ces neith e r

.

e la tion n o r d e pr e ssion Th ere is e q ua .

n im ity b e fo re d u ring a nd a ft er t h e
,
“

tra de .

T h e S c a l per i s a b o b ta i le d c a r wit h -

r a ttl ing w indo w s a j o u ncing m o ti o n a nd

‘ ,

a s t ro ng t e ndency to j um p t h e t r a c k .

T h e Tape R e a der i s l i ke a Pull m a n

c oa ch w hich t r av e l s sm o oth l y a nd s t e a d
,

i l y along t h e r oa db e d o f th e ta p e a cqu ir ,

ing directi o n a nd s p eed f rom t h e ma r k e t

-1 6
 T p e R ea d i n g
a

m a r k et ; see in his mind s eye wh a t is ’

h a ppening o n the floo r .

H e m u s t h av e t he nerv e to s ta nd a
series o f l osse s ; persistence to k eep him
a t the w or k d u ring a d v erse periods ; se l f
contro l to avo id overtr a ding a nd a phl eg
m a tic disposition t o b alla s t a nd b ala nce
him at all tim e s .

F or per fe ct c o ncentr a tion a s a p ro

tec tio n f rom t he tips gossip a nd other ,

in flu ences w hich ab o u n d in a b ro k er s ’

o ffi ce he sho ul d i f possi b l e sec lu de him

, , ,

se l f A tiny r o om with a tic k er a des k

.
'

a nd pri va te te l ephone n n ec tfo n with co

his b rok er s offi ce a r e all the fa ci l ities r e

’

q u ired T he
. w o r k req u ires s u ch de l ic ate
b ala nce o f the fa c ult ies th at the s l igh t e s t
in fl u ence ei ther w a y m ay throw the r e s ul t
a g a inst the t r a der H e m ay s ay : .

“
N othing in flu ences me b ut u n co n ,
”

s c io u s l y it d o es a ffect h i s j u dgmen t to

k no w th at a n ot her m a n is b e a rish at a
point where h e thin k s stock s sho ul d b e
b o u ght T he mere t ho u gh t H e m a y b e
.
,
“

right h a s a deterring in flu enc e u pon

,
”

him ; he hesit at es ; th e oppor tu nity is l ost .

N o m a tter h o w th e m ar k et go e s f r om
th a t point he h a s miss ed a cog a nd his
,

ment al m a chinery s thrown o u t o f gea r 1 .

S i l ence s a m u h needed lu b ric a nt to t he

1 c

Ta pe Rea der s mind ’

S ec l u s i o n T he a dvis ab i l ity o f h a ving even a ne w s

tic k er in t he ro om is a s u b j ec t fo r dis ,

c u s s io n .

T he ta pe te ll s t h e pr e sen t a nd futu re
o f the m a r k e t .

—
1 8
 r o d u c to r y
In t

T he news t ic k er records w h a t ha s h a p
pened It a nn o u nces the c au se f o the
. r

e ff ect w hich h a s al re a dy b een more o r

l ess f e l t in t h e m a r k et .

M oney is m a de in Ta pe R e a ding b y
a nticip at ing wh at is co m ing n ot b y —

N
w a iting t i ll i t h ap pens a nd going w i t h
the cro wd .

T he effec t o f ne w s is a n entire l y d i f ew s

f en t propositi o n
er C onsider a b l e l ight
.

is thro w n o n t he t echnic al strength or

w e ak ness o f t he m a r k et a nd speci al
sto k s b y their a ction in t he f a ce o f im
c

port a nt ne w s Fo r the moment it seems

,

to u s th at a ne w s t ic k r migh t b e a d
'

m itted t o t he s a nct u m provided its w h i s ,

p e r i n g s a re gi v en on l y t he weigh t t o
w hich t hey a re entit l ed .

T o evo lv e a pr a c t ic al me t hod o n e —
w hich a ny t r ad e r m ay u s e in his d a i l y
oper a tions a nd which those w i t h va ry
ing pro fi ciency in the a rt o f Ta pe R e a d
ing wi ll fi nd o f valu e a nd a ssis ta nce
s u c h is the t a s k w e h a ve set b e f ore u s
i n this series P erh a ps we sh all s u cc e ed ;
.

perh a p s n ot .

We w i l l c o nsider all t he ma r k e t fa c Our Tas k

tors o f v it al impo r ta nce in Ta pe Rea d
i g a s w e ll a s me t hods u sed by e x perts
n ,
.

T hese w i ll b e i ll u s t r at ed by reprod u ctions

f om the ta pe E very e ff ort w i ll b e m a de
r .

to prod u ce something o f de fi nite t a ngi b l e ,

v al e t o those w ho a re no w oper at ing in

u
—
a hit o miss sor t o f w a y
r -
.
 II . p r e l i m in a r y S u gg e s ti o n s

H E N e m b a r k ing o n a ny n e w
en t erprise th e fi rs t thing
,

t o consid e r is t h e amou nt o f
c a pi tal r e q u ir” e d To st u dy
.

Ta pe R e a ding on p a per is o ne t hing

“
,

b ut to pr a ctice a nd b ec o me pr ofi ci e n t in
the a r t is q u i t e a nother Al most a nyone .

c a n m ake m o n ey o n i ma gin a ry t r a d e s ,

fo r these req u ire n o ris k o f a ny k ind

the mind i s f ree fr o m the str a in w hic h
a ccomp a nie s a n a ct ual v ent u re ; f e a r do e s
no t en t er in to the sit uat i o n ; p at ienc e is
u n l i m i te d .

All th i s i s c hanged w he n eve n a

s mall ma r ket c omm i tme n t i s ma d e Th e .

t r a d e r o f s l igh t expe ri e nc e s u ff e r s men

tal a n gu is h i f the s to c k d oe s no t in s ta n t
l y g o his w a y ; he is a f r a id o f a la rg e
lo s s he nc e h i s j u dgme n t b e come s w a rp
,

e d a n d h e c lo s e s t h e t r a d e in o rd e r to
,
-

s e c u r e me ntal r el i e f .

A s th e s e a r e all sym p tom s o f i nex

p e r i e n c e,
they c a nnot b e overcome b y
avo iding t h e i ss ue The br ave a nd t h e
.

b u s ine s s l i ke t hing to d o i s to w a d e righ t

-

in to th e game a nd lea rn to play i t u n

d e r co ndi t i o n s w h ich a re to b e met a nd
'

_ 20
 P r e li m i n a ry S u gg es ti o n s

f
cc tq u er ed b e fo r e s u cc e ss c a n b e at

ta ined .

A fte r a com p lete ab s o rpt i o n o f eve ry

ava i l a b le p i e c e o f e d u c at i o n al wr i t ing
b ea rin g upo n Tape Rea di ng i t i s b e s t ,

to c omme nc e t r a di ng in t e n s h a r e lot s ,

s o a s to a cq u ir e ge n u in e t r a din g exp eri

e nc e Th i s may n ot s u i t s ome people
.

wi th a pr o p ens i ty fo r ga m b l in g a n d ,

who look u pon th e te n sh a r e t r a d e r a s -

a p i ke r T h e ave r a g e lamb wi th
.
S m a ll
w a n ts to comme nc e wi th 1 00 to 5 00
—
s h a r e lot s h e wi s h e s to s ta rt at th e to p
a nd w or k d o wn I t i s o n l y a que s tio n
.

o f time when he w i ll h av e to t r a de in
ten sh a re lot s
-
.

To u s i t s eem s b etter to s ta r t a t th e
b ottom w ith t e n sh a res T here is p l enty.

o f t i me i n w h ic h to incr ea s e th e u n i t
i f you a r e s u cc e s s ful I f s u cc e ss i s not
.

even tuall y r eal i ze d y ou wi ll b e ma ny d ol

la r s be tte r o ff fo r hav in g ve n tu r e d th e
m ini mum qua n t i ty .

I t h a s al re a dy b ee n sh own in T H E
T I C KE R S Inq u iry C o l u mn th a t t he m a r
’

ket fo r o d d lot s o n th e Ne w Yor k Stoc k

E xch a ng e i s mo s t s at is fa c to ry s o the re ,

i s n o oth e r ex cu s e fo r th e no vice wh o
desires to t ra de in ro u nd l ot s th a n
gr e ed o f ga in o r get ric h q u ic k Th in k
- -
,
- -
.

o f a b aby j u s t lea rning to w alk being

, ,

en te red in a r a c e wi th p r o fe ss io na l
s prin te r s "
In the pr ev i ou s chapte r w e s u gge s t
e d that s u cc e ss in Tape Rea din g s h oul d
 T a p e R ea d i n g
b e me a s u r e d b y th e n um b e r o f po tfi
pro fi t ove r p o i n ts lo s t F o r all pr a cti
.

c al p u rp o ses ther e f or e w e m igh t t r a d e

, ,

in o ne
sh a re l o t s wer e t her e n o ob ice
-
,

tion on t he p a r t o f ou r b roke r a nd i f ,

this q ua n t ity were n ot s o a bs u rd ly s m a ll

a s to i nv i te c a r el e ss exe c ut i o n s Ten .

sh a re s i s re all y th e s malle s t qu a nt ity

t h at sh oul d b e co n s id er ed b ut w e men
‘

ti o n o ne sh a r e s i m p l y to imp r e ss u po n

N
o r re a ders t h at in s tu d y i ng T a pe Rea d
u

ing b e tt er kee p in mind th at you a re

,

P o i n ts , ot pla ying f o r p o i n ts no t d olla rs T h e do l

D o ll a r s
.
,

la rs wi ll co m e al ong f a s t e no u gh i f y ou
c a n make more points n et th a n yo u l o s e .

T he pro f ession al b i ll i a rdist p laying f o r

a s tak e a ims to ou t p o i n t his a n ta gonist
-
.

A f ter t r a ding fo r a f ew mon ths d o no t

c onsid e r the d olla rs yo u a re a h ea d o r
b ehind b u t a n al y z e the rec o rd in poin t s
, .

In this w a y yo u r progress ma y b e st u d '

ie d .

A s th e ini t i al lo ss e s in t r a ding a re l i ke
ly to be h e av y a nd a s th e e stim at ed
,

c a pi tal mu s t b e a m o r e or le ss a r b i t r a r y
am o u n t w e sh oul d s a y t h at u ni t s o f
,

Ca p ita l $ 1 000 w oul d b e necess a ry fo r ea ch te n

,

sh a re lot t r a d e d in at t he b eginning .
_
T his allo w s fo r 90 po ints mo re lo s s e s
th a n pr ofit s a nd s ti ll l e av e s ma rgin
,

w ith which to pr o c ee d S o m e peop le .

wi ll sec u re a f o o t ing wi th l ess c a pi tal ;

others m a y b e ob l iged t o p ut u p s ev er al
u ni t s o f e a ch b e f ore they b egin
to show pr ofi ts ; s til l others w i ll spend a
fo r tu n e ( la rge o r s m all ) w ith out m ak in g
_2 2 _
 P r e li m i n a ry S u gg e s ti on s

i t p a y o r mee t ing wi th any e n co u r a ge

,

m ent .

Look ove r R G D u n Co s Cau ses

. . .
’

of Comme rci al Fa i lu re s a s rec e nt ly ,

ta b u lat ed in th is m a g az ine a nd y ou w i ll ,

fi nd t h e chie f c au s e s to b e : ( 1 ) La c k o f
c a pi tal a nd ( 2 ) Inco mpetenc e
,
.

La c k o f c a pi tal in W all St r e et o p e r a
tions c a n u s uall y b e t r a ced t o over tr a -

d ing . T his b e a rs o ut the epigr a m

O ve r tr a ding i s fi n a nci al s u icide
-
It .
”

m a y m e a n t o o la rge a q ua n t ity o f s to ck
in t he ini t i al o per at io ns o r i f the tr a der ,

lo s e s mo n ey h e m a y n ot red u c e t h e
,

s i ze o f his t r a d e t o corresp o nd wi th
th e shrin ka ge in his c a pi tal .

T o m ake o u r point c l e a r : A ma n
s ta r t s t r a ding in 1 00 sh a r e lot s o n 2 0 -
O v r Tr
e - i g
ad n

poin t s ma rgin A ft er a series o f lo ss e s

.

he fi nds th at he h a s on l y $ 2 00 re ma in
ing T his is sti ll 2 0 points on ten sh a res
.
,

b ut d oe s he r e d u c e h is order s N o He
? .

ris k s the $2 00 o n a 5 0 or 1 00 sh a r e t r a de -

in a la s t desper at e e ff ort to rec ou p .

Af ter b e ing wiped o ut h e t ell s hi s f ri e nds

how he coul d h ave m a de mo n ey i f he
“

h a d h a d m or e c a pit al .
”

Inc o mpet e nce re all y d e ser v es fi rs t

pla c e in th e l i s t Su pr e me ignor a nce
.

is t he predo m in a n t f e atu re o f b oth W all

S tree t lam b a nd s ea s o ned spec u la tor It .

is s u rprising ho w m a ny peop l e s tay

in the St reet ye a r a ft er ye a r a cq u iring ,

nothing more a pp a rent l y th a n a k e e n

,
’
,

scent f o r tips a nd gossip A s k th em a .

 T a p e R ea d i n g
technic al q u es t i o n t h at sm a c k s o f sc ien
I gn o ra n ce ti fi c k no w le dg e o f t h e ta p e , a nd t h ey
a re u n a b le to r e p l y .

S u ch fo lk s a re there fo r o n e o f
t w o re a sons : T h ey h av e e ither b een
“
lu c ky o r t h e ir m a rgins a re rep l enished
”

f ro m s ome s ou rc e out side o f W all

S treet .

The p r opo rt i o n o f c o mm e rci a l fa i l

u res d ue to L a c k o f Ca pi tal o r I n co m
p e te n c e is a b out 6 0 p e r c e n t. Call t h e
f or me r by i t s W all St re et c o gnome n
O ve rt r a din g a nd th e pe rc e n ta ge o f
-

s toc k ma r ket di s a s t er s t r a c ea b le the r eto

wo ul d b e ab out 90 .

Su cc e ss i s o n l y fo r the fe w a nd t h e
,

pro b l em i s to a s c e r ta in wi th the m ini

,

m um expe ndi tu r e o f t i me a nd mo n ey ,

wheth er yo u a r e fitt ed fo r th e w o r k .

T h e s e in a n ut s h ell ar e t h e v i tal q ue s
, ,

t i o ns u p to t hi s po in t :
Hav e yo u technical k n o w le dg e o f
'

the m a r k et a nd the f a ct ors w hich mov e

it ?

Have you o r mo r e w h ic h y ou
c a n a ff ord to l os e in a n e ffort to
demonstr a te yo u r a b i l ity at Ta p e
R e a ding ?
Ca n y ou d evote you r e ntir e t i me a nd
at t e n t ion to t h e s tu dy a nd t h e p r a c t ic e
o f t hi s s cienc e ?

A re you s o fixe d fi n a nci all y th at y ou

a r e no t dep e nden t upo n y ou r po ss ib le
profit s a nd s o t h a t you wi ll n ot s u ff er
,
‘

i f n o n e a r e fo r t hcoming n o w o r late r ?
4
 T p Re d i g
a e a n

j u s t in wh at mo m ent a ry p o sition one

sto c k o r t he m a r k e t st a nds T he b ro k er
“

wh o is n ot o ve r b u rdened wi th b u siness
-

c a n gi ve t his service ; h e c a n al so d e
vot e t ime a nd c a re to the exe c u ti o n o f
orders .

Let m e gi v e a n ins ta nce o f h o w t his

wor k s o u t in pr a ct ice : You a re l ong 1 00
~

U nion wi t h a s to p order j u s t u nder t he

,
-

m a r ket price ; a dip come s a nd 1 00

—
sh a r e s s e ll s at y ou r stop price s a y 1 6 4 .

Y o u r c a re ful a nd no t to o b u sy b r ok er
,

sta nds in t he cr o w d H e o b ser ve s th a t .

sev er al t h ou s a nd s ha res a r e b id fo r at
1 6 4 a nd on l y a f ew h u ndred o ff ered a t
the pric e H e d o es n ot s ell the st o c k
.
,

b ut w a i t s to s e e i f i t w o n t r all y I t ’
.

does r all y Yo u a re gi v en a ne w l e a se f
. o

l i f e T his h a nd l ing o f t h e o rder may

.

ben efit y ou $ 5 0 $ 1 00 o r s ev er al h u n
,

dr e d do lla rs in ea ch in s ta nce a nd is a n ,

a d va n ta ge t o b e s ou gh t w he n cho o sing
a br ok er .

Th e hou se w hich t r a n s a cts a n a cti v e

co mm ission b u siness fo a la rge c l iente l e r

is u n ab l e to giv e this ser v ic e I t s sto p .

orders a nd o t her orders n o t c l ose t o “

the m a r k et m u s t b e gi v en to S p e ci al
,

i s ts a nd t he press o f b u siness is s u ch
,

th a t i t c a nno t dev o t e especi al at ten t ion

t o t h e o rders o f a ny o ne c l ien t H ence .
,

it w oul d seem th at o u r Ta pe R e a d e r h a d
b e t ter se a rch f o a sm all ommissi on
r c

ho u se w hich h a s one N e w Y or k S t o c k
E x ch a nge mem b er a n offi ce p a r t ner a nd
,

on l y o ne o r tw o emp l oy ee s .

—
26
 P r eli m i n a r y S u gg es ti o n s
T h e n u m b e r o f c le r k s is a go od i n
de x to the a mo u nt o f b u siness done .

T h e ir f ewness is no t a re fl ect i o n o n
the s t rength s ta nding or b r ok er a ge
, ,

a b i l ity o f t h e h ou se S ome peop l e a r e .

House
good b r ok ers a nd h a ve a mp le c a pit al ,

b u t t h e y d o n ot u n d er s ta n d th e s ci e nc e
‘

of b u siness getting .

In

op i n 11
“

b e le ft
W ? o r l ess to himse l f a nd be f r e e to
“

c o nc en t r ate u p o n his ta s k .

T he t ic ke r sho u l d b e wi t hin c all ing

‘

dis ta nc e o f th e t e l ephone to th e Sto ck

E x ch a nge So m e bro ke r s h av e a w ay
.

o f m ak ing yo u o r a c l er k w alk a mi le
to gi v e a n o rd e r E v ery s te p mea n s de
.

la y T h e e la p s e o f a f ew s e c o nds may
.

re s ult in a lo s t ma r k e t o r oppor tu nity

‘

I f yo u a r e in a s m all private ro o m a w ay
f rom the o rder d e s k t here sho ul d b e a ,

s pe ci al t e l e p h o n e connect in g you wi th
th e o rd e r c le r k P g nd er ons ic e w a on -

g
.
n

me tho d s won t g o in Ta p e Rea d ing

’

N
.

Or d er s sh o ul d ggnera l ly b e gi ve n at
‘ i '
‘

the ma r ket W e make t hi s s tateme n t

.
”

a s a r e s ult o f lo n g e xp e ri e nc e a n d o b
s e rvat i o n a nd b el i eve w e c a n d emo n
,

s t r ate the ad v i s abi l i ty o f i t .

The p r o c e s s o f rep o r t ing t r a n s a ct i o n s

o n th e ta p e a s r e c en tl y s et fo r th i n
,

th e s e pa ge s c o ns ume s f r om five s e c o nd s
,

to s a y five m in ute s d ependi ng upo n the ,

 Ta p e Rea d in g

a c t iv i ty oft h e ma r ket Fo r a rgume n t s

.
’

s a ke l et u s co n s id e r th a t th e av er ag e
,

in te rval b etw ee n the t i me a sa le ta ke s

pla c e o n th e floo r a n d the r epo rt a p
p e a r s o n th e ta p e i s hal f a m i n ute .

G ivi n g Or d ers A ma r ket o rd e r i n a n a c t i ve s to c k i s

u s uall y e x e c ute d an d r epo rte d to th e
c u s tome r in a bou t tw o m i n ute s . Hal f
th i s ti me is c o n s ume d in putt in g y ou r
b roke r in to th e cr owd w ith th e o rd e r in
ha nd ; the o th er hal f in w r itin g o u t a nd
t r a n s m i tti ng the r epo r t . H e nc e w he n
,

Uni o n Pa c i fi c c ome s 1 64 o n the ta pe

a nd yo u in s ta n tl y d e cid e to b u y i t the ,

pe ri o d o f t ime b etw ee n you r d e ci s i o n

a n d th e e x e cu t i o n o f y ou r o r d e r i s a s
fo l lo w s :
M in u tes .

Th e ta pe i s b eh ind the m a r ket

T i me ela p s e d b e fo r e br oke r ca n e x
co ute the o rd e r 1

I t wi ll the r e fo r e b e s ee n that y ou r d e
c is io n i s b a s e d o n a p ri c e w h i c h p r ev a il
e d hal f a m in ute ag o , a n d th a t y ou mu st
pu rch a s e i f yo u wi ll , at the p ric e a t
w h ich the s toc k s ta n d s o n e m in ute he n c e .

Th i s m ight hap p e n b etw ee n y ou r d e

c is io n a nd the e x e c ut i o n o f y ou r o rd e r :

a nd you r s m igh tthe last hu ndr e d

be .

Whe n the r epo r t a rr ive d you c oul d n ot

sw ea r th at it w a s b ou ght at 1 64 b e fo r e
o r a f te r i t tou che d Or y ou
8
 P r e li m i n a ry S u gg es ti o n s

m ight g et i t at eve n th o u g h it
w a s 1 6 4 w he n yo u gav e the o rd e r a n d ,

wh e n t h e repo r t w a s h a nd e d to y o u .

Ju s t as o fte n t h e oppo s i te wi ll take

—
p l a c e the s to c k wi ll go in you r favo r .

In fa ct the th ing ave r a ge s u p in t he

,

lo n g ru n s o that tr a d e rs wh o d o n o t
,

give ma rke t o rd e rs a r e hu r t in g t h e ir o wn
ch a nc e s .

A n i n fi n ite n u mb er o f t r a d e r s s ee i ng
‘

Uni o n Pa ci fi c at 1 6 4 wi ll s ay ,
“
Bu y me a h u ndr e d at ”

The br oke r w ho i s n o t too b u sy wi ll

go in to the cr owd a nd fi nding the s to c k
, ,

at wi ll r epo rt b a c k to the o f
fi c e that U ni o n i s V; bid
“ ”
.

Th e tr ad e r gi v e s h i s br oke r n o cr e di t
fo r th i s s e rv ic e ; ins tea d he c o n s id e r s i t
,

a sign that h i s br oke r the fl oo r t r a d e r s

,

a nd th e insiders h ave all conspir e d t o

make h im pay V; per c e n t h i gh e r fo r .

h i s 1 00 s ha r e s s o he r epl i e s
,
“
Let i t s ta nd at 1 64 I f they d o n t .
’

g i v e i t to me at th a t I w o n t
, b u y i t at ’

al l 3 ,

H o w fool is h " Yet ch a r a cte ri s t ic o f

.

the s ty l e o f r ea s o nin g u s ed by the pu b

l ic
. H i s a r gume n t is that the s to ck fo r ,

goo d a nd s u ffi ci e n t r ea s o n s i s a s ple n did ,

pu rcha s e at 1 64 At 1 6 4 % o r
. the s e
r ea s o ns a r e c ompletel y n ull i fie d ; th e
s to c k b e come s d ea r o r he ca r e s mo r e to
,

fo i l the pla n s o f th i s b a nd o f r obb e r s

“ ”

th a n fo r a po ss ib le pr ofit .

I f a s to c k i s ch ea p at 1 64 i t s ch eap at ’

_2
 T a p e R ea d i g n

I f you ca n t t ru s t you r br ok er get

’
, an

o th e r .

If you th in k the la w o f s u p pl y an d
d ema nd i s alte r e d to cat ch y ou r $2 5 ,

b ett er re o rga ni ze y ou r th in k ery .

W e r e y ou o n the floo r yo u coul d pr o b

a b l y b u y at 1 6 4 the m in ut e i t tou ch e d
that fi gu r e b ut o f thi s t her e i s n o c e r
,

t a inty You w oul d howe ve r b e I V

.
, , 2

m in ute s n ea r e r to t h e ma r ket You r .

co mm is s i o n cha rge s w oul d al s o b e p r ae

t icall y e l i m in ate d T h e r e f o r e i f y ou
.
,

h ave s eve n ty o r eigh ty th ou s a nd d ol

la r s l yin g a r ou nd t h e hou s e w h ic h y ou
d o n o t esp e ci all y n ee d b u y a s eat I f , .

you h ave n o t c ea s e the u pr oa r

, .

A Tape Rea d e r w ho d e s e rve s th e

n ame make s mo n ey in s p i te o f c omm i s
,

s i o ns ,taxe s a nd d elays .

A r th u r L i ver mo r e u s e d to t r a d e s ol e
l y o n w hat th e tape tol d hi m c lo s in g ,

o u t eve ry thing b e fo r e t hr ee o c lo c k He ’
.

t r a d e d f r om a n o ffi c e a nd p a id t h e r e g
ula r c omm i ss i o n s y et thr ee t r a d e s o u t
,

o f five s h o w e d p r ofit s Hav ing ma d e .

a fo r tu n e he in ve s te d i t in b o nd s a nd
,

gave th em all to h i s w i f e An t ici pat ing .

t h e 1 907 p a nic he p ut h i s , a uto

m obi l e u p fo r a loa n o f a nd wi th
this c a pit al st a r t ed to p la y th e b e a r side ,

u s ing hi s pr ofit s a s a dditi o n al ma rgin .

At o n e t i me h e w a s s h o r t s h ar e s
o f U ni o n Pa ci fi c H i s wh ol e l in e w a s
.

c ove r ed o n o n e o f th e pa nic d ays a nd ,

his net pro fi ts w ere a mi ll ion do l

la r s "
 P r eli m i n a r y S u gg e s ti o n s

To r etu rn to the q u es t i o n o f giv in g

orders : A nyo n e wh o s ays T his s to ck ,
“

sh oul d b e bo u gh t b ut I wi ll no t p ay V3
ab ove m y price f o r i t is l i ke a m a n ,

wh o thin k s h e c a n mak e c e r ta in mon ey

i f he co ul d b ut get to C hic a go A rri v .

in g at th e t ick e t offi ce h e fi nds th at t h e

f a r e is $2 m o r e t h a n he ex p e c t ed b u t ,

t h o ugh w ell hee le d h e re f u s e s to p a y

,

th e req u ir e d a m ou n t a nd a b a ndons t he
trip .

I f yo u d o n t ge t a b oa rd y ou r t r a in
’
,

you ll ne v er a rri ve
’
.

G iving l imi t ed o rd e r s lo ses mo re goo d

"
d olla rs th an i t s av es We re f er o f .
,

cou r s e to o rders in th e b ig a ct iv e s to c k s
, , ,

wh e r e in the bid a nd a s k ed prices a r e

u s uall y V3 apa r t E sp e ci all y is t his t r u e
.

in c lo sing o u t a t r a de Ma ny f o ol i s h .

p eo p le a r e in te rm in ab l y h u ng u p b e c au s e
th ey t r y to s ave e i g h t hs by gi v ing l i m i t
ed order s in a m a r k e t th at is r u nning
a w a y f r om them .

Fo r the Tape R e a d e r t h e r e i s a
psych olo gic al m omen t w he n h e mu st
open o r c lo s e h i s t r a de H i s o rd e rs .

mu s t t h e r e fo r e b e at t h e ma r k e t “
.
”

Ha ggl in g ove r f r a c t i o ns wi ll make h im

lo s e the th r ea d o f t h e ta p e u ps et his ,

po i s e a nd in te rr u p t th e w o r k ing s o f hi s
me n tal ma ch inery .

In sc ale b u y ing o r se ll ing i t i s o b v i

o u s t h at l i m i t ed o rders mu s t b e u s e d .

T here a re cer ta in other t imes when they

a re o f a d va n ta ge b ut a s t he Ta p e
,
 T a p e R ea d i n g
R e a der gen e r ally goes wi th the t r e nd
it is a c a s e o f ge t on o r ge t le f t
“
,
.
”

B y all mea n s g et o n “
.
”

T hi s i s a n im po r ta n t matte r a nd ,

sh oul d b e decid e d in a gen e r al w ay b e

fo r e o n e s ta r t s to t ra d e Let s n o s e ’
.

a r ou nd a l i ttle a nd s ee w hat w e c a n
r ea s o n out .

I f yo u a r e tr a din g in 1 00 s h a r e l ot s -
,

y o u r s to c k mu s t move you r w ay o n e
poin t to m ak e $ 1 00 pro fit .

Which c la ss o f s t oc k s a re mo s t
l i k e l y to m ove a po in t ? Ans w e r : The
high pric e d is s ue s
-
.

Lo o k ing ove r th e r e c o rds w e find th at

a s to c k se ll ing a ro u nd 1 5 0 wi ll ave r a g e
po in t s flu c tuat i o n a d a y whi le o n e ,

s ell ing at 5 0 will av er a g e o n l y o n e po in t .

Co nseq u en tl y y o u h ave 2 / ti m e s mo r e
, 2

a ction in t h e higher priced s to c k .

T he c o mmis s ion a nd ta x ch a rg e s a re
the s a me in b oth In te r e s t ch a rge s a r e
.

thr e e t i me s a s la rg e b u t t his i s a n in
,

signi fi c a n t i tem to th e Tape R e a d e r w ho

c lo ses o ut h is t r a d e s ea ch d ay .

T h e higher pric e d s toc k s al s o c ove r

a gr eat er n u m b er o f po in t s d u ring t h e
yea r o r cyc le th a n t h o s e o f low e r pric e
—U nion Pa ci fi c f r om 1 9 5 93 d own to
p a r ( 9 9 3 poin t s ) a ga in s t St e el commo n
,

f r om d own t o 2 1 7 3 ( 2 8 V po in t s ) 2

b eing recent stri k ing exa mp l es S t o c k s .

l i ke G r eat N or thern al th o u gh en
,

j oying a m u ch wid e r r a nge a re no t ,

desir a b l e fo tr a ding p u rposes w hen u p

r

0 0 —
t o 3 or mor e fl u c tu a tio n s a nd bid a nd
 T p R
a e ea d n i g
o f the sto c k is sho w n in the f e
’

q u e c yn f V1 point
o fl u c tu a t o n s b et w een 1

s al es .

I t is a v ery s at is f a cto ry s t oc k f or Ta pe
R e a ding oper at ion s .

U . S . S tee l S tee l common is lum b e ring in its

mov em e nts th u s re fle c t ing th e five m i l
,

l ion s h a res out s t a nding a nd t h e co n s e

qu en t w idespre a d pu b l ic in ter e s t I t is .

u se f u l a s a b a rom e ter o f the m a r k e t a n d

o f p u b l ic sen t imen t b u t i t s s wing s a re
, .

r a re l y w id e eno u gh fo r th e Tape Rea der ,

a s t h e y av er a ge on l y a b out a p o in t a
d ay .

St . Pa u l St Paul is o ne o f the t r u es t s toc k s

.

fo r tr a ding p u rpo se s I t is ma n ip u l a t
.

ed at t imes b ut ge ner all y i t r e spo nds

,

au t o m a tic all y to th e s l ightes t ch a nge in

ma r k e t t emper I t s d a i l y mov ements a re
.

wid e ab out eq u al t o U nion Pa ci fi c a nd

,

R e a din g I t s la s t big sw ing w a s 1 06

.

p o in t s .

A m lg m a a a te d Am al g a m at ed is at pr e s e n t on l y a s e c
C pp r
o e o n d a ry l e a der a nd tak ing t he y ea r
,

thr ou gh n ot n ea r ly a s s at i s fa c t ory to
de al in a s s om e o f th e othe r s ab ov e men
tio n ed I t s sw ing in 1 907 w a s a b o ut
.

80 poin t s .

S m el te rs S me l ters is o n e o f the mo s t hi gh l y
m a nip ulate d iss u es o n t he l is t err at ic , ,

o fte n di ffi cu lt to follow at other ti me s ,

e a sy I t s d a i l y r a ng e i s u s uall y eq u al
.

t o a ny o f t he o t h e r s a nd i t s la s t big ,

s w ing w a s ab o ut 1 1 6 p o in t s One get s .

p l enty o f a ct ion in Smelte rs b ut n ot ,

n ea r l y t h e s t e a din e s s n o r th e c l e a r l y d e
 P r e li m i n a ry S u gg e s ti o n s

fi ned t rend pre va i l ing in th e b ig r a i l

roa ds .

A s a r e s ult o f obs ervat i o n a nd y ea r s k

B e s t S to c s
o f t r a ding ex perience w e pre f e r U ni o n
, f o r th e T pe
a

Pa ci fi c to a ny o ther b e c au se o f t h e
,
R ea d e r
q u al ities to w hi c h w e h a ve re f erre d In .

i t s presen t r a nge ( betw ee n 1 60 a nd 1 7 0)

i t is be l o w the pric e w a rr a nt e d b y i t s
di v id e nd r ate a nd eq u it ie s T hi s m ake s .

i t e s pe ci all y r e s ponsi ve to b u ll ish ne w s

a nd b e tter a d apte d f or t r a din g o n th e
lo n g s id e .

I f o b l iged to choose a second s to c k ,

Rea ding w oul d a ppe al to u s a s o ff e ring

th e n ext gr eate s t a d va n ta ge s Whi l e .

Rea din g c o n ta in s e n o rmou s intrin s ic

value i t i s at pres e n t a 4 p e r cen t s t o ck
—
.

s ell ing in th e 1 3os a p ric e s c a rc el y w a r

r a n t ed i f i t s r ate w ere incr ea s e d to 5
per c e n t So fo r the t i me b e ing at lea s t
.
, ,

R e a ding a ff o rd s the b e s t medi um fo r

short s e ll ing .

T h e se tw o i s s u e s a re t he chie f h ing e s
on which t he d oo r o f th e m a r k e t tu rns
—U ni o n t he u pper R e a ding the low er
,

hinge I t is u nnec e ss a ry fo r a ny one t o

.

go b eyond th e s e e x cep t in ti me s wh e n
t he ind u s t ri al s d o min at e the ma r ket ; in
t his c a se A m al ga m a ted Sm e l ters o r
, ,

St ee l w i ll r e p la ce the m t e m p o r a ri l y .

I t is bett er fo r a Ta p e R e a d e r t o t r a de
in one s toc k th a n tw o o r m ore Sto ck s .

h av e h ab i t s a nd ch a r a ct eris t ics w hich

a re a s dis t inc t a s th o se o f h u m a n beings
or a nim al s B y a c l ose s tu dy th e t r a der
.

becom es intim at e l y a cq ua in te d wi th
 T pe R
a ea d n i g
t h e s e h a b its a nd is ab le to a nticip ate th e
s toc k s a ct ion u nder giv en circ u ms ta nces
’
.

A s t oc k m a y b e s tu b b o rn sensiti v e ir , ,

respo nsi v e comp la is a n t a ggressiv e ; i t

, ,

m a y d o min at e th e ta p e o r t r a i l al ong b e
hind th e res t ; i t is w hi m s ic al a nd co
q u e tti s h ; i t m a y whisper b a b b le l i k
,
e a
b r ook o r r oa r l i ke a c ata r a c t I t s moo d s .

m u s t be s tu died i f yo u w oul d k n o w i t
a nd b e nd i t to yo u r wi ll .

Stu dy imp l ies c o nc e n t r at i o n A p e r .

son wh o t r a d e s in a do ze n s to ck s at a
t ime c a nn ot c o nc en t r at e o n o n e .

The po p u la r meth o d o f t r a ding ( w h ich

me a n s th e u ns u cc e s s f u l w a y ) i s to s ay :
“
I thin k t h e ma r k et s a s al e S m el
’
.

t ers C opper a nd St Paul hav e h a d th e

,
.

b igge s t rise latel y ; th e y ou gh t to have

a goo d re a c t i o n ; s ell a h u ndr e d o f ea ch
f or me .
”

T r a d e s b a s e d o n t hin k s s el do m pa n
o ut w ell The se l ec t i o n o f tw o o r thre e
.

s to c k s b y gu es s w o r k ins tea d o f on e by
r ea s o n a nd a n al ysi s e x p la in s ma n y o f
the p u b l ic s lo sses I f a t r a der wish e s
’
.

to t r a d e in thr ee h u ndr e d sha r e s let ,

him s el l that q u a nti ty o f th e s to ck

r a te
C o n c en t w h ich h e kn ows mo s t a bout o r w h ich ,

is e n t i tle d to the gr eate s t dec l in e U h .

l e ss he i s p lay in g t h e lo ng s wing h e in
j u r e s h i s ch a nc e s by t r a ding in a lot o f
stoc k s at o nc e I t s l i k e ch a sing a dro v e
’

—
.

o f pi g s w h i le you r e w at ching thi s o n e

’

t he oth e rs get a w a y .

Bette r to c o nc e n t r a te o n o n e o r t w o
s to ck s a nd s tu dy the m ex h au s t ivel y You .
 P r e li m i n a ry S u gg e s ti o n s

wi ll fi nd th at w hat a pp l i e s to o n e d o e s
n ot al w ay s fit t h e oth e r : ea ch mu s t b e
j u dge d o n i t s o w n m eri t s T h e va ry .

ing pric e level s volume s pe rc e nta g e o f

, ,

fl o at ing s up p l y in v es tme n t value s t h e

, ,

m a nip ula ti o n a nd othe r fa c to r s all te nd ,

to p r o d u c e a di ff eren t c o mbin a tio n in

e a ch p a r t ic ula r c a se .
 111 . T he S to c k Li s t A n a l y z e d

N t he l a St ch a pter w e re f erre d
t o Union Pa ci fi c a s the mos t de
si r a b l e stoc k fo r a ctive tr a ding .

T he A n al yst in f orms u s th a t
“ ‘

he once m a d e a composite ch a rt o f the

princip al a c tive stoc k s fo r the p u rpose ,

o f a scert a ining w hich in its d a i l y flu c

N
,

tu a tio n s f o ll o w e d the co u r se o f the gen

,

T h e B es t er al m a r k et most a c c u r a te l y H e f o u nd
k
.

S to c ow
U nion Pa ci fi c w a s wh a t might b e c all ed
t he m a r k et b a ck b one w hi l e the other s , ,

especi all y R e a d ing f req u ent l y sho w ed

,

err at ic tendencies r u nning u p or do w n

, ,

m o re o r l ess contr a ry t o t he gener al

t rend O f all t h e iss u e s u nder i n s p ec
.

t ion none p o s s es s ed th e all a ro u nd

,
-

s tea diness a nd gener al desir a b i l ity fo r

t r a ding p u rposes disp layed by U nion P a
c ifi c .

But t h e Ta p e R e a der e v en i f he de ,

cid e s to oper ate e x c lu si vel y in o ne

‘

s to c k c a nn ot c l os e his eyes to wh at is
,

go ing o n in o th e rs F req u en t o pp o r
.

tu n ities o cc u r e l se w here In proo f o f .

thi s take t h e ma rk e t in the e a r l y f al l

,

o f 1 907 : U ni o n P a ci fi c w a s the l e a d er
thr ou gho ut th e ris e f rom b e lo w 1 5 0 to
Fo r three o r f o u r d a ys b e f ore
38
 T h e S to c k Li
A ly d st na ze

this a dva nce c ul min at ed he avy se ll ing ,

occu rred in R e a ding St Pa u l Co pper ,

.
, ,

St e el a nd S me l ters u nder cover o f the,

str e ngt h in U ni o n T hi s m a de the t u rn

.

i n g poin t o f t he m a r k e t a s c l e a r a s
d ay l ight O ne h a on l y t o go s hort
. d o f

R e a ding a nd a w ai t t he b re ak or he co u l d ,

h av e p lay e d U nion w i th a c lo se stop ,

kno w ing th at t he w h ol e m a r k e t wo u l d
co lla pse a s so o n a s U nion t u rned do w n
w a rd When the l iq u id a ti on in o ther
.

s t ock s w a s comp l et e d U nion s t o p ped a d

,

v a n ci ng ,
the s u ppor t ing orders w er e
wi t hdr a wn a nd the pre e l ect i o n bre ak
,
“
-
”

to o k p la ce T his a m o u nted to o v er 2 0
.

p o int s in Union wi th propor t ion at e de

,

c l in e s in th e res t o f the l is t .

T he o per at or wh o w a s w at chin g on l y
Union w oul d h ave b een s u rpris e d at
th i s ; b ut ha d he v i e w e d the ma r ket a s
a comp l e t e org a ni sm he m u s t h av e seen
wh at w a s c o ming K no w ing t h e po in t o f
.

distri b u ti o n he w o u l d b e o n th e l ook o ut
,

f o r t h e a cc u m u lat ion w hich mu s t f o llo w ,

or a t l e a s t th e l e vel w here s u ppor t

w o ul d b e f orthc o ming Ha d h e b een e x .

p e rt en ou gh t o det ect t his q u ic k mo ney ,

co ul d h av e b een ma de o n t h e s u b s e q u ent
r ally.

Whi l e U nion Pa ci fi c at pre s en t con

s titu te s the b a c kb one this imp o r ta n t ,

mem b er is on l y o ne p a r t o f the ma r k e t .

body w hich a ft er all is v ery l i ke t he

,

physic al s t ru ctu re o f a h u m a n being .

.

T o get thi s p o in t c lea r l y in m ind l et ,

u s dr a w o n o u r im a gin a tions a l it tle

 T a pe R ea d i n g
U ni o n is s t r o ng a nd a dva ncing ; s u dd e n
l y Ne w Yo r k Ce n t r al d ev e lo p s a n atta c k
o f g out ; Co n s ol id ate d Ga s g o e s o ff o n a

s p ree ; Ame ric a n Ic e become s n a u s ea t

in g l y w eak ; Sou th e rn Ra i l w a y d evelo p s
ty pho id ; G r eat W e s te rn c a nn ot meet e x
pe n s e s a nd i s p ro s t r at ed T her e may b e
, .

n othing at all th e matte r wi t h t he b a c k

b o n e b ut i t s s t r ength w i ll be a ff e cte d
,

by s ic k n e ss o r ex c e ss e s a m o ng th e ot h e r
mem b e r s .

S ym p i
a th e t c A b a d br eak may c ome in B r ookly n
M o v e m e n ts Ra pid T r a n s i t o cc a s i o n e d by s ome po
,

l itica l atta c k o r ot h e r pu r el y lo c al i n
,

fl u ence T hi s c a nn ot po s si b ly a ff e ct th e
.

b u sin e ss o f t h e gr a nge r s tr a n sco ntinen ,

t al s o r c oale r s y et St Paul U ni o n a n d
, ,
.
, ,

Rea ding d e c l in e a s mu ch a s B R T A . . .

per s o n who s e fi nge r i s cr u s h e d wi ll

s omet i me s fa in t f ro m th e s ho c k to h i s
ner vou s sy s tem althou gh th e inj u r e d
,

m em b e r wi ll in n o wi s e a ff ec t the oth e r
mem b ers o r f u nctions o f the b ody .

T h e t i me w o rn i llu s t r at i o n o f the
-

c ha in w h ich i s a s s t ro ng a s i t s w eak est

l in k wi ll n ot s e r v e
, When t h e w eak
.

l in k br eak s the ch a in i s in tw o pa rts ,

ea c h pa r t b e ing a s s t r o ng a s i t s we ake s t
l in k
. The m a r ket d oe s n ot br eak in
tw o eve n w he n i t r e c e i ve s a s ev er e b lo w
,
.

I f s ometh ing o cc u r s in th e n atu r e o f di s

a s te r wh e r eb y t h e m on ey s i tuat i o n i h
, ,

ve s tme n t d ema nd pu b l ic s e n t i me n t a nd
, ,

c o rpo r ate ea rning p o w e r a r e de e p l y a f

f ected a t r e m e nd ou s b r eak ma y o cc u r
, ,

b ut t h e r e i s al w ay s a level ev e n in a ,
 T p R
a e ea d n i g
F o u r stoc k s o u t o f t he B ig S ix a re
chie fl y in flu enced by t he o per a tions o f
w h a t is k no w n a s t h e Ha rrim a n S t a nd -

Th e B ig S ix a rd Oi l p a rty t h e mo s t a cti ve mem b ers

,

o f which a re E H Ha rrim a n Wi ll i am
. .
,

Ro c ke f e lle r H H Ro ger s a nd H C
, . .
, . .

F ric k . T heir fou r s t o c k s a re U ni o n ,

Rea ding St Paul a nd A m al g a m at ed

, .
,
.

O f th e other t w o Smelte rs is h a nd l ed ,

by th e Gu gge nh e ims whi l e S te el is u n ,

q ue s t i o n a b l y sw u ng u p a nd do w n m o re
by t h e in flu enc e o f p u b l ic sen t i m en t th a n
a ny t hing e l s e O f c o u r s e the c o nditi o n
.

o f th e s t eel tr a de fo rm s t he b a sis o f im
p o rt a nt m ove men t s in t hi s is s ue a n d ,

occ a si o n all y Mo rg a n o r s om e o ther la rge

in t ere s t may tak e a h a nd by b uy in g o r
se ll in g a f ew h u ndred th ou s a nd sh a res ,

b u t gener all y spe ak ing it is th e at ti tu de

, ,

o f t h e p u b l ic which chie fl y a ff e ct s t h e

price o f St ee l comm o n T hi s sh oul d b e .

b o rn e s t rict l y in mind a s i t i s a valua b l e ,

gu ide t o the t e chnic al po s i t i o n o f the

m a r k e t w h ic h f r e q ue n tl y tu rn s o n th e
,

o v er bo u g h t o r ov ers ol d c o ndi t i o n o f the

-

p u b l ic .

N ex t in i m po r ta nc e c ome w hat w e
wi ll t er m the Se c o nd a ry Lea der s ; v i z ,

t ho s e which at t i m es b u r s t in to gre at a c
tiv ity a cc o mp a nied
, by la rg e volume .

Th e s e a r e righ tly te r me d Se c o nd a ry
Lea d e r s b e c au s e w h i le t h ey s e l d om in
,

fl u en c e the B ig S i x to a m a r ke d ex te n t ,

th e l es s imp o rt a n t i s s ue s u s uall y f all in

to l in e at t h e ir ini t i a ti ve .

T h e p rincip al S ec o nd a ry Lea d e r s a r e :
 Th e S to c k Li st A na ly z e d
At chi s o n
Bal timore O hio
B roo kl yn Ra pid T r a nsi t
Col or a do Fuel
C onso l i d a ted Ga s
D e la w a re Hu dson
E ri e
G re a t N orthern
N orthern P a ci fi c
I ll inois C entr al
L o u i s v 1l l e Na shvi ll e
M iss o u ri P a ci fi c
N e w Y or k C entr al
P ennsy lva ni a
S o u thern P a ci fi c
S u ga r
A noth e r gr ou p which we w i ll c all the
M inor St o c k s is comprised o f le ss im
port a n t iss u es mo st l y l ow p ric e d a nd
,
-
,

emb ra cin g m a ny p u b l ic f av ori t es s u ch ,

A meric a n Ca r F o u ndry
C hes a pe ak e O hio M i n o r S to c k s
C hic a go G r e a t Western
C o l o r a d o S o u thern
D enver R io G r a n d e
Interb oro u gh
M e x ic a n C en t r al
M isso u ri K a ns a s
,
T e xa s
N or f o lk Western
O nt a rio Western
R ep u b l i I on
c r S tee l
Ro c k Is la nd
S o u thern Ra i l w ay
'

T e xa s P a c ifi c
W ab a s h
 T a p e R ea d i n g
T h e s e gr ou ps a r e a rr a nged s ol e ly with
r e ga rd to their pr e s e n t spec ulat ive pr om
in en ce a nd t h e ir p o w e r to in flue nc e t he
,

gen e r al m a r ket S o me peo p le wh e n

.
,

th ey s ee a n a d va nc e in a u gu r at ed in s ome

N
o f t h e M in o r S toc k s s u ch a s C h e s apeake
,

M i n o r S to c k s O h i o On ta ri o
,
W e s t ern o r R oc k ,

Do ot L ea d Is la nd a r e l ed to b u y P ennsy lva ni a
, ,

R e a ding a nd other P rim a r y o r Se c o nd

a ry L e a d e r s o n the gro u nd t h at th e
,

latte r wi ll be b ull i s h l y a ff e c t ed Th i s .

so m e t i me s o cc u r s ; mo r e o fte n i t d o e s
no t I t is j u s t a s falla cio u s to ex
—
.

p ec t a sh a r e o p e r ato r to follo w a
1 00 sh a r e t r a der
-
or —
a 1 00 s ha r e ma n
—
,

to be in flu enc e d by wh at t h e 1 0 s ha re
tr a d e r is d o in g .

T he va r i ou s s to c k s in t he ma r k e t a r e
l i k e a giga ntic fl ee t o f b oa ts all hitched ,

tog ether a nd b eing t owed by t h e tu gs

“
Mo ne y S i tuat ion a nd Bu sine s s C on
,
“

d itio n s . In th e fi r s t r o w o f b oa ts a r e
the B ig S ix ; b e hind the m the Se c o nd ,

a ry Lea d e r s t h e M in o rs a nd t h e M is
, ,

c e l l a n eo u s iss ue s in the o rd e r n ame d .

I t take s t i me to gener at e s t e am a nd to
get the fl ee t u nd e r w ay Th e l e a der s .

a r e fi rs t t o feel t he imp ul se ; t h e others

f o llo w in tu rn . S h oul d t h e tu g s halt ,

t h e fle e t w i ll r u h alo ng fo r a w hi le nu
der i t s o w n mome n tu m a nd ther e wi ll ,

b e a cer ta in a m ou n t o f b um ping b a ck ,

ing a nd fill ing In c a s e th e dir e ct ion

.

of t h e tu g s i s cha ng e d a br u p tl y th e ,

b u mpin g is a p t to b e s ev er e O b vio u s l y . .

t h o s e in t h e r ea r c a nn ot ga in a nd h ol d
 Th e S to c k L i s t A n ly a z ed

the l e a dership with out a n all ar ou nd r e -

a dj u s t men t .

T he B ig S i x a r e repre s e n tat i ve o f
—
A meric a s gre a tes t ind u stries r a i l r oa d
’

in g stee l m ak ing a nd mining

,
It i s ,
.

b u t n a t u r al t h at t h e s e s to c k s sh oul d f or m
the princip al ou t let to the co u n t ry s ’

spec u lat i v e t endenci e s T he U ni o n P a .

c i fi c a nd St P aul sys t e m s co v er t he en
.

tire We s t Rea ding o f i t s el f a la rge

.
,

r a i l r oa d pro per ty d om in at e s the co al ,

mining ind u stry ; i t is s o in te r la c e d wi t h

o ther r a i l ro a ds a s to ty pi fy the E a s te rn
sit uat ion Steel i s c l ose l y b ou nd up wi t h
.

the s tat e o f gener al b u siness thro u gho ut

th e s tate s whi le Amal ga m ate d a nd
,

S me lte r s a r e the con t ro ll ing f a c to r s in

co pper m ining a nd th e s m elt in g ind u s
try
In o rd e r th at w e may c o nsid e r the r e G ro u p s
l a tio n sh ips o f t h e p rincip al s to c k s o n the
l is t l e t u s f u r th e r di v ide t he a c t i ve is
,

s ue s i nto grou ps .

H A RR I M A N
TH E G RO UP * .

U nion Pa ci fi c R e a ding S o u thern , ,

Pa ci fi c At chison E rie I ll inois C entr al

, , , ,

Pa ci fi c Ma i l W heel ing a nd Lak e E ri e , .

S T A N DA RD OI L G R O UP
TH E .

A m al gamat ed C opper A n a c o nd a , ,

Su ga r St Pa u l Co nso l id ate d Ga s Co rn
, .
, ,

P rod u cts Ame ric a n L inse e d B r o okl y n

, ,

Union Ga s .

‘T h
e d ea th of
"

Mr H a rr im a n s in th b o
o s s om
ce e a ve
th s t
.

h as ch a ng ed e e g r u p ew h a .
 T a p R ea d i n g e

T H E M O R G A N G R O UP .

Atla n t ic Coa s t L ine Ho c k ing Val l ey , ,

L o u is v i ll e Na s h v i ll e South e rn Ra i l ,

w a y U S Ste e l Ge ner al E l ec t ric a nd

, . .
, ,

Me rca nti le Ma rin e

*
.

T H E P E N N S Y LV A N I A G R O UP .

P
ennsy lva ni a P i t ts b u rg C in C h , , . .

S t L o u is Bal timore
.
, O hio C hes a ,

pe ake O h i o No r folk W e s te rn , .

T H E H I LL G R O UP .

G r eat No r th e rn Nor thern Pa ci fi c , ,

G re at N o rth e rn Ore Pa ci fi c Coa st .

T H E GO ULD G R O UP
M is so u ri Pa ci fi c D enver R io ,

G r a n d e T e xa s Pa ci fi c W a b a s h W e s t
, , ,

ern Ma ry l a n d S t L o u is S o u th w e s t ern
,
.
,

We s t e rn U n i o n a n d Colo r a d o Fuel ,
.

T H E V A N D E R B I LT G R O UP .

Ne w Yo r k Ce n t r al No rth w e s t C C , , .
, .
,

C .
,
St L ; Lake E rie . . We s te rn N , .

Y C hic a go St L N Y Ha r le m . .
,
. .
,

a nd D elaw a r e Hu ds o n
*
.

T H E H A W L E v G R O UP .

C o l or a do S o u thern M inn eapol i s ,

S t Lou is I o w a Ce n t r al Tole d o St L
.
, , , . .

Wes te rn C hica go Alto n , .

T H E M OO R E G R O UP .

Ro c k Is la nd St L Sa n F r a nci s co
, . .
,

A m e ric a n Ca n .

T H E C A NAD I A N P A C I F I C G R O UP .

Ca n a di a n Pa ci fi c M inne a po l i s St
'

.
, ,

Pa u l S S Ma rie D ulut h South S h o re

, . .
, ,

Atla ntic .

Ch s p
‘ e k a Oh io h
ea s in b o m H wl y as ce ec e a a
o
e e
t
.

pr p er y .

_4 6_
 Th e S to c k L i s t An a ly ed z

G U G G E N H E I M G R O UP

N
TH E .

Am Sm e l ting
.
,
Nat i o n al L e a d , Utah
C opp e r .

TH E H AV E N G R O UP
E W .

Ne w Ha v en O n ta ri o W e s t ern
'

.
,

A rr a nged a cc o rding t o in d u s t rie s w e

h av e the foll owing :
S T EE L S T O C K S .

U S S t e e l A m S t ee l F o u n dri e s
. .
,
.
,

B eth l ehem S tee l C o l or a do Fu e l ,Ir o n ,

G re at N or thern O re R ep u b l ic Ir o n ,

Ste e l Sl oss S h efli el d U S Ca s t Ir o n

,
-
,
. .

P ipe F o u ndry .

E QU I P M E N T S T O C K S .

Am Ca r . Fou ndry A m L o c o m o ,
.

t i v e N Y A ir B r ak e P res sed S t e e l
,
. .
,

Ca r Pul l m a n Ra i l w a y Steel S pring s

, , .

EL E C T R I CAL S T O C K S .

Ge ner al E l ec t ric W e s t ingho u se All i s , ,

Chalme r s .

CO PP E R S T O C K S .

Amal ga m ate d A n a c o nd a G r a nby

, , ,

Ne w h ou s e T enn e s s e e Uta h ( A m S m el
, , .

t ers is al s o c lo s e l y id e n t i fie d wi th t hi s
ind u s t ry ) .

TE L E G R A P H A D TE L E P H O N E S T O C K S
Wes te rn Uni o n Ma c kay Com p a nie s
N ,
.

Am Tele gr a ph
. Tele ph o n e .

A N T H R A C IT E S T O C K S .

R e a ding E ri e D e la w a re La c k
, , ,
.

W e s te rn D el a w a r e , H u d s o n On ta ri o ,

W e s te rn a nd P enn sy lva ni a
. .

C HE M I C AL S T O C K S .

Am A gric ultu r al Che mic al V irgini a

.
,

Ca ro l in a Ch emi ca l Am Cotto n Oi l , . .
 Ta p e R ea d n i g
T he a b ov e a re t h e princip al gr ou ps .

T here a re o f c ou rse a n u m b er o f in
, ,

dependent r a i l roa d s s u ch a s M is s o u ri , ,

K a ns a s T e xa s K a ns a s C ity Sou the rn

, ,

C hic a go G re at Wes t ern a n d -Wisc o n s in ,

Ce ntr al b esides l oc al t r a c t i o n c ompa

,

ni e s a nd com b in e s s u ch a s the Ry a n ,

B e l mont G r o u p in N ew Yo r k C i ty ,

inc lu ding Int e rb o r ou gh Met r opol i ta n -

,

T hird Ave n u e a nd Ma nh atta n T h e se , .

a nd o ther p u b l ic u ti l ity s to c k s s u ch a s ,

P eop l e s Ga s a nd T o le d o Ra i l w ay
,

L ight et c a r e go v erned by lo c al co n
,
.
,

d itio n s a nd d o no t a s a r ule a ff ec t t he
, , ,

ge n e r al l i s t .

In d ust ri a l s La rg e ind u s t ri al c o nc e rn s l i k e Am .

Su ga r Am Wo ole n In te rn a ti o n al P a
,
.
,

pe r Intern at i o n al Ha rve s t er U S Ru b
, , . .

b e r e t c a re al so aff ec t ed princip all y by

,
.
,

th e s tat e o f t heir respecti ve t r a de s a nd ,

c a r ry l i t t l e w e ight other w is e .

Hav ing c la ssi fi ed t h e princi pal a c t i v e

“

s to c k s w e c a n no w r e cogni ze m o r e C lea r
l y the f o rce s b ehind t h e ir m o v e m en t s .

F o r _in s ta n ce i f C on s ol id a ted Ga s s u d
,

d en l y b ec o mes s t r o ng a nd a c t i ve w e ,

k n o w i t wi ll pr ob a b l y a ff e c t B r ookl yn
U ni o n Ga s b ut t here i s n o r ea s o n w h y
,

th e ot her Sta nd a rd Oi l s to c k s s h oul d a d

va nce mor e th a n s l igh tl y a nd o u t o f sy m
p athy B u t i f all the s to c k s in th e Sta nd
.

a rd Oi l gr ou p a d va nce in a s tea d y a nd
fif gfigiii
tl c
s u s ta ined f a shion w e k n o w t hat t hes e ,

c a pit al is t s a r e enga ge d in a b ull cam

p ga i n . A s t hese pe o p le do n ot e n t er
de al s f or a f ew poin t s i t is s a fe t o go
_ 4 8_
 T pe R a d in g a e

ri s e c o m me nc e s in At chi s o n ( a Se cond
a ry L e a d e r ) th e B ig S ix i s a bout d o ne
,

a nd dis t rib ut i on i s tak ing p la ce u nder ,

pr ot ec t i o n o f the s t rengt h in At chi s o n

a nd o th e rs in i t s c la s s Su g a r a c t s in a .

I n d i c a to rs s i m i la r c apa ci ty fo r the Sta nd a rd Oi l

gr ou p P ro f e ss i o n al t r a der s call the se
.

s to c k s Indica to r s .
”

T h e Ha rri ma n a nd Sta nd a rd Oi l p a r
t i e s w o r k in h a r mo ny t h e ir r elat i o ns ,

in th e va ri ou s pr ope r t i e s b e ing c lo s ely

in t erw ove n .

T he M org a n peo p le a r e c ompa r at i vel y

in a cti ve e x c ept at ti me s w he n they tu rn
,

ov er i m men s e q ua n t iti e s o f Ste e l s e c u ri

ties We f ee l s a f e in a s serting th a t f ew
.

ma nip ulat ive o rd e r s e ma n ate f r om the

c o rn e r o f W all a nd B ro a d T his i s al s o .

t r ue o f t he H i ll a nd P ennsy lva ni a
gr ou p s ex cep t in r a re in s ta nces wh e n
, ,

b a n k er s a r e brin ging o u t n e w iss ue s .

The a b sence o f insid e ma nip ulat i on

in a s to c k l e av e s th e w ay ope n fo r pool s
to ope r at e a nd ma n y o f th e move s that
,

a r e O bs e r ve d in the s e gr oup s a r e p r o
d u c ed b y a ha nd ful o f floo r o r o ffi c e
Po o ls op e r ato r s w ho by j o inin g h a nd s and
, ,

s w ingin g la r g e q ua n t i t i e s a r e ab le to ,

fo rc e t h e ir s to c k in t h e d e s ir e d d irec
t io n .

A c t i v i ty in t h e Goul d gr oup i s la rg e
ly c o n fi n e d to M i ss ou ri Pa ci fi c a nd Colo
r a d o Fu e l b ut t h e oth er s a r e tak en in
,

h a nd at t i me s wi th th e ex c ept i o n o f
,

W e s te rn U ni o n w h ich i s princip all y

,

h el d fo r inve s tme n t .
 T h e S to c k L i s t A n alyz ed
O f the V a nd e rbi lt s Ne w Yo r k Ce n ,

t r al i s t h e l e a d e r ; all t h e oth e r s u s ually

take t h e ir c ue f r om i t Ne gle c t i s t he .

princi pal m ar ket ch a r a c te ristic o f t h e

m a j o rity o f thi s gr ou p mos t o f th e o u t ,

st a nding sh a r e s b eing l oc k ed u p in s a f e
deposi t b ox es T h e pr i ncip al m ov es a r e
.

m a d e b y th o se n ot id e n t i fi ed wi th t h e
Va nder b i lt s ( I t w i ll b e n o t e d th at Wm
. .

Roc k e f e ll er Ja mes S ti ll m a n a nd s om e
, ,

o f t he M org a n p a rty a r e dir e ct or s ) .

T h e Ju ni o r Va nderb i lt s s u ch a s N
“ ”
,
.

Y .
C,
h St. L,
a nd Lake. E ri e.
,

W e s t ern a r e p oo r lea d e r s a nd ge n er ally ,

u n s at i s f a c to ry s to c k s to w a tch ex cept ,

a s s t r a w s S h o wing t h e dir e c t i o n o f t h e
,

wind .

With th e e x cept ion o f C hes a pe ak e 8;

O hio a nd Col or a d o S o u thern the ,

Ha w l ey s t oc k s c ut v ery l itt l e fi g u r e
thei r movements c a rry S l ight signi fi c a nce .

T h e Moo r e p a r ty s p rinci pal a c t i v i t i e s

’

a r e c o n fi n e d to Ro c k Is l a nd th e i n ,

fl u en ce o f which se l d om exte nd s b ey o n d
i t s own c o n tro lle d pr op er t ie s .

T he prim a ry m a r ket f o r Ca n a di a n
Pa ci fi c i s in Lo n d o n T h e m o veme n ts .

o f i t s Am eric a n lo op ( M inn S t Pa ul .
,

8 S S Ma rie ) a r e n ot signi fi c a n t D u
: . .
, .

l u t h S o ut h S h o re
, Atla n t ic is gi ven
a r u n o nce or twice a y ea r b y th e Ca n a
di a n Pa ci fi c f ollo win g h av ing i t s h ea d
q u a r te r s in Mo n t re al
T h e G u gg enh e ims a r e al w ays a ct i ve
in S m elt ers a nd th e s to c k freq u en tly O f
,

f e rs s pl endid t r ading o pp o r tu ni t i e s Lea d .

—5 1
 T a pe R a d i n g e

is f r eque n tly u s e d a s a cha s e r a nd ,

i s o fte n ma d e a c ti ve w hen Smelte r s h a s

complete d its ru n .

Ne w Have n i s ma in l y hel d by Ne w
E ngla nd e r s fo r inve s t men t On ta r i o .

Wes te rn is popula r w i th s mall tr a d e r s ;

i t s moveme n ts d e s e rve l i ttle c ons id e r a
tion .

P u b li c
U S Steel i s s w ay e d by c o ndi t i ons
. .

Th e
in the s teel t r a d e a nd th e s pe c ulat i ve
,

tem p e r o f the g e n er al p u b l ic a ss i s te d ,

o cc a s i o n all y by s ome o f t h e in s id e r s No .

othe r s t oc k o n the l i s t i s s u c h a t r ue
ind e x O f the att i tu d e O f the pu b l ic o r ,

t he te c h nical po s i t i o n o f the ma r k e t In .

c lu ding those w h o o w n the s toc k o u t

right a nd tho s e w ho c a rry it on m a rgin
, ,

p r ob a b ly a qua rte r o f a m i ll i on people

h er e a nd a br oa d c lo s el y follo w i t s move
m en t s W eekl y r epo rt s o f the s teel
.

t r a d e a r e mo s t ca r e full y s crut ini ze d a nd ,

t h e c o r po r at i o n s ea rning s a nd o rd e r s o n
’

ha nd m in ut e l y s tu di e d b y thou s a nd s .

Th i s g r eat p u b l ic n eve r s ell s i t s f a

v o r ite sh o r t b ut c a rri e s i t pa id fo r
“ ”
, ,

o r o n m a rgin u n t i l a pr ofit i s s e c u red o r ,

u nti l i t i s sh ake n o r sc a red o u t in a v io

l ent dec l ine .H enc e i f the stoc k is
,

st r on g u nder a dvers e ne w s w e m a y ,

in f er th a t p u b l ic ho l din gs a re strong
ly forti fi ed a nd th a t con fi denc e
,

a b o u nds I f S tee l disp l a ys m ore t h a n

.

its s h a re o f w e ak nes s a n u n t en a b l e ,

position o f the p u b l ic i s indic a ted .

T h e o th e r s t ee l s t oc k s a re domin at ed
b y th e gi a nt corpor a tion a nd s el dom ,

f u rnish in dic a tion s o f val u e to th e

2
 Th e S to c k L i s t A n a ly z ed

Ta pe R e a ders e x cept a t the end o f a

,

l ong rise .

A t thi s point p u b l ic sen t i m ent b e

com e s intense l y b ul l ish a nd spre a ds
its e l f in the l o w priced s pec ul a ti ve
-

sh a res In s ider s in t h e j u nior ste el

.

stoc k s t ak e a dv a nt a ge o f this a nd a re
a b l e to a dv a nce a nd fi nd a go o d m a r
k et fo r t heir ho l ding s .

T he E q u ipm ent S toc k s fi nd th e i i

chie f insp i r a tion i n th e o rders fo r c a rs
l ocomotives etc p l a ced b y the r a i l
, .

ro a ds T hese orders a re d e pendent

.

u pon gener al b u sine s s conditions C on .

s eq ue nt l y th e e q u ipm ent i s s u es c a n
s e l do m b e ex pected to do more th a n
fo l lo w t h e t r e nd o f pr o s perity o r de
pres si o n .

W e h ave t h u s i n t rod u ced o u rse l ve s

to t h e princip al spec u l a tive m edi u m s
a n d their fa m i l ies e a ch o f which u pon
, ,

c l oser a cq ua int a nce s e e m s to h a ve a

,

sort of pers o n al ity : I f w e s t a nd in a

room w ith fi fty or a h u ndred peop l e ,

all o f w hom w e k no w a s reg a rds their ,

chie f m o tive s a nd ch a r a cteristics w e ,

c a n form de fi nite ide a s a s to thei r

pro b a b l e a ction s u nder a given s et o f
circ u m st a nces T his w o ul d b e i m p o s
.
~

S i b l e a mong s t r a ng e rs .

S O it b ecome s the Ta pe R e a der t o

a cq ua int hims e l f w ith the mos t m in u t e K n o w l e d ge
o f D e ta il s
det a i l s pert a inin g to these m a r k e t
iden t ities al so w ith the h a b its mo
, ,

f i v e s a nd me th od s O f the m en w h o
m ak e the princip al mo v es on th e
S toc k E x ch a n ge c he s s b o a rd -
.
 IV S to p O r de r s T r a din g Ru l e s 63 d
.
, , .

H E N a p erson c o n temp l a t e s
a n e x ten s i v e trip o n e o f ,

th e fi rs t thin g s t ak en int o
a cco u n t i s the e xpe n s e
th a t w hich c a n not b e av oided In .

p l a n n ln
g o u r e x c u rsion into the re al m s
o f T a p e R e a din g w e m u st th e re fo r e
, ,

c a re fu ll y w eigh the e x pen ses or t o , ,

u se a b etter term the fixe d ch a rges in

,

tr a din g .

W ere there no e x pen ses p r o fi t m a

'

E x p en s es
—
,
-

k in g wo ul d b e fa r e a sier p r o fi ts
w o ul d m ere l y h a ve t o e x ceed l os s e s .

B u t n o m a tter w hether yo u a re a m e m
b e r o f the N ew Y or k S toc k E x ch a nge
or n ot in a ct u al tr a ding pro fi t s m u s t
,

e x ceed l os s es a n d exp ens es T he s e

.

a re inc u rred in every tr a de w hether i t ,

S ho w s a g a in 01 a l os s T hey con si s t
‘ ‘

N
of :

C om mis sion o n 1 00 S h a res

In v isi b l e eighth ( see T I CKE R V o l ,
.

I ,
O 2 p 17)
.
, .

Tax on s al e
 S to p Or d e r s Tr a d i n g R u l es
, , &c .

in a ddi t ion to int e r e s t i f t he tr a d e is

c a rri e d ove r night .

B y pu rch a s ing a N ew Yo r k S t oc k
E x ch a n g e s e a t th e commi s si o n c a n b e
,

red u ced t o $ 1 per h u ndred s h a r e s ,

bo u gh t a nd s ol d th e s a m e d a y o r ,

$3 V
. 1 2 i f c a2rried o ve r n igh t T hi s a d .

v a n ta ge is p a rt l y o ff se t b y in t eres t o n
t he money invo l ved d u es a ssessments , , ,

e tc w hich am o u n t to ne a r l y
.
,

per a nn u m on a s e a t c o sting
T he i n v isi b l e eighth i s a fa c to r Th e I n vi s ib le
w h ich n o one — n o t ev en a mem b er E igh th
c a n overcome N or c a n t h e tax b e .

l egitim a te l y av oided .

T he Ta p e R e a d e r w ho i s a n o n
me m b er m u s t t her efo r e r eal i z e th at
, ,

th e i ns ta n t he g iv es an o r d er to go
long or s h o rt 1 00 sh a re s , he h as l os t
I n o rder th at he m a y n ot fool
hi m s el f he s houl d a dd h i s c o m m i s
,

s ion s to hi s p u rch a s e p rice or ,

d e d u c t th em f r om hi s s ell ing p ric e im

med ia tel y People w ho b oa s t o f t h e ir
'

p r ofit s u s u al l y fo r g et to d e d u c t e x
pe n s e s Yet it i s thi s in s idi ou s i te m
.

w h ic h f r e q ue n t l y thr o w s t h e n et t e ‘

s ul t ov er to th e d e bit S id e .

Th e exp r e s s ion i s f r e que n tl y hea rd ,

I g ot o u t e ve n e x cep t t h e c om m i s ,

s i o ns the s p eak er ev id e n t l y s c o rnin g

,
”

s u ch a tri fl in g c o n s ider a ti o n T his .

s o r t o f se l f dec e p t ion i s r u in ou s a s
-
,

w i l l b e seen b y c omput in g t h e fi x ed
ch a rg e s o n I o tr a des —o r o n 2 0
t r a de s B e a r in m in d t h at a
“

_5 5
 T a p e R ea d i n g
‘

lo s s of o n the fi r s t t r a d e l e a ve s
— —
d ou b le t h at amou nt 4 579 to b e m a d e
o n th e s e c o nd t r a d e b efo r e a d ol l a r of

p ro fit i s s ec u r e d .

I t th e r e fo r e a ppe a r s th at t h e Ta p e
Rea d e r s pro b l e m i s n ot o n l y to el i m
’

i n a te l os s e s
,
b u t to c ove r h is e x
p e n s e s a s q u ic kl y a s m a y b e I f h e h a s.

a co u p l e o f po in t s pr ofit in a lo n g
tr a d e t he r e is n o re a s o n w h y h e S houl d
,

l et th e s t o c k r u n b a c k be l o w h is n et
b u y in g p rice . H e r e circ u m s ta nc e s
s ee m to c al l fo r a s top o rd e r s o that ,

Use of n o ma t te r wh a t h appe n s h e w i l l n ot
p Or d r s
S to e
,

b e c om p el l e d to p a y ou t mo n e y T hi s .

s t o p S hou l d n ot b e th r u s t in w h e n n e t
c o s t is to o c l o s e to th e ma r ket p ric e .

Rea cti o n s mu s t b e al l o w e d fo r .

A T a p e R e a d e r i s e s s e n t i al l y o n e
w ho fol lo w s t h e i mm e di ate tr e nd A n .

e x per t c a n re a di l y di s t ing u i s h b et w ee n
a ch a n g e o f t ren d a n d a re a c t i o n .

W h en h i s m en tal b a r omete r in dic ate s

a c h a n g e h e d oe s n o t w a it fo r a s top
ord e r to b e c au g h t b u t c l ea n s hou s e
,

or re ve r s e s h i s po s i t i o n in a t w in kl in g .

T he s t op o rd e r a t n e t c o s t i s ther e ,

fo r e o f a d va nt a g e o n l y in c a s e o f a r e
,

v ers al which is s u d d en pr o no u nced , ,

a n d w i t h n o f orew a rn ing .

A s t op s h oul d al s o b e p l a c e d i f th e
op e r at or i s o b l iged to l e av e th e t a p e
fo r more t h a n a m omen t o r i f t h e tic k
,

e r g e t s o u t o f o rder W h i l e he h a s h is
.

eye o n the ta pe the m a r k et w i ll t e ll

hi m w h at to d o T he momen t thi s
.

3
 T p R ea d i n g
a e

s en s u s o f s hrewd a nd ex per i e nc e d t r a
ders i s in f avo r Of t w o p o int s max i
m u m g r o s s l o s s o n a ny o n e t r a de .

T hi s i s p u r el y a rbitr a ry h o w ev er Th e , .

Tap e Rea d e r k n o w s a s a r ul e wh at to , ,

d o wh e n h e i s at t he t a p e b u t i f he ,

i s s ep a r ate d f r o m t h e ma r ket b y a ny
'

con t ingen cy h e w i l l b e o b l iged t o fal l

,

b a c k u p o n t h e a r b itr a ry s to p .

A c l o s e r s to p m a y b e O b ta in ed b y
n o t in g th e p o in t s of re s i s ta n c e — t h e
“ ”

l evel s at w h ich t h e m a r k et t u rn s afte r

a r ea c t i o n . F o r exam p l e i f yo u a r e ,

sh o rt at 1 3 0 a n d th e s toc k b reak s t o
12 8, r al l ie s to 1 2 9 a n d th en tu rn s
,

d o wn a g a in th e p o in t o f r e s i s ta nc e i s
,

129 . In c a s e o f t e mpo r a ry a b s e n c e o r
in te rr u p ti o n t o th e s e rv ic e a g oo d ,

s“t o p w oul d b e 1 2 9 % o r T he s e.

p oin t s o f r e sist a n c e w i l l b e mo r e ”

fu l l y disc u s s e d l at er .

I f the op e r ato r w i s he s to u s e a n a u
to m a ti c s t o p a ve r y go o d m eth o d i s
,

th i s : Su pp o s e t h e in iti al t r a d e i s
m a d e w ith a o n e point s top -
Fo r .

e ve r y V3 th e s t o c k move s in y o u r favo r ,

c h a n g e the s top to c o rr e s po n d s o t h at ,

th e s to p i s n e ve r m ore n o r l e s s t h a n
'

o n e po in t a w a y f r om th e ex tre m e ma r

ket price T his gr a d u al l y a n d au to

.

m a ti c a l l y r e d u ce s th e ris k a n d i f th e
.

Ta p e R e a der b e at al l s k i lfu l h i s p r of ,

i t s m u s t ex ce e d l o ss e s A S s oo n a s .

th e s t o p i s thu s r a i s e d to co ve r c om
mis si o n s i t w oul d se em b e s t n o t t o
,

m ak e i t a utom at ic th e r eafte r b u t l et .

-5 8
 S to p Or d er s Tr a d i n g R u l es
, , &c .

t he m ar ket d evel o p i ts o w n s top o r

si g n al t o g e t o u t .

O n e tr o u b le w it h th i s k in d o f a s top
i s th a t it in t er f ere s w i th t h e f r ee p l a y
o f j u dg m en t A h ome l y i l l u str a ti o n
.

wi l l ex p l a in w hy : A t al l w om a n a nd
a s hor t m a n a ttem p t t o cros s a s treet .

An au tomo b i l e ap pr oa ch e s Th e .

w oma n s e es th a t t here i s a mp l e t i me
in which t o cros s b u t h e h a s her b y ,

t h e a r m a n d b ein g u ndecid e d h i m s el f ,

b a c k s a n d fil l s fi rs t p u shi n g t he n p ul l
, ,

i g
n h er by th e a rm u nti l
"

t h ey fi n all y
r etu rn to the c u r b a fter a h a irbre a d t h ,

e s c a pe L e f t to h er s e l f S h e wo ul d
.
,

h av e k n o wn e xa ct l y wh at to d o .

It i s the s am e wit h th e T ap e R e a d
er . H e i s h a m p ered b y a n auto mat ic
s top I t i s b e s t th a t h e b e f re e t o a c t
.

a s h i s j u dgmen t dict a te s w it hout feel ,

ing c o mpe l l ed by a prior r e s o l u tion to

a ct a ccordin g to a h a rd a n d fa s t r u l e .

T h e re is a nother tim e w h en th e s to p
order i s o f val u e to th e T a p e Rea d e r ,

v i z w h en h i s indic a ti o n s a re n o t c l e a r
.
,

l y d efi ned T h e origin al comm itmen t

.

sh oul d o f c ou r s e b e ma de o n l y wh en
, ,

the tren d i s positi v e l y in dic a ted b u t ,

r
U n c e ta i n ty
s it u a ti o n s w i l l de v e l op w h e n h e wi l l
b e u n c e r ta in wh e t h er to s ta n d p a t ,

c l ose o u t o r re v ers e h is p o s iti o n At

, .

s u ch a tim e it s e e m s b e tter to p u s h
the s to p u p to a p o in t a s c lo s e a s
,
‘

p os si b l e to the m a r k et pric e w itho u t ,

cho k in g o ff th e t r a d e B y this w e .

m e a n a re a s on a b l e a re a s houl d b e a l
 T a p e R ea d i n g
lo w e d fo r tempo r a r y flu c tu at ion s I f .

th e s t o c k e m erg e s f r o m i ts u ncert a inty

b y g o in g in th e d e s ir e d d ir e ction th e ,

s t op c a n b e ch a n g e d o r c a nc el l ed I f .

it s t r e n d b e c ome s a d ve r s e t h e t r a de ,

i s autom at ic al l y c lo s e d .

Fea r h e sit at ion a nd u n c e r ta in t y a r e

,

de a d l y ene m ie s of th e T ap e Rea d e r .

Th e c h i ef c au s e o f fea r i s ove r tr a di ng - .

Th e r efo re c om m it me n t s s h ou l d b e n o
g r eate r th a n c a n b e b o rn e b y o n e s ’

s u s c ept ibi l ity in th i s r e s p e c t .

H e s i tat i o n mu s t b e ove rc ome b y

s el f tr a inin g To o b s e r ve a p o s i t i ve
.

in dic at ion a n d n ot a c t upo n i t i s fata l

—mo r e s o in c l o s in g th a n in ope ni ng
H e s i ta ti o n
a tr a d e T he a pp ea r a n c e o f a d efi n i te
.

indic a ti o n s houl d b e i m me di atel y fo l

lo w e d by a n o rd e r Se c o n d s a r e ofte n
.

m o r e val u a b l e th a n m in ute s T he
—
.

Tap e R ea d e r i s n o t th e c apta i n h e i s
b u t th e e ngin ee r w ho c o n t r ol s th e
ma c h in e r y Th e Tape is the p i lot a n d
.

th e e n gin ee r m u s t o b e y o rd e r s wi th
p r om p t n e s s a n d p r e ci s i o n .

U n c e r ta in ty m a y b e r e d u c e d by t h e
u s e o f s top s a s a b ove o r b y c lo s in g a
,

t r a d e w h e n e ve r o n e s c ou r s e i s n ot e n
’

ti r el y c l ea r .

W e h av e d efi n e d a T a p e Rea d e r a s

o n e w ho fol l o w s th e i m me di ate t r e nd .

T hi s m ea n s th at he p u r s u e s t h e l in e o f
lea s t r e s i s ta nc e He goe s wi th th e
—
.

m a r ket h e d oe s n ot b u c k i t The o p .

c r a tor w h o o pp o s e s t h e im me di a t e
t ren d p i t s h is j u dg m en t a n d h i s h u n
 p Or d e r s Tra d i n g R u l e s &
S to , , c.

dr e d o r mo r e S h a r e s a g a in s t the
w o r l d s s upp l y o r d ema n d a n d the
’

weigh t o f i ts m i l l i o n s o f s h a r e s A r m e d .

with a br oom h e is t r y in g to s ta y the

,

inc om i ng t id e .

W he n he goe s wi th the tr e nd the ,

fo rc e s o f s u p p l y d ema n d a nd m a n ip u
,

l at i o n a r e w o r k in g fo r a n d w i th h i m .

A ma r ket w h ic h s win g s w i th in a r a
di n s o f a c oupl e o f po in t s c a nn ot b e
s a id to h ave a t r e n d a n d i s a g oo d o n e
,

fo r th e Tap e Rea d e r to avo id Th e

N
.

r ea s o n is : U n l e s s h e c at c he s th e e x
t r eme s o f th e l i ttl e s win g s h e c a nn ot ,

p a y c om m i s s i o n s t ake o cc a s i o n al
,

l o s s e s a n d c ome o u t ah ea d o y a c ht .

c a n w in in a d ea d c al m AS i t c o s t s .

h i m n ea r l y h al f a p oi n t to t r a d e ea c h ,

ri s k s hou l d c o n ta in a p r ob a b l e tw o t o
fiv e poin t s p ro fit o r i t is n o t j u sti
,

fi ed .

A m e c h a nic al e n gin ee r g i ve n th e ,

weig ht of a n o b j e c t th e fo rc e of the,

b lo w whic h s tri ke s i t a n d th e el eme n t,

th r ou g h whic h i t m u s t pa s s c a n fi g u r e ,

app ro x i m atel y ho w fa r t h e o bj e c t w i l l
b e dri ve n S O t h e Tape R e a d e r b y
.
,

g au gin g the i m p etu s o r th e e n e r gy

w ith whic h a s to c k s t a r t s a nd s u s
t a in s a moveme n t decide s w h ether it
,

i s l i k e l y t o t r av e l fa r e no u gh to w a r
—
r a n t his g o ing wi th i t wheth e r i t w i l l
p a y it s e x p e n ses a n d re mu ner ate h i m
fo r hi s b o l dnes s .

T he ordin a r y tip t r a ding s p e c ul at or

-

g ul p s a point o r t w o p r ofi t a n d di s
 T a pe R ea d i n g
d a in s a lo ss u n l e s s it is b ig eno u g h to
,

s tra h g h im T he T a pe R e a der m u st
le
—
.

do th e opposite h e m u st c u t o u t
e v ery po s si b l e eighth l os s a n d se a rch
fo c h a n c e s to m ak e three fiv e a n d ten
r ,

points H e does n o t h av e to gr a sp
.

e v erything th a t l oo k s l i k e a n o p p o r tu
mity .I t i s n ot n ecess a ry fo r him t o b e
in th e m a r k et contin u o u s l y He .

choo s e s on l y the b es t o f wh at th e tap e

O ff er s .

H i s o ri g in a l ri s k s c a n b e gr a d ual l y
e ff a c e d by C l e v er a rr a n gemen t o f s t op
orders w h en a stoc k g o es hi s w a y H e .

m a y ke ep thes e in h is he a d o r p u t them
on the flo or F or my o w n p a rt I pre
.

fer, h av in g decided u pon a d a n ger

p oint to m a int a in a m ent al s t o p a nd
,

w hen the price i s re a ch ed c l o se th e

t r a de a t the m a r k et R e a son : T here
.

m a y b e gro u nd fo r a ch a n ge o f p l a n o r
O pinion a t th e l a s t momen t ; i f a stop
is o n th e fl o o r it t ake s tim e to c a n ce l
o r ch a n ge it hen ce there i s a period o f
,

a fe w m in u tes w hen the op er a tor does

n ot k no w w here he st a nd s B y u sing .

men t al s tops a n d m a r k et orders h e a l

w a ys k no w s w here he st a nd s e x cept ,

a s reg a rds th e price s a t w hich his o r

d e rs a r e e x ec u ted T h e m a in con sider
.

at ion i s he k no w s w hether h e is in or
,

out .

T he p l a ci n g o f stops is mos t e ff ect

u a l a n d s cienti fi c w hen in dic a ted by
the m a r k e t i t se l f A n exa mp l e o f this
.

i s a s f oll ow s
 S to p Or d e r Tra d i n g Ru l es
s, , &c .

S to p ra ised to
1 2 9 93 .

—B u y l n g p o in t ,

1 2 8 134 .

H ere a stoc k flu ct u a tin g b e t w een

,

1 2 8 a nd 1 2 9 gives a b u yin g in dic a tion

,

at O b vio u s l y i f the in dic a tion

,

i s tr u e t h e price w i l l not a g a in b re ak
,

12 8, h av ing m et b u ying s u ffi cien t l y

Stron g t o t u rn it u p t w ic e f r om th a t
fi g u re a n d a th ird time f r o m
T he fa ct th at it did no t to u ch 1 2 8 on
the l a st do w n s w in g forec a sts a higher
u p s w in g ; it s ho w s th a t the do w nw a rd
pres s u re wa s no t s o s t ron g a n d the
d em a nd s l ight l y more u rgent In .

oth e r w ord s th e p o in t o f resist a nce

,

w a s r a ised H av in g b o u g ht a t .

— 6
 T a p e R ea d i n g
th e s top p l aced a t
i

12 8 94 , is ‘

12 7/ 73 .

wh ich is V; b el o w t h e l a s t po in t of re

s i s ta n c e .

Th e s to c k g oe s a b ov e i t s p r ev i ou s
-to
p a n d contin u e s to 1 3 94
0 .

At a n y t i m e af ter i t h a s cr o s s e d 1 3 0
th e ope r ato r m a y r a i s e h is s t o p t o
co st p l u s co m m i s s ion The
s t o c k r ea c t s a t th e n c o n t i n ue s
th e a d va n c e to a b ove 1 3 1 A s s oo n a s .

a n ew h ig h p o in t is r ea c h e d the s t op
is r a i s e d t o 1 2 9 5 3 a s 1 2 9 % w a s t he
,

po in t o f re s i s ta n ce o n the di p .

I n s u ch a c a s e t h e ini t i a l ri s k w a s
V3 p l u s c o m m i s s i o n s e t c
, th e m. a r
, ket
gi v in g a w el l de fi n ed s top po i n t m a ,

k ing a n a rbitr a r y s t op n ot o n l y n u
n e ce ss a ry b ut e xpens i ve The i llu s
.

tr a tio n i s gi ve n in ch a r t fo r m b u t the ,

e x peri e nc e d T a pe R e a d e r g e n e r al l y
c a rri e s the s e s w i n gs in h i s hea d A .

s e rie s o f h i g he r to p s a n d b otto m s a r e
m a d e in a p r o n ou n c e d up s w in g a n d
t he r eve r s e in a d o wn s win g .

A r b i t r a r y s t o p s m a y o f c ou r s e b e
, ,

u s e d at a n y t i m e e sp e ci al l y i f o n e
,

wi sh e s to c l in ch a s u b s t a n t i al p r ofit
'

b u t u n t i l a s to c k g et s a w a y fr om th e
p ric e at w h ic h i t w a s e n tered it s ee m s ,

b es t to u s e t h e s t o ps i t d evelop s fo r
its el f.

I f th e o p e r ato r i s S h ake n o u t o f h i s
ho l ding s i m m edi a te l y a ft e r en te ring
th e t r a d e i t d oe s n ot p r ov e h i s j u d g
,

men t in err o r S o m e a cciden t m a y

.

h ave hap p en e d s o m e u n to w a rd d evel

,
 T a p e R ea d i n g
e r e d fi n al o r in fle xi b l e I t i s n ot o u r
.

a i m t o a s s u m e t h e r ol e o f a n o r a c l e .

Rathe r w e a r e r ea s o n in g th i n g s o u t
,

o n p ape r a n d a s w e p r o gr e s s i n the s e
,

s tu di e s a n d appl y t h e s e te n tat i ve r ul e s
to th e tap e in a c tu al o r p a p e r t r a d i ng
, ,

w e s h al l pr o b a b l y h ave o cc a s i o n to ‘

mo di f y s ome o f o u r c o n c l u s i o n s .

A Tap e Rea der mu s t c lo s e a t r a d e

( )
1 w he n the t ap e t el l s h i m to c lo s e ;
( )
2 w h e n h i s s top i s c au g ht ; (3) w h e n
h i s po s i t i o n i s n o t c lea r ; ( 4 ) wh e n he
h a s a l a r g e o r s a t i s fa c to r y p r ofit .

The fi r s t a nd mo s t i m p o r ta n t r ea s o n
fo r c l o s in g a tr a d e is : T h e t a p e s a y s
so . T hi s in dic a ti o n m a y appe a r in v a
ri o n s fo r m s A s s u m i ng th at o n e i s
.

t r a di n g in a l e a d e r l i ke U ni o n Pa ci fi c
o r Rea din g th e w a rnin g m a y c om e in
,

t h e s to c k it s el f W it h in t h e ribb o n o f
.
‘

s al e s r e c o rd e d o n th e tap e the r e r u n s ,

t h e fi n e s i lke n th re a d o f th e t r e nd It .

i s c l ea r l y di s t i n g u i s h a b l e to o n e s u ffi
c i e n tl y ve r s e d in th e a r t o f Tap e
Rea din g a nd fo r r ea s o n s p r ev i ou s l y
, ,

expl a in e d i s mo s t r ea di l y O b s e r ve d in
,

th e l ea d e r s H e n c e w h e n o n e i s s h o r t
.

of U n i o n Pa ci fi c a n d th i s th r ea d s u d
d en l y in dic ate s th at the ma r ket h a s
t u rn e d u p w a rd i t i s fol l y to r ema in
,

s ho r t N ot o n l y mu s t o n e c ove r qu ic k
.

l y b ut i f th e po w e r o f th e mov e me n t
,

i s s u fli c i en t to w a rr a n t th e ri s k th e ,

o p e r ato r m u s t g o lo ng I n a m a r ket .

o f s u ffi ci e n t b re a d th a nd s w in g the ,

Tap e Rea d e r w i l l fi n d t h at w h e n i t i s
w
e6
 S to p Or d e r s Tr a d in g Ru l es &c
, , .

ti me t o c lo s e a tr a d e i t i s us u al l y t i me
,

t o re ve r s e h i s po si t i o n On e mu s t .

h ave th e fl e x i b i l ity of wh al e b o n e a n d ,

ent e r ta in n o rigid op in i o n H e m u s t .

obey th e t ap e i mp l icit l y .

T h e in dic at i o n t o c lo s e a t r a d e m a y
c om e f ro m a n o ther s to c k s eve r al ,

st o c k s o r th e g e ner al ma r ket Fo r ex .

a m p l e o n J a n u a ry 4 th th i s y ea r t he
, ,

d a y o f the Su pr em e C o u r t deci s i o n in
Co n s ol id a ted G a s s u pp o s e th e o p e r a
,

to r w a s l o n g O f U n i o n Pa ci fi c a t 1 1
o c lo c k h av in g p a id th e r efo r 1 8 2 94
’
,
.

B e t w ee n 1 1 a n d 1 2 O c l oc k U n ion ’

r al l i e d to a n d Rea din g whic h ,

w a s mo r e a cti ve to 1 44 , Ju s t b efo re .
.

a nd i m m edi atel y af ter t h e n o on h ou r , ,

t r eme n do u s tr a n s a cti o n s t ook p l a c e in

Rea din g ov er ,
s h a r e s ch a n ging
h a n d s w ithin th r ee qu a r t er s of a p o in t
-
.

T he s e ma y h ave b ee n l a rg el y w a s h
s al e s a ccomp a ni e d b y in s id e s el l in g ;
,

it i s i m p o s s i b l e to tel l I f th e y w er e .

n o t t he in fe r e n c e i s th at c o n s id e r a b l e
,

b u yin g po w e r d evelop e d in Rea din g at

t hi s l evel a n d w a s met b y s el l in g
he av y e n ou g h to s u p p l y al l b idders
a nd pre ve n t the s to c k a d va ncin g a b ov e
1 44 94 .La r g e qu a n t iti e s co m in g w i th
in a s m al l r a ng e in dic ate d either o n e
o f t w o t h ing s : ( 1 ) That con sider a b le
b u ying po w e r s u dd e n l y d evel o p e d at
t hi s p o in t a nd t h e in sid e r s c ho s e t o
,

ch e c k i t o r to tak e a d va n ta ge O f th e
opp o r tu ni t y t o u n l o a d ( 2 ) T h e de m .

o n s tr a ti o n in R e a din g m a y h ave been

 T a p e R ea d i n g

N
intend e d to dis t r a c t at tention f ro m
o th e r s to c k s in whic h l a rge op e r at ors
w e re u n loa din g ( T he re i s no speci al
.

e v idence o f thi s ex ce pt in ew Yo r k
,

Ce n t r al ) .

I f the s el l in g i s not s uffi ci e n t t o

c he c k the up w a rd mov e th e m a r ket ,

fo r R ea din g w i l l a b s o r b al l t h at i s o f
-

fer e d a n d a dv a nce n o w o r l a ter t o a , ,

hi g he r l ev e l b ut in thi s c a s e th e s el l in g
,

w a s mo r e e ff e c tu al th a n t h e b u ying ,

a n d Rea din g f e l l b a c k w a rnin g the ,

o p e r ato r t h at t he tempo r a r y l ea d e r o n
t h e b u l l S ide o f t h e m a r k e t h a d m e t
w it h d efeat .

I f a s to c k o r th e w hol e ma r ket c a n
n o t b e a d va n ced th e a s s u mpti o n i s
—
,

t h at i t w i l l dec l in e a m a r ke t s e l d om
s ta n d s s t i l l At t h i s p o in t the oper ato r
.

w a s th e re fo r e o n th e lo o kou t fo r a
, ,

S l u mp .

Rea din g s u b sided in s m all l ot s b a c k , ,

to U n i o n Pa ci fi c afte r s e l l ing ,

at d e c l in e d to B oth
s to c k s d evel oped d ul l n e s s a nd th e ,

w h o l e m a r k e t b ec a me mo r e o r l e s s
w itho u t f e atu re .

Su dd e n l y U ni o n Pa ci fi c c ame
indic at ing n ot
o n l y a la c k of de ma nd b ut r ema r k ,

a b l y p o or s u pp o rt I m m edi a te l y fol.

lo w in g t hi s N e w Yo r k C en t r al w h ich
so l d o n l y a fe w min ut e s b e fo r e 4 00
, ,

131V .
) c ame
T hi s d e m on s t r ate d th at th e m a r ket
w a s r ema r ka b l y hol l ow a n d in a p o s i
_ 3 3_
 S to p Or d er s Tr a d i n g R u l es
, , &c .

tion to devel o p gre at we ak ness T he

“

l a rge q u a ntiti e s Of N e w Yo r k C entr al

a t the lo w fi g u r e a ft er a r u nnin g de
,

c l i n e o f a po in t a n d o n e h al f s ho w e d -
,

t hat the r e w a s n ot on l y a n a b s e nc e o f
s u p po r t in g o rd e r s b u t t h at s el le r s
,

w e r e o b l i g e d to m ake gr eat c o n c e s
s i o n s in o rd e r to di s po s e o f t h e ir hol d
in g s Th e qua n t i t i e s e s p e ci al l y in
.
,

v i e w o f th e n a rr o wn e ss o f th e ma r ke t ,

pr ove d t h at th e s el le r s wer e n o t s m al l
fry .

Co upl e d wi th t h e w et b l a n ket p ut o n
Rea din g a n d the p oo r s uppo r t in U n
ion Pa ci fi c t hi s w e a k ne s s i n N e w Yo r k
,

Ce n t r al w a s a n othe r a d va nc e n ot ic e o f
a d e c l ine On a ny fu r the r in dic at i o n
.

h e m u s t b e rea d y to j u m p o u t of h i s
l on g s to c k a n d g et s h o r t o f th e m a r k e t .

W h i l e w a i t in g fo r h is c u e th e T ap e ,

Rea d e r ha s t i me t o c o n s id e r w h ic h
s t o c k amo n g th e l ea der s i s th e mo s t
de s ir a b l e fo r s el l in g

we a s o n T h e
* w

d evel opstf
' ' W

o u ts i b l i e g e n e r al l y b u y s o n j u s t B u yin g
s u ch b ul g es a s th e o n e h a s ta
k en p l a ce in Rea din g g e . o l v

u m e eve n i f a c c o m p a n
, y onl y a
f r a cti o n al a d va n ce h a s t he eff e c t o f
,

m ak in g t h e o rdin a ry tr a der in te n s el y
b u l l is h th e r eS u l t b ein g t h at h e b i t e s
,

o ff a l o t o f l on g s to c k a t th e to
'

f th e
’

p O

—6 9
 Ta pe R e d i n g a

b ul ge T hi s i s e xa ct l y wh at t h e m a n
.

ip u l a to r w i s he s h i m to do W e have .

al l hea rd pe o p l e b oa s t t h a t t h e ir p u r
ch a s e w a s a t th e to p e ig h th a nd th a t
i t h a d t h e e ff e ct o f tu rn in g t h e s to c k
d o wn T h o s e wh o m ake t heir p u r
.

ch a s e s afte r t h i s fa s h ion a re qu ic k e s t
to b e c o m e s c a r e d a t t h e fi rs t a p p ea r
a n ce of w eak n e s s a n d t hrow o ve r
,

b oa rd w h at the y h ave b ou g ht In .

ch oo sin g Rea din g the re f or e the Ta pe

, ,

Rea der i s p ic k in g o u t the stoc k in

wh ic h h e is l i kel y t o h av e t h e mo s t
,

h el p o n th e b ea r S id e .

At th e m a r ke t i s s ta nding s t i l l ,

t he m a j o rit y o f tr a n s a cti o n s b ein g in

s mal l lot s a n d a t o n l y f r a c t i o n al
c han ge s Rea ding s ho w s th e e ffe c t o f
.

the r e c e n t u n loa din g I t i s co m in g o u t

.

The o pe r
a t o r r eal i z e s th a t Rea din g i s p r o b a b l y
a s h or t s al e rig h t h er e w i t h a s top o r
,

d e r at I 44 V2 o r -On the gr ou n d
th at th e b u l l s m u s t have a n extr a o r
d in a ry a mou n t o f l at ent b u yin g po w e r
i n o rd e r to p u s h the s to c k a b ove i ts
fo r m e r top w h er e at ev ery e igh th a d
, ,

va nc e ove r 1 44 94 t h ey wi ll e ncou n te r
,

a c o n sider a b le p o rti o n Of
s h a r e s T hi s r ea s o n in g ho we v er i s
.
, ,

al l a s id e fr om o u r ma in a r g u m en t ,

w h ic h i s to S h o w ho w th e c u e to g et
o u t w i l l b e g iv en b y s to c k s oth e r t h a n
‘

t h at in wh ic h th e op e r ato r i s w o r k ing .

U n i o n Pa ci fi c S h o w s o n t h e ta p e i n '

small lot s at Ne w Yo r k Ce n
_ 70
 S to p Or d e r s Tra d i n g R u l es
, , &c .

t r al Th e r e s t o f th e
m a r ket s eem s to h ave al l the s n ap a nd
gin g e r take n o u t of it a n d th e op e r ato r
d oe s n o t l i ke h is po s i t i o n o n th e lo n g
S id e H e h a s n o d efi ni te indic at i on to
.

sell s ho r t h o w eve r b u t feel in g th at

, ,

h i s c ha n c e s o n th e lo n g s id e h ave b ee n
red u c e d t o p r a c t ic al l y n i l b y the w eak
u n d e r to ne o f t h e m a r ket h e the r efo r e ,
C lo s i n g O u t
ge t s o u t o f h is U n i o n Pa ci fi c a nd
w a i t s u n t i l th e tap e tel l s h i m to s el l
Rea di ng s ho rt .

U ni o n Pa ci fi c w eake n s to
T h e othe r s s l id e o ff f r a c t i o n all y The .

w eak n e s s i s n o t p o s i t i ve e n ou g h to
f or e c a s t a ny bi g br eak s o h e c ontin u e s
,

t o w a i t T h e r e a r e 1 800 s h a r e s o f U m
.

i o n altogeth er a t follo w e d by
3 0 00 at 1 8 2 V2 O t h. e r s to c k s r e s po nd
a n d th e ma r ket look s m o r e b ea ri s h .

Co ns ol id ate d Ga s c ome s
1 63 . Th i s i s th e fi r s t S i g n o f a cti v it y
in th e s to c k b ut t h e move i s not h in g
,

u n u s u al fo r Ga s a s its flu c tu at i o n s a r e
,

ge n e r all y wid e a nd e rr at ic T h e b al .

a nc e o f the l i s t r al l i e s a f r a c t i o n G a s .

come s At thi s
p o in t G a s w h ic h h a s b ee n ve ry d ul l
,

h e r eto fo r e n o w fo rc e s i t s el f by i t s d e
, ,

c l in e a n d w eak n e s s u p o n the n ot ic e o f
,

th e op e r at or H e b egi ns to l oo k u pon
.

t he s to c k a s t he po ss i b l e she a rs w hich
wi l l c u t th e t hr ea d Of t h e m a r ket a n d
l et eve rything d o wn
—Ga s 5 00 1 6 1 V2
.

. I t is ve ry
w eak T h e b al a n c e o f th e l is t is
.
 T a pe R e a d i n g
s tea d y U ni o n Pa ci fi c
, Ce n t r al
1 3 094 , Rea ding 1 4 3 94 T her e i s a .

f r a c t i o n al r all y U ni o n Pa ci fi c t o
1 8 2 93 a nd Ga s to 1 6 2 Ple n ty o f C en .

t r al fo r s al e a r ou nd 1 3 0 ; R ea din g i s

Th e r al l y p ete r s o u t The r e i s a .

gr a d u al we ak enin g al l a r ou nd b u t th e ,

Ta p e Rea d e r c a nno t g o w i th th e t r e n d
u nti l h e i s s u r e of a b i g s win g Ce n .

t r al c ome s 1 2 9 94 s ho win g that a fte r

,
:

al l t he b u y e r s a t 1 30 a r e fill e d up c o n
s i d e r a b l e s to c k i s s t i l l fo r s al e The ‘

othe r s S ho w o n l y in s mal l l ot s The .

m a r ket i s o n the v e r g e o f a d e c l in e ;
i t i s w he r e a p u s h o r a j a r o f a ny s o r t
w i l l s ta r t i t do w n U n i o n Pa ci fi c is
.

heavy at Rea ding

Ce n tr al 2 000 1 3o 800 . . .

AI
.

Th e Th ru s t H er e i s th e t hr u s t h e h a s b ee n l o o k
in g f o r " Ga s
1 6 0V 2 4 OO I O
. Ol . H e w a i t s n o lo nge r ,

b u t gi ve s a n o rder t o s el l R e a din g
S ho r t at t h e m a r ket Th ey a r e al l o n .

th e ru n n ow Rea din g 1 4 3 Vz 6 oo 94
, . . .

Ce n t r al 1 3 o 1 2 9 % Ga s 5 00 .
, ,

Something ve ry r otte n ab out

G a s a n d i t s a cinc h to s e l l i t s ho rt i f
’

y o u d o n t m in
’
d t r a din g in a b u z z s a w -

s to c k .
‘

Th e m a r ket b r ea k s s o r ap id l y th at
he d oe s n ot g et ove r 1 42 94 fo r h i s
g

R e a din g b u t h e is s ho r t n ot fa r f r o m
,

th e to p Of w hat l ook s l i ke a w id e op e n
,

bre ak .

_7
 T a pe R ea d i n g
m at i on to s i f t t hr ou g h tel ep h o n e a n d
'

tel egr a ph w ir e s a n d r ea c h the m b y th e

ro u nd a b out w ay o f n e w s t ic ke r s or
w o rd o f m out h a r e w o r k in g u nder a
,

tr e me nd ou s h a n dic ap .

Tha t n o t eve n t h e in s id e r s k n e w
w h at th e decisi o n w a s to b e i s s h own
in the d u l l n e s s o f t h e s to c k al l mo rn
.

in g Tho s e w ho h ea r d t he d e ci s i o n in
.

th e Sup r e m e C ou r t c h am b e r d ou b tl e ss
did t h e d ou b l e qu ic k to the telepho n e
-

a n d s ol d th e s to c k s ho r t . T he ir s al e s
s ho w e d o n th e ta p e b efo r e th e n e w s a r
ri ve d in Ne w Yo r k Ta p e Rea d e r s w e r e
.
,

t h e r e fo r e fi r s t to b e n ot i fie d They w e r e
,
.

s hor t b e f or e th e St r eet k n ew w hat ha d

h ap pe n e d.
V V o l um e s
'

an d Th e i r S i gn i fi c a n c e

S t he
w hole Ob j e c t O f t h e se s tu d
ies i s to lea rn to r ea d wh at the
ta p e s ays I wi ll n o w e x pla in a
,

p o in t w h ich i s p r ob a b ly o ne o f
t h e mo s t valua b le in t h e p ra c t ic e o f th e
a r t T hi s mu s t b e k n o wn a nd u nd e r s too d
.

b e fo r e w e p r oc ee d oth e rwi s e th e expl a n

,

a tio n s c a nn ot be ma d e c lea r .

F ir s t o f all w e mu s t r e co gn i ze that
—
,

the ma r ket fo r a n y s to c k a t wh a teve r

—
l ev e l i t ma y b e i s c o m po s e d o f t w o
sid e s r e pr e s e n te d by th e b id a n d the
,

a s ke d pric e Plea s e r ememb e r that th e

.

la s t s ale is s omething e n t ir el y di ff e ren t

f ro m t h e m a r ket p rice I f Steel h a s j u s t .

s o l d at 5 0 t hi s fi gu re r ep r e s e n t s w hat
,

h a s h a pp e n e d I t i s hi sto ry T h e ma r
. .

k et p r i c e o f Steel i s e i the r or
Th e b i d a n d as k ed p r i c es
c o m b i n ed f o r m th e ma r k et p r i c e .

T hi s ma r ket p ric e i s l ik e a pa ir o f .

s c ale s a nd th e volume o f s to c k thro wn

,

by s elle r s a nd re a ch e d fo r by p u rch a s e rs
show s to w a rd which s id e th e p repo n
der a nc e o f w e i gh t h a s mome n ta ri ly s hi ft
ed F o r exa mp le when t h e ta p e s hows
.
,
 T a pe R ea d i n g

- /8
I

th e ma r ket p ric e i s a nd the la r ge

volume s a r e o n the up s id e .I n the s e
fou r t r a n s a c t i o n s the r e a r e 700 s ha r e s
so l d at 5 0 a ga in s t ta ke n a t so /é l
,

p r ov in g th a t a t th e mo men t the b uy in g
i s mo r e u r ge n t th a n th e s ell i ng Th e d e .

d u c t i o n he r e to b e ma d e i s th at Steel
wi ll p r ob ab l y s ell at 5 OV; be for e 49 93 .

Ther e i s n o c e rta i n ty in t hi s fo r s uppl y

,

a nd d ema nd i s ch a n g in g wi th eve ry s e c
ond n ot o n l y in Steel b ut in eve ry o the r
,

s t oc k o n th e l i s t .

He r e i s o n e a d va n ta g e in t r a din g in
Ad v a n ta ge of
th e lea d e r s The in flue nc e o f d em a nd o r
th e L r
ea d e s
.

p res s u r e i s c o nc e n t r ate d o r at lea s t

s t r o ngl y f e lt in the p rin c i p a l s to ck s The .

h a nd o f t h e d om in a n t po w e r w hether i t
,

b e a n in s id e r an out s id e ma n i pulato r o r
,

the pu b l ic i s sho wn i n t h e s e volume s

, .

Es pe ci all y i s thi s tr ue i n the p i votal

s to c k s l i ke U ni o n Pa ci fi c Rea din g a nd
, ,

othe r s which a r e g e n e r all y u s e d b y the

,

H a rr ima n a nd Ro c ke felle r p a rt i e s The .

r ea s o n is s im ple Th e s e bi g fell o w s ca n
.

n ot p ut the ir s to c k s up o r d o w n wi thout
t r a din g in e n o r mou s amou n t s I n a n a d
.

v a n c i n g m a r ket t h e y a r e o b l i ge d to r e a c h

u p fo r o r bid u p t h e ir s to c k s a s fo r e x
, ,

a m ple :
 V l
o u m es and T h ei r S ig ifi n ca nce

1 82 1 000 . 1 82 . 1 5 00 V3

2 00 V; 35 0
0 . 2 000 A
I

In a c a s e l i ke the follo win g U ni o n ,

P a ci fi c is b e in g b ou ght o n a d e cl i n e
wh e n eve r r ou nd lot s come in to the ma r
ket :

U E xa m p l es

Tak e the o p e ning a nd s u b s eque n t

t r a ns a c t i o n s in Ame ric a n Lo c o m ot i ve o n e
d a y la s t fall

_7 7
 T a p e R ea d i g n

He re t he opening m a r k et price w a s
4 96 4 a nd the b u yers o f 2 00
sh a r e s at the m a r k e t p a id t he high
“ ”

price All b ids at 4 6 94 w ere t hen fill ed

. .

T his is pro v ed b y the ne x t s al e w h ich is ,

at T he b ig l o t s there a ft er a re
m ost l y o n t h e d o w n si d e sh o wing t h at ,

press u re sti ll e x isted T he indic at i o ns .

w e re t here fo re th at t h e s t oc k wou l d go
, ,

l ower A lot o f 1 900 sh a res in a s t o c k

.

l i k e Lo comotive is a la rge l ot ; in U nion

Pa ci fi c i t w o ul d b e o f f req u en t o cc u r
rence even in co m p a r a ti v e l y d ull ma r
,

k ets .

P r o p o r ti o n a l V o lu
V o l u mes et, a s _
_
_y e
v l L a s

p a rti c ula r is;

su e . r u l e c a n b e est a b l ished I .
5 5 7 6 s een a Ta pe R e a der m ak e mo ney
T
"

by follo w ing the l e a d o f a I ooo s ha re lot -

o f No r t h w es t w h i ch s o m eo n e to ok at a
'

f r a c t ion a b o ve th e la st s al e Ordin a ri l y .

N or t h w es t is a s l u ggish in v estmen t stoc k ,

a nd t his si e l o t a ppe a red a s th e fo r e

z

r u nner o f a n a ctive s pec ul a ti ve d e

m a nd .

N o w l e t u s see w h at ha ppens o n the

fl oor to prod u ce the a b o v e descri b ed e f -

—
f eet on the t a pe l e t u s pro v e t h at o u r
theory is correct A f ew ye a rs a go th e .

con t ro l o f a cer ta in r a i l ro a d w a s b eing

b o u gh t on t h e floo r o f the N e w Y or k
S toc k E x ch a nge O ne ho u se w a s gi v en
.

all th e orders w i t h ins t r u ctions to dis

,

tri b u te them a nd conce al the b u ying a s

m u ch a s p os s i b l e T he origin al ord e r .
 V l m o u d T h i r Sig ifi
es an e e n can c

f or t he d a y w oul d r ead Take eve ry ,

t hing t h at i s O ff e r e d u p to 3 8 A s 38 .

w a s ab o ut 3 p o int s ab ov e the ma r ket o f .

the d ay b e fore this l e ft c o n s id e r a b l e l ee

,

w a y fo r th e br oke r to w hom th e b u y in g
order w a s entr u s te d .

H e w oul d in s t r u c t h is fl o o r br oke r a s
f o ll ows : T he s to c k c l osed la s t n igh t
“

at 3 5 You tak e e v er ything O ff e red up

.

t o 3 5 V a nd th e n repor t to m e how
2

thing s s ta nd D o n t b id f or the s to ck ;
.
’

j u st take i t a s i t is o ff e red a nd m a r k i t
do w n w hen ev er you c a n .
”

In s u ch a c a s e th e floo r mem b e r s ta nd s
in t h e cr o wd a w a i t in g th e op ening On .

the ins ta n t o f te n o c lo c k the ch a irma n s ’ ’

g avel s tri ke s a nd th e cr o wd begin s y ell

ing Someo n e o ff e r s 2 000 at a n e igh th
.
“
.

A n ot h e r b r oke r s a y s F i ve fo r five h u n “

dr e d O u r brok er take s the 2 000 at V3

.
,

th en offe r s i t at 3 hims el f s o a s to keep

1
,

th e pric e down O th e r s the n o ff er o ne

.

or tw o h u ndred s ha res at V3 so he wi th ,

dr a w s h i s O ff e r a s h e wishes to a cc u mu
,

la t e a nd o n l y o ff er s o r s e ll s w he n i t hel p s
h im b u y mo r e o r p ut s t h e pric e d o wn
, .

T h e b u yer at 3 5 ha s 300 s h a r e s o f h is
l o t c a nc elle d s o h e alt er s h is _b id to 3 5
,
“

f or tw o h u ndred T h e othe r s e lle r s

.
”

s u pp l y hi m a nd he the n bids 7 3 fo r a “

hu ndr e d O u r br oke r s ell s h i m 1 00 at

.
”

j u s t to ge t th e ma r ket d own Some .

o n e co me s in wi t h a t h ou s a nd at five “ ”
.

O u r b ro k er s ay s I ll take i t , F i ve
“ ’
.
”

h u ndred m or e is o ffered at V3 Th i s he .

al s o take s .
 T a pe R ea d i n g
L e t u S s ee h ow the ta pe rec o rd s th e s e
tr a ns a ct ion s

2 000 35 V3 2 00 35 7
7
34 8

T h e Tape Rea d e r in te rpr et s thi s

O pe ning bid a nd a s ke d p rice w a s p r ob a
b l y 3 5 @ V3 ; s omeo n e too k th e la rg e lo t
at t h e high p ric e T h e t w o s al e s f ollow
.

ing w e r e in s mall lot s s h owing l igh t

,

p res s u r e .Th e a ft er
sh o w s th at o n th e 7 3 @ 5 m a r k e t the b uy
er took th e s to c k at t h e o ff ered p rice a nd
follo wed i t u p by tak ing 5 00 m or e at
th e e ighth T h e w e igh t i s o n the u p
.

sid e a nd i t d oe s n ot matte r wh eth e r t h e

b u yer is o ne indi v id ual o r a d oze n the ,

m omen ta ry t r e nd is upw a rd .

To get th e o pp o s i t e sid e let u s s u p po s e

,

a m a nip ula tor i s de s ir ou s o f d e pr e ssing

a s t oc k T his c a n be a cc ompl i s h ed by
.

Off e ring a nd s ell in g mo r e tha n the r e i s a

dem a nd fo r o r by c oax in g o r f righ te n
,

ing o ther h ol der s in to t hr o w ing ove r the ir

sh a res I t make
. s n o di ff erence w ho s e
s t oc k is so l d ; T he L ord is o n t he side
“

o f t h e h eav ies t b attal i o n s a s A ddi s o n

”
,

Ca m mo c k u sed to s a y Wh e n a m a n ip u
.

la tor p ut s a b ro k er in to a cr o w d wi th
orders to m a r k i t d ow n th e b ro ke r s u p
,

p l i e s all b ids a nd the n O ff ers i t d own to

the obj e ct i ve po in t o r u n t i l he meet s re
 T a p e R ea d i n g

R e s i s ta n c e s ho wing that the r e w a s d em nd

"

at 79 a a
fo r mo r e than he w a s wi ll in g to s upply
( the r e m i ght have b ee n s ha r es
w a n te d at
F r equ en tl y a br oke r meet ing s u ch a n
ob s ta c le wi ll leave the cr o wd lo ng e n ou gh
to pho n e h i s p rinci pal H i s d epa rtu r e
’
.

ope n s the w a y fo r a r a ll y a s the s toc k

,

is n o lo nge r u nd e r pr e ss u r e a nd the la rge

,

b u y in g o rd e r a t 79 i s s ometh ing fo r flo or
tr a d e r s to fall b a c k o n So tho s e in the
.

cr o wd bid i t u p to V2 in h op e s o f s c alp
ing a f r a c t i o n o n the lo ng sid e .

Ta ke a n othe r c a s e w he r e tw o broke r s
a re put in to the cr o wd — o n e to d ep r e s s

the s to c k a nd the othe r to a cc umulate i t .

Th ey pla y in to ea ch othe r s ha nd s a nd
’
,

the tape mak e s th e followin g r epo r t o f

w hat h appe n s
X
 V l m a d Th i r S ig ifi
o u es n e n ca n ce

W e r e w e o n the floo r w e s houl d s ee

o n e br oke r o ff erin g t h e st oc k d own ,

w h i le the oth e r gra b b e d eve ry r ou nd l o t

t h at a ppe a r e d W e c a nn ot tell ho w fa r
.

d o wn t he s toc k wi ll b e put b ut w he n ,

t h e s e i n dic at i o n s appea r it make s u s ,

w at c h c lo s ely fo r th e tu r n in g po in t w hich ,

is ou r t im e to b uy .

So fa r a s the Tape Rea d e r i s co n

c e rn e d he d oe s no t ca r e w hethe r the
,
“

move i s m ad e by a ma ni pulato r a gr oup ,

o f fl o o r t r a d e r s t h e pu b l ic o r a c om bin a
,

t i o n o f all .

The fi gu r e s o n the ta pe r ep r e s e n t th e
consens u s o f opinion the e ff ect o f m a nip ,

u l a tio n a n d th e s uppl y a n d d ema n d al l ,

c ombin e d in to co ncr ete u ni t s Th a t is .

w hy ta pe indicat i o n s a r e mo r e r el i a b le
tha n w hat a n yo n e hea r s k n o w s o r ,

t hin k s .

Wi th th i s id ea o f the p a ir o f s c ale s
c lea r l y i mpla n te d i n ou r m ind s w e s ca n ,

the ta p e me ntall y w e igh ing th e lea d er s

,

in o u r eff o r t to lea r n o n w h ich s id e the

tendency i s s t r o nge s t Not a d eta i l mu s t .

e s c a p e o u r n ot ic e A s u dd e n d ema n d o r
.

a b u r s t o f l iq u id at ion m ay e n a b l e u s t o
fo r m a n ew pla n r ev i s e a n o l d o ne o r bid
,

u s w a it .

The s e v o lume indica t i o n s a re n ot a i

w ays c lea r No r a r e t h ey i n fa ll ib le I t
. .

doe s n o t do to re l y upo n the indica t i o ns

o f a n y o ne s to c k to t h e ex c lu s i on o f t h e

rest T here w a s a t ime in S epte m b er

.
, ,

1 908 ,
w hen c er ta in s to c k s ( U nion a nd
R e a ding i f memory i s, correc t ) wer e b e
,

3
 T a p e R ea d i n g
ing r u shed up whi le the volum e indic a
,

tion s in th e oth e r a cti v e stoc k s sh ow ed

c l e a r l y th at th ey w ere b eing dis t ri b u ted
a s fa s t a s the ma r ket w oul d take them .

Thi s h appe n s ve ry f r equ en tl y o n a la r ge

o r s mall s c ale Es pe ci all y i s i t appa r e n t
.

a t the tu rnin g po i n t o f a bi g s wing

w he r e a cc umulat i o n o r di s t r ib ut i o n t e
qu ir e s s ome d ays to c omplete .

Vol u me s ca n b e s tu di e d f r om t h e r e
po r t s pri n te d i n the N ew Yo r k E v ening
S u n o r the Wa l l S tr eet J o u r na l b u t th e
,

r eal w a y to s tu d y them i s f r om the tape .

I f o n e i s u n ab le to sp e nd five hou r s a
d ay at th e tape w h i le the t ic ke r i s in o p
c r at i o n he ca n a rr a ng e wi th o n e o f t h e
,

boys in h i s b r oke r s offi c e to wind th e

’

ta pe up ea c h d ay a nd s ave i t fo r h i m .

T hi s i s d o n e mo s t e x pe di t i ou s ly by u s ing
a n automat ic r e e l whic h c a n b e h a d at
,

a n y s to r e w he re tele gr ap h in s t r ume n t s
a r e s ol d The tape ca n th en b e take n
.

h ome an d s tu di e d at l eis u re A s ec o nd
.

r eel in the s tu d y make s i t ea sy to u m

wind a fte r w h ich th e tape c a n b e ma d e
, .

to ru n a cr o ss o n e s d e s k j u s t a s t h ou gh
’

i t w e r e co min g f r om th e t ic ke r .

In s tu dy ing u nd e r th e s e co ndi t i o n s d o
n o t let y ou rs el f b e d e c e i ve d a s to y ou r
a bi l i ty to make mo n ey o n pa p e r I ma g .

in ar y t r a de s p r ove n oth ing in Tape

Rea din g The w a y to te s t you r p o wers
.

i s t o get in to the game Let i t b e o n a s

.

sm all a s c ale a s you l i ke b ut make a ctual

,

t r a d e s wi t h r eal mo n ey .

The r e a r e t i me s w he n the fo r ego in g

 V l m es
o u Th ei r S ign ifi c a n c e
and

r ule o f volume s indic ate s almo s t the re

ve r s e O f w hat w e have e x pla in e d On e .

o f the s e in s ta nc e s w a s d e s cri b e d in o u r
la s t ch a p t er In this c a se the tr a ns
.

a c t i o n s in Rea ding s u dd e n l y sw elle d o u t

,

o f all p r o po r t i o n to the r e s t o f the ma r

ket a nd i t s o wn p r ev i ou s volume Not .

w i t hs ta nding the pr e d om in a nc e o f a p
p a r e n t d ema nd th e r e si s ta nc e O ff e r e d
,

( wh ethe r le gi t i mat e o r a r t i fi ci al ) b e c ame

to o gr eat f or t h e s to c k to ove rc ome a nd ,

i t f e ll b a c k f r om 1 44 93 On th e w ay
.

u p the s e volume s alo n e s u gge s te d a p u r

ch a s e b ut the tape s how e d a bnor mal
,

t r a n s a c t i o n s a ccom pa ni e d by po o r r e
s po n se f r om t he res t o f t he l i s t . Th i s
s u gge s te d ma nip ulat i o n a nd w a rned the
op e r ato r to b e c aut i ou s o n t he b ull s ide .

T he volume in R e a ding w a s s u s ta ined

e v en a fte r the s to c k r ea cte d but the ,

la rge lot s w e r e ev id e n tl y th r o wn ove r a t

the bid pric e s On the w a y up the vol
.

ume s w e r e n ea r l y all o n the u p s id e a n d

t h e s mall lot s o n the d o wn s id e A fte r .

w a s r ea ch ed the la rge lot s w er e

o n the d o wn s id e a nd th e s mall lot s o n
the u p .

I t i s j u s t a s impo rta n t t o s tu d y the Th e S m a ll

s mall a s the large lot s The s malle r .
L o ts

q ua n t i t ies a r e l i ke the feath er s o n a n

—
a rro w they indic ate that the b u sin e ss
pa r t o f t h e a rro w is at the o the r e nd In .

oth e r w o rds th e s malle r l o t s keep o n e

,

con s ta n tl y in fo r me d a s to wh at f r a ct ion
fo r m s t h e oth er s ide o f th e ma r ket To .

i llu s t r ate : D u ring th e fi r s t five tr a d e s i n

 Ta p e R ea d i n g

1 2 Li
5 000 1 44

. 1 4 4 yg

. 1 44 53

. 1 4 4 34
. 1 44 53
. 1 44

. 1 44

1 44
2 000 .

. 1 4 3 93

T u rn i n g p oi n t i n R ea di n g m o r ni n g
. of J
an. 4 . 1 909
f h C o n o lid t d G ol l p
th e d a y o t e s a e as c a se

Rea din g r e c o rd e d a bove t h e m a r ket

, ,

quotat i o n i s s ho wn to h av e b ee n
i t t h e n ch a nge d to a nd a ga in t o
On t h e w ay d own i t got t o b e
4@V 3 a nd
,
at th i s level t h e s m all lot s
w e r e pa rtic ula r l y valua b le in s h o win g
t h e pres s u r e w h ic h ex i s te d .

Sto c k s l i k e Uni o n a nd Rea ding u s uall y

make t his s o r t o f a tu rning p o in t o n a
v o lume o f f r om to 5 0 000 s h a r e s , / .

T h at i s wh e n t hey me et wi t h opp o s i t i o n
,

o n a n a d va nc e o r a d e c l in e i t mu s t b e in

86
 V o u Th e i r Sign ifi c a n ce
l m es a nd

s o m e s u ch qua n t i ty in o rd e r to s tem the

t id e .

W alk in t o t h e hi ll y cou n t ry a nd y ou
w i ll pro b a b l y fi nd a s mall ri vulet ru n
ning q u i etl y o n i t s w ay The s t r eam i s s o .

t in y th at y ou c a n pla c e y ou r ha nd in i t s
co u r s e a nd t h e w ate r wi ll b a c k up In .

fiv e m in ute s ho w eve r i t ove rc ome s th is

, ,

r e sis ta nc e by go ing ove r o r a r ou nd you r

h a nd Yo u f et ch a s hovel p i le d ir t i n
.
,

i t s p ath p a c k i t down h a rd a nd s ay
, ,
“
T here I ve d amme d y ou
,
’
But y ou .
”

h av en t a t all f o r the ne xt d a y yo u fi nd
’

yo u r pi l e o f dirt w a shed a w a y Y o u .

bring ca r tloa d s o f dir t a nd b u i l d a s u b

s ta n tia l d am a nd t he flo w i s fi n all y hel d
,

in ch e c k .

It is th e s ame w i th a n indiv id ual s to c k

.

o r t he ma r ket P ric e s follo w th e l in e o f

.

l e a s t r e sis ta nc e I f Rea ding i s go in g up

.

so meo n e may th r o w s ha re s in i t s
p at h wi th out pe rc ept i b le e ff e c t A n othe r .

lot o f s ha r e s follo w s ; the s to ck

h alt s b ut fi n all y ove rcome s th e Ob s ta c le
—
, .

T he s ell er g i ve s a n oth e r o rd e r th i s t i me
s h a r e s mo r e a r e th r o wn o n th e
ma r ket I f the r e a r e
. sh a r e s w a nt
e d at that l e vel the s to c k wi ll br e a k ,

thr ou gh a nd go h igh e r ; i f o n l y
sh a r e s a r e n ee ded to fill all bid s the ,

pric e wi ll r e ced e b e cau s e d ema n d ha s

b een ove rc ome by s u pp l y .

I t look s a s th ou gh s ometh in g l i ke th i s
h a pp e n e d in Rea ding o n the o cc a s i o n re
fe rr e d to Whe the r o r n o t ma ni pulat i ve
.

o rders pr e d o mi n ate d d oe s n ot ch a n ge th e
_3
 Ta p e Rea di n g
Vol u me S tu d y i n U n i o n P ac i i c f . Sh o w i ng
S ha r es Sol d f r om 1 4 9% to 1 5 0 C heek in g the
.
i

1 4 7 94 1 4 00 1 4 7 94 1 1 00
1 4 7 94 1 6 00 1 4 7 94 2 00
1 4 6 94 2 000" sld 1 4 7 94 6 00
1 47 5 00 1 4 7 94 1 00
1 4 6 94 2 00 1 4 7 94 6 00
1 4 6 94 2 00 1 4 7 94 1 00
1 4 6 94 1 4 00 1 4 7 94 1 2 00
1 47 1 000 1 4 7 94 1 00
1 4 7 94 2 00 1 4 7 94 1 7 00
1 4 7 94 1 000 1 4 7 94 2 4 00
1 4 7 94 4 00 1 4 7 94 1 00
1 4 7 94 1 000 1 4 7 94 70 0
1 4 7 94 6 00 1 4 7 94 1 00
147 8 00 1 4 7 94 1 00
1 4 6 94 2 1 00 1 4 7 94 1 1 00
1 47 2 00 1 4 7 94 1 6 00
1 4 7 94 2 8 00 1 4 7 74 1 00
1 4 7 94 1 4 00 148 7 00
1 4 7 94 4 00 1 4 7 94 5 7 00
1 4 7 94 2 1 00 1 48 4 4 00
1 4 7 94 9 00 1 4 7 94 1 00
1 4 7 94 1 000 1 48 1 5 00
1 4 7 94 1 8 00 1 4 8 94 2 5 00
1 4 7 94 7 00 1 4 8 94 1 3 00
1 4 7 94 4 00 1 4 8 94 1 1 00
1 4 7 94 2 5 00 148 1 6 00
1 4 7 94 1 3 00 1 4 8 94 1 6 00
1 4 7 94 1 2 00 1 48 14 1 1 00
1 4 7 94 5 00 1 4 8 94 6 00
1 4 7 94 4 00 1 4 8 94 3 00
1 4 7 94 2 8 00 1 4 8 94 6 00
1 4 7 94 5 00 1 48 14 , 8 00
1 4 7 94 1 2 00 1 4 8 94 5 00
1 4 7 94 3 5 00 1 4 8 94 1 000
1 4 7 94 9 00 1 4 8 94 1 2 00
1 4 7 94 3 00 1 4 8 94 5 00
1 4 7 94 7 00 1 4 8 94 3 2 00
1 4 7 94 1 00 1 4 8 94 6 00
1 4 7 94 4 00 1 4 8 94 8 00
1 4 7 94 4 00 1 4 8 14 1 00
1 4 7 94 1 1 00 1 4 8 94 8 00
2 00 1 4 8 94 9 00
1 4 7 94 2 00 1 4 8 94 1 7 00
1 4 7 94 8 00 1 4 8 94 2 6 00
1 4 7 94 4 00 1 4 8 94 1 00
1 4 7 94 1 3 00 1 4 8 94 1 00
1 4 7 94 1 5 00 1 4 8 94 3 00
1 4 7 94
1 4 7 94
1 1 A M
1
138
1 4 7 94 3 00 1 4 8 1714 5 00
1 4 7 94 9 00 1 4 8 93
1 4 7 94 2 2 00 1 4 8 53 12 M
1 4 7 94 1 6 00 1 4 8 96 1 00
1 4 7 94 1 9 00 1 4 8 34 7 00
1 4 7 94 1 7 00 1 48 % 1 00
 T a p e Re a d i n g

a spect the ca se In the fi n al shuffl ing

of .

the weight w a s o n the down side .

The pub l ic a nd the fl oor tr a ders do not

st a nd a side whi l e the m a nipu la tor is a t
work no r is the reverse true Ev ery
, .

body s stock l ooks al ike on the t a pe

’
.

The ticker p lays no f av orites .

When a stre a m bre a ks through a d a m

it goes into new territory L ikewise th e .

bre a king through o f a stock is sign ific ant ,

for it me a ns th a t the resist a nce h a s b een

overcome T he stronger the resist a nce
.

the l ess l ike l ihood o f finding further o h

s ta c l e s in the immedi a te vicinity — d a ms
a re not usu ally b ui l t one behind the
other So when we fi nd a stock emer g
.

ing into a n ew fi e l d it is best to go with

it espe ci al ly i f in bre a king through it
, , ,

it c a rries the rest o f the m a rket al ong .

A L iv e T a p e Whi l e much c a n be l e a rned from the

reports printed in the d a i l ies mentioned
above the t a pe itse l f is the on l y re al i n
,

struction book A l ive t a pe is to b e.

pre ferred for the e l ement o f speed with

,

which the ticker prints is no sm all f a c

e a

c o nd i tio n o f th e m a rket .

-J
or 1n stan ce during a dec l ine i f the
‘
o f W ‘
'

, ,

ticker is very a ctive a nd the vo l ume o f

s al es la rge vo l unt a ry or compu l sory
‘

l iquid a tion is indic a ted This is e mph a .

si z ed i f o n the su b sequent r a l ly the t a pe

, ,

moves s l uggish ly a nd on ly sm all l ots a p

pe a r In a n a ctive bu ll m a rket the ticker
.

appe ars to b e choked with the vo l ume o f

 V o l u m es and T h ei r S i g n ifi c a n c e

s al es poured through it on the a dv a nces

'

but o n re a ctions the qu a ntities an d the

number o f impressions decre a se unti l ,

l ike the oce a n a t ebb tide the m a rket is ,

al most li fe l ess .

Another indic a tion o f the power o f a

movement is found 1n the di fferences b e
tween s a les o f a ctive stocks for ex a mp l e : ,

This shows th a t there w a s only 1 00

sh a res fo r s al e a t 1 80A none a t all at
Jmp
,

a nd on ly 5 00 a t I 80% The J ump . u s

from to 94; emph a si z es both the a b

sence o f pressure a nd persistency on the
p a rt o f the buyers T hey a re not con
.

tent to w a it p a tient ly unti l they c a n se

cure the stock a t I 8O %1 ; they re a ch for
it a nd finding themse l ves clutching the
, ,

a ir a re obl iged to re a ch higher The

, .

s a me thing on the opposite side s h ows

la ck o f suppo rt .

Ea ch indica tion is to be j udged not so

much by rule a s a ccord ing to the cond i
tions surrounding it The ta pe fu rnishes
.

a continuous series o f motion pictures ,

with their respective exp la n a tions writ

ten b etween the printings These a re in .

a la ngu age which is foreign to all b ut

Tape Rea ders but a nyone c a n l e a rn a
,

foreign la n g u a ge .

These vo l umes which we h a ve b een

discussing a re l e a st l i ab l e to mis l e a d
when m a nip ul ation prev a il s for the ,

_9
 Ta p e R ea di n g
E fl ec t o f ma nipu la tor is ob l iged to de al in la rge
'

M p
a n i u l a ti o n
b l ocks o f stock a nd must continu a lly
,

show his h a nd A comp l ete m a nipu la

.

tive oper a tion o n the l ong side consists

o f three p a rts : Accumu la tion m a rking ,

up a nd distribution In the c a se o f a
, .

short oper a tion the distribution comes

first then the ma rk down a nd the a ccu
,

mu l a ti o n No o n e o f these three sections

.

is comp l ete without the other two ( For .

fu ll det a i l s see my series o n M an ipu la

tions in V o l s I a nd 2 o f T H E T I C K E R )
. .

The m a nipu la tor must work with a

la rge bl ock o f stock o r the de al wi ll no t
be worth his time the risk a nd expenses , .

The Ta pe Re a der must there fore b e on , ,

the l ookout fo r extensive oper a tions on

ei ther side o f the m a rket Accumu la tion .

wi ll show itse l f in th e qu a ntities a nd in

the w ay th ey a ppe a r o n the ta pe H a v .

ing detected the a ccumu la tion the Ta pe ,

Re a der h a s on l y to w a tch its progress ,

ho l ding himse l f in readiness to t a ke on

some o f the issue the moment the m a rk
ing u p period be g i ns He does not buy
-
.

it a t once bec a use it m ay t a ke weeks or

,

months for the m a nipu la tor to complete

his line ; al so there might be opportuni
,

ties to buy che a per Ho l ding o ff unti l .

the psych o l ogic al moment forces some

o n e e l se to c a rry the stoc k f o r him - to
p ay his interest so to spe a k Further
, .

more his c a pit al is l e ft free in the me a n

,

time .

When the m a rking u p b egins he gets

in a t th e commencement o f the move a nd ,

_9 z
 V o l u m es and Th e i r S i g n i fi c a n c e

goes a long with it ti ll there a re signs o f

a h a lt o r distribution H aving pa ssed
’

through the fi rst two periods he is in a ,

position to fu lly b ene fi t by the thir d

st age o f the oper a tion In this sort o f
.

work a fi g ure ch a rt which I describe d in

,

V o l I o f T H E T I C K E R will help him es

, ,

p ec i a l l y i f the m a nipu la tive oper a ti on i s

continued over a consider abl e period
it wi ll give him a bird s eye view o f th e
’
-

de al en ab l ing him to drop o r resume the

,

thre a d a t a ny st age .
 VI . M a k et T
r ec hni q u e

N S a turd a y mor ning Feb ru a ry ,

2 7 th the m a rket ope ned

,

sl ight l y high er th a n th e pre

v i o u s night s c l os e Re a ding
’
.

w a s the most a ctive stock A fter touch .

ing 1 2 3 V; it s l id off to a t which

point it invited short s al es This indica .

tion w a s emph a si z ed a t 1 2 2 a t a nd,

aga in a t 1 2 1 The downw a rd trend w a s

.

strongly m a rked unti l it str uck

then fo ll owed a qu ick r ally o f I /é I

T hi s w as a vicious three poi nt j a b -

into a m a rket whi ch w a s o nly j u st r e

c o v eri n g fr o m th e Febru a ry bre a k
"

S tr o n g Wh a t w a s its e ff ect o n th e oth er pri n

c i p a l stocks ? Union P a cifi c d ecl i ned
only 94 So uth ern P a cifi c
, a n d Stee l
T h i s p roved th a t they were tec h
n ic a l l
y s tro ng ; th a t is they
,
were in
h ands which cou l d view with equ a n im
ity a three point b re a k in a l e a ding
-

i s s u e H a d this drive occur red when

.

Re a ding w a s a round 1 4 5 a nd Un ion 1 8 5

the e ff ect upon the others wou l d prob ably
h a ve bee n very di ff erent .
 M a rk et T ec h ni qu e
I n order to determ in e th e extent of
a n o re body m i ners u s e a di a mon d
'

dri ll T h is produces a core th e ch a r

.
,

a cter of whic h shows wh a t i s bene a th

the s urf a ce If it h a d bee n pos sib l e to
.

h a ve dri l l ed into the m a rket a t th e top

o f th e recent r is e we shou l d h a ve fou nd
,

th a t the b u l k of the fl o a tin g supp l y i n

Stee l Re a din g a n d som e others w a s
,

hel d by a cl a ss of tr a ders who b uy

he a vi l y i n boom s a nd o n bu l ges T hes e .

peop l e op er a te with a comp a r a tively

s m a l l s upply o f m a r g in s n erve a nd ex
x
,

p e r i e n c e T hey
. a re exceedi ng l y vu l
n e ra b l e hen ce the stocks m wh ich th ey
,

oper a te s u ff er th e gre a test decl i ne s

wh e n the m a rket receives a j a r T he .

figures a re interesting .

Points
’ ’
1 907 -
9 F eb y, 09
Adv a nce . B re a k .

U P. . 12 %
‘

Re a ding 2 6%
Steel 3 A
6 1 6%

T he a bove s hows t h a t the p ub l i c w a s

he a vily extended in Stee l somewh a t ,

l es s l o a ded w ith Re a ding a n d w a s c a r ,

ryi ng very l itt l e Uni on P a ci fi c In .

other words Unio n showed tech n ic a l

,

strength by i ts resist a nce to pres sure ,

where a s Re a din g a nd Stee l o ff ered l it

tle o r no opposition to the dec l in e .

B oth the ma rket a s a who l e a nd i ndi

v idu al stocks a re to be j udged a s much by

5
 Ta p e R ea di n g
A t
Th r ee-po in B r ea k i n Rea d i n g w h i ch had l i ttl e

e t pon th o th
ff ec u e er l ea d e r e. p r o i ng
v th e m arke t
t h ni l l y st on g
ec ca r

B ea d i ng Co . 2 1 00 1 2 1 34 2 00 1 2 036
1 7 00 123 3 00 1 2 1 36 5 00 1 2 036
2 00 2 000 1 2 1 36 1 2 00 121
5 00 1 23 11 A M 2 00 1 2 036
5 00 1 2 2 36 1 7 00 1 2 1 34 1 00 1 2 034
1 3 00 123 2 00 1 2 1 36 6 00 1 2 036
5 00 6 00 1 2 1 34 1 000 121
1 9 00 1 2 3 56 , 1 00 1 2 1 36 7 00 1 2 1 34
1 5 00 1 2 3 36 2 7 00 1 2 1 34 4 00 1 2 1 36
2 00 123 K 1 008 1d . 1 2 1 36 9 00 1 2 1 34
4 00 1 2 3 56 2 00 1 2 1 36 4 00 1 2 1 36
1 1 00 123 4 00 1 2 1 34 7 00 1 2 1 34
1 2 00 1 2 3 116 1 4 00 1 2 1 36 1 000 1 2 1 36
3 00 122% 2 00 1 2 1 36 6 00 121
1 5 00 122 % 4 00 1 2 1 34 1 000 1 2 1 14
1 4 00 1 2 2 % 1 1 00 121 1 1 00 1 2 1 36
1 2 00 122 % 1 00 1 2 036 1 000 1 2 1 34
1 00 1 2 2 55 1 00 121 2 00 1 2 1 36
3 000 1 2 2 55 7 00 1 2 036 1 00 1 2 1 36
2 00 1 2 2 96 1 4 00 1 2 036 2 00 1 2 1 36
7 00 122 % 7 00 1 2 036 3 00 1 2 1 36
1 00 1 2 2 56 7 00 1 2 036 1 2 00 1 2 1 36
2 000 1 2 2 % 1 4 00 1 2 034 5 00 1 2 1 36
5 00 1 2 2 56 1 00 1 2 036 1 5 00 1 2 1 34
2 00 122 % 9 00 1 2 036 1 2 00 1 2 1 36
1 00 1 2 2 54, 2 000 1 2 034 5 00 1 2 1 34
5 00 122 1 00 1 2 036 2 00 1 2 1 96
1 00 1 2 2 15 5 00 1 2 034 8 00 1 2 1 36
8 00 1 2 2 14 , 5 00 1 2 036 Un . P ac . Ry .

1 00 1 2 2 % 1 5 00 1 2 036 1 5 00 177
1 00 1 2 2 35 8 00 1 2 036 5 00 1 7 6 36
6 00 1 22 % 6 00 1 2 034 1 9 00 177
7 00 1 2 2 54 4 00
,
1 2 036 7 00 1 7 6 36
1 2 00 1 2 2 115 3 00 1 2 034 7 00 177
1 00 122 % 8 00 1 2 036 6 00 1 7 6 36
1 00 1 2 2 116 2 00 1 2 026 5 00 177
1 00 1 00 1 2 036 1 5 00 1 7 7 36
1 00 1 2 2 % 1 3 00 1 2 036 1 2 00 1 7 7 34
2 1 00 1 2 2 54 1 6 00 1 2 036 1 2 00 1 7 7 36
4 00 122 6 00 1 2 036 2 00 1 7 7 54
3 00 122 % 7 00 1 2 034 6 00 1 7 7 36
5 00 1 2 2 34 2 000 120 3 00 1 7 7 34
2 00 1 2 2 55 1 00 1 2 036 1 1 00 1 7 7 26
1 5 00 122 1 5 00 120 9 00 1 7 7 36
2 00 122 % 1 00 1 1 9 36 2 4 00 1 7 7 36
1 00 122 2 00 120 2 00 1 7 7 174
1 9 00 1 22 % 2 00 1 2 036 1 00 1 7 7 36
1 6 00 122 2 00 120 7 00 1 7 7 34
1 00 1 2 2 % 1 000 1 2 036 5 00 1 7 7 26
5 00 122 1 7 00 1 1 9 36 1 3 00 1 7 7 21
1 00 1 21 % 2 00 1 20 2 00 1 7 7 26
1 00 1 1 9 36 1 2 00
“
1 5 00 122 1 7 7 36
3 00 1 2 1 % 1 6 00 1 20 1 7 00 1 7 7 26
5 00 1 2 1 % 1 1 00 1 2 036 2 000 1 7 7 34
1 5 00 . 1 2 1 3‘ 5 00 1 2 036 2 00 1 7 7 36

6
 Ta pe R ea d in g
wh a t they d o a s wh a t they do not do a t
critic a l points I f the big f ellows who
.

a ccumul a ted Union below 1 2 0 h a d dis

tributed it above 1 80 the stock wou l d ,

h a ve broken someth ing like thi rty

points owing to its h aving p a ssed from
,

stron g to we a k h a nds As i t di d not .

h a ve a ny s u c h dec l in e bu t o n l y a ve ry ,

sm a l l re a ction comp a red to i ts a d

,

v a nce the Ta pe Rea der in fers th a t Union

,

is destined for m uch h igher p rices ;

th a t it o ff ers comp a r a tive i m m unity
from dec l i n es a n d a possib l e la rge a d ~

v a nce i n th e ne a r future .

T h is shou l d not b e t a ke n a s a pre

di ctio n .E ve n were U nion P a ci fi c
scheduled fo r a thirty po m t r 1s e in the -

next two weeks something might h a p ,

pen to morrow to postpone the c a m

-

J
[J ga i n fo r a con sider a b l e ti m e B u t th e .

I a pe Re a der must work with these

‘

bro a de r con s ider a tions i n fu ll vi ew H e .

h a s j ust s o m u ch ti m e a nd c a pit al a nd
this m u st b e emp l oyed where it w ill
yi e l d th e gre a test resu l ts I f by w a tch .

i ng for th e most f a vor abl e O pport uni

ties he c a n op er a te with th e tre nd i n
a stock wh ich wi ll som e d ay o r week
show him ten points profit over a ny
other i ss u e h e cou l d h a ve chos en h e is ,

i ncre a s i n g h i s ch a nces to th a t extent .

A l on g a dv a nce o r dec l in e u s u ally

c ul m m a tes m a
- fl 0‘
r “
a
l ,
fi
r
c

k movement
H

q u 1 c

i n the le a ders Ta ke the bre a k of F eh

.

?ua 1 y 2 3 d l a st : Re a din g dec l ined fr o m

'

1 2 8 % to 1 1 8 a nd Steel f rom 4 6 to 4 1 %
 M a r k et T ec h n i qu e
i n on e d a y South ern P a cific a fter
.
,

creeping up l a s t f a l l from 9 7 to 1 1 2 ,

re a ched a cl im a x i n a s even point j u mp -

duri ng one s es sion I nst a nces a re s o .

nu merou s th a t th ey a re h a rdly worth

citi ng T h e s a m e thing h a pp en s in the
C u l m in a ti
.

m a rket a s a who l e— a n exception a ll y o ns

vio l ent moveme nt a fter a p rotr a cted ,

s ag o r ri s e us u a l ly i ndi c a tes i ts cul

,

m in a tion .

A stock gener a lly shows the Ta pe

Re a der wh a t it p roposes to do by its
a ction under p res sure or s ti m u la tion .

Fo r ex a mp l e : O n Fri d a y Febru a ry ,

1 9 th 1 909 th e U nited St a tes Stee l C o r

, ,
‘

p o ra ti o n a nnou nced a n open m a rket in

stee l p roducts T h e news w a s out
. .

E verybody i n the cou ntry knew it by

the fo l lowing morning The Ta pe .

Rea der in weighing the situ a tion b e f ore

,

th e next d a y s op ening wou l d re a so n

’

,
“
A s th e news i s p ubl ic property the ,

norm a l thing for Steel a nd the m a rket

to do i s to r a l l y Steel c l osed la st night
.

a t 48 96 T he m a rket h i nges upon this”

.

L et s s ee how it a ct s
’
one stock . .

T his is down from la st night s clos

’

1n g —a p e r f e c tl y 4 1 a tu r~
a l occurrence in
 Ta pe R ea di n g
view o f yesterd ay s a nnouncem ent Th e
’
.

re al test o f strength or we a kness will fo l

low For the first ten minutes Stee l
.

comes

without otherwise v a rying .

E ighteen tim es the price swings ba ck

a nd forth between the s ame fr a ctions .

Me a ntime Union P a cific which opened

, ,

at shows a tendency to r a lly a nd

pu ll the rest o f the m a rket up behind it .

A n I n tere s t Un ion l i ft Stee l Th a t is the

Ca n ?
1n g C o n tes t question Here a re two opposing forces
.
,

and the Ta pe Re a der w a tches l ike a

h awk for he is going with the m a rket
i n the direction o f the trend Union is . .

up from the opening a nd Southern

P a cific is rein forcing it .

But Stee l does not respond Not once

—
.

does it get out o f th a t rut n o t

even a single hundred sh a res se l ls a t 4 8 .

This proves th a t it is freely o ffered at

47 A a nd th a t it possesses no r all yin g
—
1 00 =
 T 5p e
Rea di n g
-

Th e pressure on Stee l incre a ses a t the

low leve l .

Successive s a les a re m a de a s fol l ows :

,

36

L i qu i d a ti o n From this time on there is a stea dy fl ow

o f long stock Re a ding an d P en n syl
.

v a ni a a re the we a kest r a ilroa ds C olo .

r a do Fuel bre a ks 7 p6 ints in a running

decline a nd the other steel stocks fo l low
suit U S Steel is dumped in bunches
. . .

at the bid prices a nd even the dignified

,

pre ferred is symp a thetic al ly a ffected .

Th e m a rket c l oses a t the bottom ,

with Stee l a t 4 6 l e a vi n g thous a nds o f

,

stockho l ders o f Steel i n a thorough l y

fri ghte ned st a te th eir a ccou nts we a k
,

ened by the d ec l in e a nd a ho l i d a y a he a d
for the m to worry over .

I t l o oks to th e Ta pe Re a der a s though

th e stock wou l d go l ower o n the fo l
l owi ng T u esd a y At a ny r a te no c o v
i

.
,

ering i ndi c a t ion h a s a ppe a red a nd u n ,

l es s it i s h i s i nv a ri a bl e ru l e to c l ose
every tr a de e a ch d ay h e p uts a stop a t
,
-

47 on hi s short Stee l a nd goes h i s w a y .

( H i s ori gi n al stop w a s

—1 02
 Ma r k et T e c h ni qu e
Stee l opens o n the fo ll owin g sess ion
at a n d during the d a y m a kes
T here a re a n u m b er of l es sons to b e
dr a w n from this epi sode T he m a rket .

i s a tu g o w a r Su cces sfu l t a pe re a d
’
- -
.

i ng requires a bil ity to j u dge wh ich s ide

h a s the gre a test pu ll ing power a nd o n e
m ust h a ve th e cou r a ge to go w ith th a t
side There a re critical points which
.

occur i n e a ch swin g j u st a s i n th e l i fe
,

of a b us ines s or of a n in dividu al At .

thes e j un ctu res it s eem s a s thou gh a

fe a ther s weight o n either sid e wou ld
’

determ ine th e im medi a te trend Any .

o n e who c a n spot th ese poi nts h a s

eve rythi ng to wi n a nd l ittl e to los e for ,

h e c a n al w a ys p la y with a stop p la ced

c l ose behi n d the turning point o r point
of res ist a nce .

I f Union h a d cont in ue d in its upw a rd

course ga ining in power vo l ume and
, ,

in fl uence_ a s it p ro g f é s s ed th e d ire ef
, ,

f e c ts o f the Stee l situ a t i on might h a ve

been overcome It w a s simply a ques .

tion of p u ll i ng powe r a nd Stee l p u ll ed ,

Union down .

T his stu d of respon ses is o n e of the

most v a l u a b e in the Ta pe Rea der s edu ’

R e s p o n s es
c a tion I t is a n al most u nerring gu ide
.

to the tech nic al posi tion of th e m a rket .

O f cours e a l l responses a re not c l e a r l y

,

defined It i s a m a tter o f i ndi ff erence

.

to the Ta pe Re a der a s to w h o or wh a t
produ ces th es e tests or critic al p eriods , .

They consta nt ly a ppea r a nd dis a ppea r ;

—1 03
 Ta p e R ea d i n g
he must m a ke his di a gnosis a nd a ct ,

a ccordi ng l y I f a stock is b eing m a nip

.

u l a ted higher , the movement wi ll se l

dom be conti nued u n l es s other stocks
fol l ow a n d s uppo rt th e a dv a n ce If .

th e p ub l i c i s i n co ntro l of a stock th e ,

other i ssu es s hou l d b e w a tch ed to s ee

whethe r la rge oper a tors a re u nlo a din g
on the stro ng spots Shoul d a stock
’

f a i l to bre a k o n b a d ne w s i t m e a ns th a t .

in s ider s h a ve a nticip a ted th e dec l i ne

a nd st a n d re a dy to b uy .

A m em b er of a syndic a te o nce s a id
to m e
“
We a re goi ng to dis so l ve to mor -

”
row .

“
Wi ll t h ere n o t b e con sider abl e se ll
in g b y peop l e w h o don t w a nt to c a rry ’

their s h a re of t h e s ecurities ? I a sked ”

.

“
We ll h e rep l i ed we know h o w
,
” “
,

eve ry one st a nds . Prob abl y

s h a re s w i ll com e o n t h e m a rket from a
few m em b ers who a re ob l iged to s e ll ,

a nd a s a few of u s have so l d th a t m u ch
short i n a nticip a tion we ll b e there to,
’

”
buy it w h en th e ti m e com es
,
.

T h e T u rn i n 3
. T h is rem in ds u s th a t it i s we ll to
Ro ck I s l a n d cons ider th e i nsi der s p ro ba b l e a tti ’

tu de o n a stock T he t a p e us u all y i n
.

d i c a tes wh a t th is i s O n e o f th e m uck
.

r a ki n g m a g a z in es recent l y showed th a t
Rock Isl a nd pre f erred h a d been driven
dow n to 2 8 la st Au gust to th e a c c o m
. ,

p a n i m en t o f r ec e 1v e r s h 1p rumors T h e .

write r o f the a rtic l e w as u n a b l e to

prove th a t th es e ru mors origi n a ted wit h
—1 04
 Ta pe R e a d i n g
u p a s tock a n d d rive the sho rts to
cove r With thes e a nd oth er ope ra tion s
.

going on all the time the Ta p e Rea der

,

who is a t all exp ert i s se l dom a t a

loss to know on which side his best
ch a nce s l ie O ther p eo p l e a re doing
.

for h i m wh a t h e wou l d do himse l f if he

were a l l p owerfu l
- .

Th e B r o a d W h i l e it i s t h e s m all er s win gs th a t
M o ve m en ts inter est h im most the Ta pe Rea der must
,

n o t f a il to keep his be a rings i n rel a

tio n to t h e bro a der m ovem ents of the
m a rket When a p a nic prev a ils he rec
.

o g n i z e s i n it t h e b irth o f a b u ll m a rket
a n d oper a te s w ith the cert a i nty t h a t
prices wil l gr a du a lly rise unti l a boom
m a rks the o ther extreme o f the swing .

I n a b u ll m a rket h e considers re a ctions

o f from two to five points norm al a nd ‘

re a son able ; he l ooks fo r occ a sion al drops

of 1 0 to po i nts i n t h e l e a ders w ith a,

2 5 point
- rea k a t l e a st once a ye a r .

Wh e n a ny of thes e occu r h e knows ,

wh a t to l ook fo r next .

I n a b u ll m a rket h e e x p ects a drop of

I O po int s to b e fo ll owed by a re covery
o f a t l e a st h al f t h e decl in e a n d i f th e
,

ris e i s to conti nu e all o f th e drop a n d

,

more wil l b e recovered I f a stock or .

the m a rket re fuses to r ally n a tu r all y ,

he knows th a t t h e trou bl e h a s not b een

overcom e a nd th erefore l ooks for a
,

furth e r dec l i n e .

Ta ke A m eric a n S me l ters which ,

m a de a top a t 99 5 8 la st November th en ,

s l u mp ed o ff un der rumors of competi

—1 06
 M a r k et T ec h n i qu e
tion unti l it rea ched 78 C overing . 1n

a pp e a red a ro un d H ad
"

d i c a tio n s
the op er a tor al so gone l o ng h ere he ,

cou l d c o n fi d en tl h a ve exp ect ed S m el

7

ters to r al ly to §8 % Th e de c l ine h a v
ing bee n 2 1 % points there w a s a r a lly ,

of 1 094 poin ts due As a m atter .

of record the stoc k did recover to

Of cours e t h es e thi ngs a re m ere

,
. G u id e P o s ts
gu ide posts a s the Ta pe Re a der s a ctu al
,
’

tr a ding is done only on the most posi

tive a nd p rom is ing i ndic a tions ; b ut
they a re v al u abl e 1n te a chin g h i m wh a t
'

to a void For inst a nce he wou l d be

.
,

w a ry a bo ut m ak i n g a n i niti al short s al e
of Sm elters a fte r a 1 5 poi nt bre a k even -
,

i f his indic a tio ns were c l e a r There .

m ig h t be se ver al poi nts more o n the

short si d e but h e wou l d re a li z e th a t
,

every point further dec l ine wou l d

bring h im closer to th e turni ng poi nt ,

a nd a fter such a vio l ent bre a k the s a fest

m on ey w a s on the l on g s ide .

Another i nst a nce : Re a din g so l d o n

J a nu a ry 4 th 1 909 a t 1 44 96 B y th e
,

end o f the month it tou ched

,

a nd
.

o n Febru a ry 2 3 d b roke ten poi nts to

1 18 . T hi s w a s a dec l i ne of 2 4 96 poi nts ,

al lowing for the 2 per cent dividend . .

A s previo us l y st a ted th e stock l ooked ,

l ike a n a ttr a ctive sh ort s al e not on l y ,

on the fi rst brea kdown but on the “

fin al drive T he conserv ative tr a der

Wou l d h a ve w
.

a ited fo r a buyin g indi

c a tion s there woul d h a ve been less
,
g
-1 07
 Ta p e R ea d i n g
ri sk on th e l o ng side T he e l e m. en t of
‘

s a fety i s a s i mport a nt a s a ny other .

I t is s e l do m th a t th e ma rket ru ns
more th a n three o r four consecutive
d a y s i n one direction without a rea c
tion hence the Ta pe Re a der must re a li z e
,

th a t his ch a nces decre a se a s the swing

is prolonged .

T h e d a i l y moveme nts o ff er h i s best

opportu nities ; b u t h e m u st keep i n
stocks wh ich swi ng wi d e enough to e n
a b le h i m to gr a b a profit .

I t i s a n a stonishin g f a ct a nd on e ,

wh ich w e h a ve n ever b efore seen in

pri nt th a t th ere i s a m a rket cyc l e whi ch
,

run s al most ex a ctly o n e hour .

W a tch it fo r yourse l f wh en next a t

th e ticker a nd yo u wi ll fi n d th a t if a n
,

u pw a rd move m ent cu l m in a tes a t

th e re a ction u su a l l y w i l l l a s t til l
’

a nd the a pex o f the next up s w in

wi ll occu r a bout thirty m i nutes la ter .

I h a ve a ctu a lly stood w a tch in h a nd ,

h a vi n g decided wh a t to do w a iti ng for ,

th e high or l ow mom ent o n whi ch to

s e ll o r b uy a nd h a ve ofte n h it within
,

a fr a ction o f th e best obt a in a b l e figure .

Why th is i s I do n o t a ttem pt to ex
pl a in but it h a ppens very o f ten
,
.

I h a ve frequent l y us ed this id e a a s a
test o f the m a rket s strength or we a k
’

ne ss i n th i s w a y : If a de cl i ne ended
,

a t a cert a i n mom e nt a nd th e s ubs equent

r all y on l y la sted ten m inutes in ste a d ,

o f the norm al h a lf hour I wou l d c o m

,

—1 08
 V II . D u ll M a kets r an d Th
O pp o r tu n iti e s

AN Y people a re a pt to rega rd a
du ll m a rket a s a c a l a mity .

They cl a im : O u r h ands a re
“

tied ; we ca n t get out o f wh a t

’

’
we ve g o t ; i f we could there d be no use ’

getting in a ga in f o r wh a tever we do we
,

c a n t m a ke a doll a r
’ ”
.

S i tte rs Such people a re n o t Ta pe Re a ders .

They a re Sitters They a re B i ll ikens

.

e x grin
-
.

As a m a tter o f f a ct du ll m a rkets o f
,

fer innumer able opportunities a nd we

h a ve on ly to di g ben e a th the cru st o f
prej u di ce to fin d them .

Du l ness in the m a rket or in a ny speci al

stock me a ns th a t the f orces c a p ab l e o f
i n fl uencing it in either a n upw a rd or a
downw a rd direction h a ve tempor a rily
come to a b a l a nce Th e best i l lustr a tion
.

is th a t o f a c l ock which is about ru n

—
down its pendulum gr a du a l ly decre a ses
the width o f its swings unti l it comes to
a complete st a ndstill thus :
 D ul l M a rk ets and T h ei r Opp o rtu n i ti e s

Ho w th e m a r t p nd
ke e u lum c om s
e to a sta nd s till
Now turn this on its side a nd you see
wh a t the ch a rt o f a stock or the m a rket
l oo ks l ike when it re a ches the point o f
dulness .

These du ll period s occur most f r e

quent ly a fter a se a son o f de l iri ous a c tiv i
ty on the bu ll side Peop l e m a ke money .
,

pyr a mid on their profits a nd glut them

selves with stocks a t the top As every .

one is l oa ded up there is comp a r a tively ,

no one le ft to buy a nd the bre a k which ,

inevitably follows would h a ppen i f there

were no be a rs no b a d news or a nything ,

e l se to force a dec l ine .

N a ture h a s h er o w n remedy for dis

s ip a tio n She presents the d é ba uch é
.

with a thumping he a d a nd a moquette

tongue These tend to keep him quiet
.

unti l the d a m age c a n be rep a ired .

So with these interv al s o f m a rket rest .

T r a ders who h ave pla ced themsel ves in a

position to be trimmed a re du ly trimmed .

They l ose t h eir money a nd ( tempor a ri

l y ) their nerv e Th e m a rket there fore.
“ , ,

become s n eglected E xtreme dul ness .

sets in .

—1 1 1
 Ta p e R ea d i n g
I f the h istory o f the m a rket w ere to
be written these periods o f li felessness
,

shou l d m a rk the close o f e a ch ch a pter .

Th e re a son is : The f a ctors which were

a ctive in producing the m a in movement ,

with its st a rt its clim a x a nd its co lla pse

, ,

h a ve spent their force Prices there .

,

f ore settle into a groo ve where they r e

, ,

m a in sometimes fo r weeks o r unti l a f

f ec ted by some other power fu l in fl u
ence .

When a m a rket is in the midst o f a big

move no one c a n te ll how l ong o r how
,

f a r it wi ll run But when prices a re st a

.

tio n a ry we know th a t fr o m th is po i n t
,

there wi ll b e a pronounced swing in one

'

direction or a nother .

T here a re w ays o f a nticip ating the di

rection o f this swing O n e is by noting .

the technic al strength or we a kness o f the

m a rket a s descri b ed i n a previous ch a p
,

ter Th e resist a nce to pressure men

.

tio n e d a s ch a r a cteristic o f the du ll period

in M a rch 1 9o9 h a s been fo ll owed by a
, ,

pronounced r i se a nd a t this writing the ,

le a ding stocks a re m a ny po ints higher .

T his i s p a rticu la r ly true o f Re a ding in ,

which the sh a keouts a round 1 2 0 ( one o f

which w a s described ) were f requent a nd
positive When insiders sh a ke other
.

people out it me a ns th a t they w ant the

stock themselves These a re good times .

f o r us to get in for then we wi l l enj oy ,

h aving Mr Fr ick a nd his friends work

.

fo r us .

-1 1 2
 Ta p e R ea di n g
for sc al ping purposes with the intention ,

o f ho l ding p a rt o f his l ine for a l ong

swing using the rest for regu la r tr a ding

, .

As the stock drew aw ay from his pur

ch a se price he cou l d h ave r a ised his stop
on the l ot he intended to ho l d putting a ,

ment a l labe l on it to the e ff ect th a t it is

to be so l d when he detects inside d is tr i
b u tio n . Thus he st a nds to bene fit to the
fullest extent by a ny m a nipu la tive work
which m ay be done I n other words he .
,

s ays : “
I ll get out o f this l ot when Mr
’
.

F rick a nd his friends get o u t o f theirs

”
. .

A c c u m u l a ti o n He feels e a sy in his mind about this

stock bec a use he h a s seen the a c cu mu
,

la tion a nd kn ows it h a s relieved the m a r

ket o f a l l the fl o a ting supply a t ab out this
l eve l
.

This me a ns a sh a rp qu 1ck rise sooner ,

or la ter a s l itt l e stock is to be met with

,

on the w ay up I f he neglected to w a tch

.

the m a rket continuous ly a nd get in a t

the very sta rt his ch a nces wou l d be
,

gre a tl y l essened He might not h ave the

.

cour age to t a ke on the l a rger qu a ntity .

O n Frid ay M a rch 2 6 1 909 Re a ding

, , ,

a nd Union were about a s dull a s two

gent l em a n ly le a ders could wel l be Re a d .

i ng opened a t 1 3 2 54 high w a s 1 3 3 M l ow , ,

1 32 4 l a st I 3 2 M Union s extreme fl u c
1
,
’

—
,

tu a tio n w a s M from 1 80M ; to 1 8 1 M

;
Activity w a s confined to such pup s ”

Beet Suga r Mexic a n C entr al a nd K an

,

s a s C ity Southern .

The fol l owing d ay S a turd ay the , ,

opening gave every indic a tion th a t the

—
114
 D ul l Ma r k e ts a nd T h ei r Opp o rtun i ties
previous d ay s du l ness wou l d b e repe a t
’

ed initi al s al es showing only f r a ction al

,

ch a nges C opper B
. O W a b a sh pfd
,
. .
,
.

a nd MOP were up M o r M Union w a s .

M higher a nd Re a ding M l ower Beet .

Suga r w a s down M g with s al es a t 3 2

,
.

Re a di ng showed 1 1 00 1 3 2 2 8 00 1

Union 8 00 1 8 1 4 00 1 8 1 2 00 V3
.

l l a
g

4 00 1 8 1 A
. s in g e h u ndred Stee t
B . O . Re a din g
B eet Su g a r M3
“

4 00 .

Un ion 8 00 Steel 1 000 45 .

B eet 8 00 3 2 Stee l 1 5 00 4 5 Re a d
. .

ing Steel M a rket de a d .

Mostly 1 00 sh a re l o ts :
-

Re a din g 1 6 00 Stee l 4 00 4 5 .

B eet Su g a r l ooks good o n the bu l l s ide ,

3 0 0 3 M 7
2 00 Un ion 2 0 0
Re a din g 5 00 1 3 2 3 8 Un ion 3 00 1 8 01M .
’
.

A M . meric a n Suga r now

.

resp on ds s l ig h t l y to the stren gth in

B eet Sug a r bu t we shou l d r a th er not
,

s ee th e c a rt before th e horse Su g a r .

2 00 1 3 o% 6 00 1 3 1 B eet 3 2 M 6 00 .

T h is stock ho l ds th e spot l ight -

.

O thers in a n im a te .

Ah " H ere s o u r cu e " Re a din g 2 3 00

’
Th e C u e

1 32 M a c oc M 5 00 C om ing
o u t o f a de a d m a rket qu a n tities l ike ,

these t a ken a t th e o ff ered p ri ce s c a n

me a n on l y o n e th ing a n d w ithout ,

qu ibb l ing the T a p e Re a der t a kes on a

bun ch o f Re a din g a t the m a rket
“ ”
.

W h a tever i s doin g i n Re a din g the ,

rest o f th e m a rk et i s slow to respon d ,

a l though N Y C entr al seem s wi l l in g

. .

—1 1 5
 T a pe R ea d i n g
to he l p a —
I 2 7 M ( a fter M)
l itt l e 5 00 .

B eets a re up to 3 3 M Stee l i s 4 5 5 6 .
,

—
a n d C opp er 7 1 M a fr a ction bette r .

Re a din g 3 00 1 3 2 2 1
Stee l 1 3 00 .

4 M M
5 Un ion . 1 8 1 Re a din g 3 00 .

B eets 3 3 M Un ion 7 00 1 8 1 M . .

N Y C en tr a l
. . 6 00 M
5

T here s som e a s sist a n ce "

’

Un ion 9 00 1 8 1 3 Re a din g
1
.

N
C opper 7 00 7 1 2 Re a din g 8 00 1 3 2 %
1
.

133 g oo 1 33 1 1 0 0 M1 C entr al 3 00 .

Un ion 4 00 1 8 1 3 3 00 M .

Re a din g 1 5 00 1 3 3 M 3 5 00 M ot .

mu ch doubt ab ou t th e tren d now T he .

who l e m a rket i s respon din g to Re a d

in g a nd th ere i s a ste a dy in cre a se in
,

power bre a dth a n d vo l u me T he r a p

, .

id a dv a n ce s show th a t short covering

i s n o s m all f a ctor Un ion 4 00 m y.
.

G e tti n g I n to I t l ooks a s though a l ot o f p eop l e a re

A c tive S to c k s throwing their Beet Suga r a nd get
ting into the big stocks St P a ul C o p . .
,

per a nd Americ a n Sme l ters begi n to li ft

a l itt l e .

Around 1 1 A M there is a brie f . .

period o f hes it a tion in wh ich the m a r ,

ket seems to t a ke a long bre a th in

p rep a r a tion fo r a n other e ff ort T here .

i s s c a rce l y a n y re a ction a n d n o we a k
n es s Re a ding ba cks up a fr a ction to
.

N
1 3 3 M a n d Un ion to T here a re
no se ll in g in di c a tions s o the Ta p e ,

Re a der st a nds by h i s gu n s .

o w th ey a re p icking up a g a in
'

R e a din g 1 3 3 % M M
1 Un ion .

116
 Ta p e R ea di n g
ed to s t a rt a th ing ro ll in g th a n to keep
1 t goin g .

So me o f my re a ders m a y th ink I a m
givin g i ll u str a tion s a ft er these thin gs
h a p p en o n the t a pe a n d th a t wh a t a
,

Ta pe Rea der w o u l d h ave d o ne a t the

ti me i s p rob l em a tic a l I therefore w ish
.

to st a te th a t my t a p e il l u str a tion s a re
t a ken from th e indi c a tion s wh ich a c
tu a l l y showed them s e l ve s wh en t h ey
were fresh l y p rinted on the t a p e a t ,

wh i c h tim e I did not kn ow wh a t w a s

g o i ng to h a ppen .

T h ere a re oth er w a ys in wh ich a

tr a der m a y emp l oy hi m se l f durin g du ll
periods . O n e i s to keep t a b o n the
point s of res ist a n ce in th e l e a ders an d
p la y on the m fo r fr a ction al profits .

T h is we a d m it i s a r a ther p rec a rious

, ,

occup a tion a s th e op er a tin g expen ses

,

con stitute a n extre me l y h e a vy p ercent

a ge a g a in st t h e p la yer esp eci al ly when
,

the l e a din g stocks on l y swin g a point

o r so per d a y .

B u t if o n e choose s to t a ke these
ch a n ce s r a ther th a n b e id l e th e b est ,

w a y i s to keep a ch a rt o n wh i ch shou l d
be recorded every M fl u ctu a tion T his .

form s a p ictu re o f wh a t i s occurring

a n d c l e a r l y defin es th e p oi nts of res ist
a n ce a s we ll a s th e moment a ry trend
,
.

I n th e fol l ow in g ch a rt th e stock open s

a t 1 8 I M a n d the first poin t o f resist

a n ce i s I S 1 M T h e first in dic a tion o f

.

a downw a rd trend i s shown in th e dip

to 1 8 1 M a n d w ith these two str a ws
,

-1 1 8
 D ul l Ma r k ets and Th ei r Opp o rtu n i tie s
show in g th e ten den cy the Ta p e Re a d ,

er goes short a t th e m a rket getting

“ ”
, ,

1 8 1 M ( we ll give ourselves the

’
say ,

wors t o f it )
Af ter m a kin g o n e more u n su ccessfu l
a tte mpt to bre a k through th e res ist
a n ce a t 1 8 1 M th e tren d turn s ti n m is
,

C h t sh o w i n g p o i n t
ar s o f re s ista n ce i n a du l l m a r ke t
ta k a b l y downw a rd a s show n b y a,
n a l
m ost u nb roken series o f l ower top s a n d
bottoms .
T hese i nd ic a te th a t th e
pres sure i s he a vy enough to force the
price to n ew l ow l evel s a n d a t th e ,

s a me ti me it i s su ffi cien t to p reven t
th e r all y goin g qu i te a s h igh a s on th e
previou s bu l ge .

At 1 80M a d ew poin t of res i st a n ce

a ppe a r s . T h e decl ine i s ch ecked T h e .

—1 1 9
 Ta p e R ea d i n g
Ta p e Re a de r mu st cover a nd go l ong .

T he step s a re n o w up w a rd a n d a s the
price a ppro a ches th e former poi nt of
resi st a n ce he w a tch es it n a rrow l y for
h i s ind ic a tion to c l ose out T hi s time .
,

however there i s bu t sl igh t opposition

,

to the a dv a n ce a n d the price bre a ks

,

through H e keep s h i s l on g stock

. .

I n m a kin g the in iti al tr a de he p la ced

a doub l e stop a t 1 8 1 M, o r M on the
”
,

groun d th a t if h is stock overc a m e the

resist a n ce a t 1 8 1 M it wou l d go higher
a n d he wou l d h a ve to go w ith it B e .

in g short 1 00 sh a res h i s doub l e stop ,

order wou l d re a d : “
B uy 2 00 a t 1 8 1 M
”
stop . O f course th e p rice might j u st
c a tch h i s stop a nd go l ower T hese
'

th in gs w i ll h a pp en a n d a nyon e who
,

c a n n ot f a ce t h e m w ithou t beco m in g
pertu rbed h a d better l e a rn se l f contro l .

Afte r goin g l on g a roun d th e l ow

p oint h e shou l d p l a ce a nother doub l e
,
‘

stop a t 1 80 or I 79 M for if t h e p oin t of

,

res ist a n ce i s broken th rough a fter he

h a s covered a n d gon e l on g he mu st ,

sw itch h i s p osition in a n i n st a nt Not .

to do s o wou l d p l a ce h i m in th e a tti
tu de o f a guesser I f he i s p la yin g o n
.

th is p la n he mu st n o t dilu te it w ith
oth er ide a s .

Rem e mber th is method i s on l y a p

p l i c a bl e to a very du l l m a rket a n d a s , ,

we h a ve s a id i s p rec a riou s bu siness

,
.

W e c a nnot recom men d it I t wil l n o t .

a s a ru l e p a y the Ta p e Re a der to a t
tempt s c a lp in g fr a ction s o u t of the
—1 2 0
 Ta pe R ea di n g
h e cou l d h a ve du mp ed it a t the top .

j u st before the close or h e l d it til l

,

next d a y wh en it touched 3 3 M
, .

. Aknu nfie anl l 3ee t 53u g a r

2 9 34 1 00
10 0
6 00
2 9 96 5 00
2 9 56 5 00
2 9 96 1 00
2 9 54 1 00
2 9 36 1 00
30
3 036
12 M .

3 034

3 034
3 095
3 096 2 00
3 096 [ 00
50 0
3 096 2 00
3 096 1 000
3 096 7 00
3 054 6 00
6 00
3 055 3 00
3 096 2 0 0
1 00
4 00
3 055 400
1 00
3 055 2 00
3 095 2 00
3 035 30 0
2 00
11 A M
388
. .

W
3 00
3 094
3 0§ é
3 0¥é 1 00
aosg 7 00
—1 2 2
 - D ul l M a r k ets and Th ei r Opp o rtu n i ti es
3 1 35 3 00
32 4 00
32 % 8 00
3 2 56 1 000
3 2 54 2 00

On M a rch 5 1 909 K a n s a s C ity , ,

Southern sp en t the morn in g driftin g

between 4 2 M a n d 4 3 M Short l y a fter .

the n oon h ou r the stock burst in to a c

ti v i ty a n d la rge vo l u m e D oe s a ny
‘

s a n e p erson supp ose th a t a h u ndred

or more p eop l e b ec a m e convin ced th a t
K a n s a s C i ty Southern w a s a p urch a se
a t th a t p a rticu la r momen t ? Wh a t
prob a b l y st a rted the rise w a s th e p la c
in g of m a nipu la tive or ders in whi ch ,

pu rch a ses predomin a ted T hu s the .

sudden a ctivity th e v o l u m e a n d the

.

a dv a n cing tenden cy g a ve n otice” to the

Ta p e Re a der to get a bo a rd T he .

m a n ipu la tor showed h is h a n d a n d th e “

G et Ab o a rd
Ta p e Re a der h a d on l y to g o al ong
with the current .

K a n s as C ity So u the r n
43 % 10 0
4 3 55 2 00
4 3 56 4 00
4 3 56
3 3 00
4 3 56 1 00
43
43 22 2 11 A M . .

4 3 54 00 ,

4 3 1g 1 00
43 60 0
4 3 56 25
4 3 54 1 00
,
g s sg 1 00
4 3 54 1 00
—1 2 3
 Ta p e R ea di n g
4 3 56
4 3 54 5 00
4 3 56 1 8 00
4 3 54 3 00
4 3 56
2 P M
12 M .
. .

4 4 56
4 4 56
4 4 56
4 4 56

4 4 56

4 4 56
45
4 4 56
45
4 5 56
4 5 54
4 5 56
4 5 54
4 5 56
4 5 54
4 5 56
4 5 56
1 P . M . 4 5 56

4 5 36

4 5 56
46
46 56
4 6 56
4 6 56
4 6 56
4 6 56
4 6 56

4 6 52
,

Pyr ami d i n g The not on ly su st a ined

'

a d v a n ce w as ,

but e mph a si z ed a t cert a in points H ere .

th e Ta p e Re a der cou l d h a ve pyr a m id

cd, u sin g a stop cl ose beh ind h is a ver
a ge cost a n d r a is ing it s o a s to con
—1 2 4
 V III . Th e U s e o f C ha rts as G u ides
a n d I n d i c a to r s

AN Y interesting queries h ave

been received by T H E T I C K ER
rel a ting to the use o f ch a rts .

The fo ll owing is a represent a

tive communica tion :
F ig u re C h a rts “
Re ferrin g to your figu re ch a rt e x
p la ined in V o l ume 1 I h ave found ,

it a m os t v al u a b le a id to detecting
a ccu m u la t ion o r di stribution in
m a rket m ovements I h a ve b een
.

in W all Street a n u mber o f ye a rs ,

a n d l ike m a ny others h a ve a lw a ys
shown a skepti c al a ttitu de tow a rd
ch a rt s a n d oth er me ch a nic al m eth
o d s of forec a sting tren ds ; bu t a fte r
a thorough tri a l o f the ch a rt o n
Un ion P a ci fi c I fin d th a t I cou l d
,

h a ve m a de a very con sider a b l e s u m

if I h a d fo ll owe d th e indic a tion s
shown I n e you r su ggestion s to
. c .

op er a tors t o stu dy e a rn in gs e tc
,
“ , .
,

a n d n o t to re l y o n ch a rts a s they
,

a re very often l ike l y to m is l e a d I .

“
regret th a t I c a n not a gree with
you Y o u h a ve often st a ted th a t
.

th e t a p e te l l s the story ; s in ce th is
i s tru e a n d a ch a rt i s bu t a cop y
,

o f th e t a pe ,
w ith in dic a tion s o f a c
—1 2 6
Th e U s e f Ch a rts Gu i d es and I n d i c a to r s
’

o as .

cu mu l a tion o r distrib uti o n a s th e ,

c a se m a y be why n o t fol l ow th e
,

ch a rt entirely a n d el im in a te a l l u n
,

necess a ry time dev oted to stu dy o f

e a rn i n gs etc I ”
,
.
’

L et u s con sider those portion s o f

th e a bove wh ich rel a te to T a p e Re a d
ing first c l e ar ly defining the diff erence
,

between ch a rt op er a tion s a n d t a p e
re a ding .

T h e gen u in e c h a rt p la yer u su al ly
op er a tes in o n e stock a t a time u s ing ,

a s a b a sis th e p a s t movemen ts o f th a t

stock a n d fo l lowin g a more o r l ess

defi n ite cod e o f rul es H e tre a ts th e .

m a rket a n d h i s stock a s a m a ch ine H e .

uses no j u dgmen t a s to m a rket con

d i tio n s a n d doe s n ot con s ide r the
,

movemen ts o f other stocks ; bu t h e ex

e r c i s es gre a t discretion a s to whether

he sh all p la y a n in dic a tion o r n ot

“ ”
.

T h e Ta pe Re a der oper a tes on wh a t

the t a pe shows n o w He is not wedded .

to a ny p a rticu la r issu e a n d if he , ,

chooses c a n work without p encil p a

, ,

per o r memor a nd a o f a ny sort He

—
.

a lso h a s his code o f rules less cle a rly

defined th a n those o f the ch a rt pl ayer .

So m a ny di ff erent situ a tions present

themse l ves th at his rules gr a du a lly b e
—
com e intu itive a sort o f secon d n a
ture i s evo l ved by sel f tr a in ing a n d ex -

p e r i e n c e .

A frien d to whom I h a ve given som e

points in T a p e Re a din g on ce a sked if
I h a d my ru l e s all down s o fi n e th a t
—1 2 7
 Ta p e R ea d i n g
I kn ew j u st wh ic h to u se a t cert a in
momen ts I a n swered h i m thu s :
.

When yo u cross a street where th e

tr a ffi c i s he a vy do you stop to con su l t
,

a s et o f ru l es showin g when to ru n
a h e a d o f a tro ll ey c a r o r when n ot to
dodge a w a gon ? N o Y ou t a ke a .

l ook both w a ys a n d a t th e p roper mo ~

men t yo u w a l k a cro s s Y our min d m a y .

be o n som eth in g e l s e o r yo u m a y be
re a d in g you r n ewsp a p er whi l e cros s
—
in g you r j udgm ent te ll s you when to
st a rt a n d how f a s t to w a lk T h a t is .

the a ttitu de of the tr a ine d Ta p e Re a d

er.

T he di ff erenc e between th e C h a rt
P la yer a n d th e Ta p e Re a d er i s there
fore a b ou t a s w ide a s between d a y a n d
n ight W e do n o t s e e how the ch a rt
.
'

foll ower cou l d m ix Ta p e Re a din g w ith

h i s a rt w ithou t m a kin g a hodge p odge
o f it. B u t there a re w a ys in wh ich
th e Ta pe Re a der m a y u til i z e ch a rts a s
gu ide s a n d in dic a tors a n d for the p ur
pose o f rein forcin g h is memory .

D e te c tin g First a s o u r correspon de nt s ays the

, ,
m u l a ti o n Fi gu re Ch a rt ( see T I C K ER V o l 1 No
fic
u
nf u nquestion a bly th e b es t m ech a n
,
.
,
.

Di s tri b u ti o n 4) i s
i c a l m e a ns of detectin g a ccu m ul a tion
a n d distrib ution I t i s a l so v al u a b le 1 n
.

sho w ing th e m a i n poi nts o f res ist a nce

o n th e bi g s wi n s
g .

A figure ch a rt c a nnot b e m a de from

the op en high l ow a n d l a st prices
, , ,

s uch a s a re p ri nted i n the a ver a ge

n ewsp a p er W e rec all b ut three p ub
.

—1 2 8
 Ta pe R ead in g
all y form th e a xis a n d l on g rows of
these fi gures seem to ind rca te
plenty o f s to c k is for s al e a t t h i s l e v e l .

I n c a se we a re not s ure a s to whet h e r

t h is i s fu rt h er a ccum u la tio n o r d is trib ~

u tio n we w a it u nti l th e p r i ce s ho w s
s igns of bre ak in g out o f this n a rr o w
r a nge Afte r the s eco n d ru n u p to 5 1
.

th e gr a du a l l y l oweri ng tops w a rn u s
th a t p res su re i s res um ed We t h e re .

fore l ook for l ower p ri c es .

I n te t eti n g T he downw a r d s t eps co nti nu e ti l l 3 5

h a rt i s touc h ed where a 3 6 7 l i ne be gin s to
,
-

form T here i s a dip to 3 3 56 wh ich

.
,

gives u s th e fu ll figu re 3 4 a fte r w h i c h,

th e bottom s a re h igh er a nd l ines co m ~

m en ce form i ng a t 3 8 9 H ere a re all

.
”

th e e a rm a rks o f m a nip u la tive d ep res

—
s ion a n d a c c u m u la tion the stock i s
not all owed to r ally over 39 unti l l iqui
d a tio n is comp l ete T hen th e gr a d u
.
~

al ly r a is ed bo ttom s noti fy u s i n a d

N
v a nce th a t th e stoc k i s abo u t to pus h
th rough to hig h er l eve l s .

ow if th e Figure C h a rt w ere a n
i nfa l lib l e gu ide no o n e wou l d h a ve to
l e a rn a nythin g more t h a n its corre ct
i nte rp ret a tio n i n order to m a ke b ig
m oney O u r corresp o nden t s a y s a f
.
,
“

ter a thorough tri al o f th e ch a rt o n U .

P I fi nd th a t I cou l d h a ve m a d e a v e ry
.

consider a bl e S u m i f I h a d fo ll ow ed the
i ndic a tions show n .
”
B ut he wou l d not
h a ve fo l lo w ed the i nd i c a tion s show n .

H e is foo l in g h i m s e l f I t is e a sy to
.

l o o k o ver th e c h a rt a fte rw a r d s a n d se e
Th e U s e Ch arts as G ui d es a n d I n d ic ato rs
of

w h ere h e cou l d h a ve m a de corre c t

p lay s b ut I ve nture to s a y h e n e v er
,

test ed t h e p l a n u nd er p roper c o n d i f

tions .

L et an w h o t h inks h e c a n m a ke
one
i
money f l l o w i ng a F igu re C h a rt or
a ny othe r k i n d o f a c h art h a v e a friend
prep a re it keeping s ecret t h e n a m e of
,

th e s tock a n d the p erio d c overed T hen .

put dow n o n p a per a positive s et o f

ru l es wh ic h a re to be s trict l y a dh ered
to s o th a t th ere c a n be no g u es swork
, .

E a c h s itu a tion w i ll the n c al l for a cer

t a in pl a y a nd no devi a tion i s to b e
a l lo wed C ov er up w ith a sheet of
.

p a per all b ut t h e b eg inni n g o f t h e

ch a rt gr a du al ly s l idin g th e p a per to
,

th e right a s yo u pro g res s Recor d

.

e a ch order a nd execu tl o n j u st a s i f
a ctu ally tr a ding Put Roll o Ta pe down
.

a s copperin g e v ery t r a de a nd when

done send h i m a check for wh a t yo u
h a ve l ost .

I h a ve yet to m eet the m a n w h o

, ,
-

h a s m ad e mon ey tr a di n g o n a Fi gu re
C h a rt ove r a n extended p eriod .

A ny ki nd o f a ch a rt w i l l show som e
p ro fi ts a t ti m es but t h e test is : How
,

mu ch mo ne w i ll it m a ke durin g s e v
e r al months y ope r a tions ?

T h e Figure C h a rt c a n b e u sed in
other w a ys Som e peop l e construct
.

figure ch a rts s howin g e a ch fr a cti on a l

ch a nge i nste a d o f the fu l l points I T h e .

i de a m a y a l so be u sed i n connection
w it h t h e Dow on es
, J C o a ver a ge .

” 1 31
 T a pe R ea d i n g
pr ice s. B u t fo r t h e p r a ctic a l Ta p e
Re a der th e ful l fi gure c h a r t fi rs t de
’

s cribed i s a bout the only o n e w e c a n ‘ :

recom mend .

Its v a l ue to th e T a pe Re a der l ies

chie fl y in its i ndic a tions o f a cc um ul a
tion a nd di strib uti on T h ese frequ ent.

l y ( not a l w a y s ) w a rn th e O pe ra tor in
a dv a nce o f a n i mport a nt m o ve a nd pu t ’
‘

h i m on th e w a tch fo r the mo m en t when

either pr o ces s i s com pl eted a nd the
m a rki n g up o r down b e gins ;
T h e ch a rt gives th e direction o f com
i ng m oves ; th e t a p e sa y s wh en “ ”
.

S om e peopl e cl a i m to b e a bl e to p r e
d ict h o w f a r such a m ovem ent wi l l go
by cou nti n g th e n u mber of ful l fi g u r e s
wh ich form a n unb r oke n l i ne In a .

c a s e wh ere a stock shows a lon g hori

z o n ta l l in e o f 1 5 a nd 2 05 a t th e bot
9
tom o f a decl i ne a n d a cou nt o f the zo s
‘

sh o w s th a t th ere a re twelve o f them ,

this i s t a ke n a s a n i ndic a tion th a t th ere

wi l l b e a ris e o f twelve poi nts fro m 2 0 .

Fi gu re ch a rts s eem to b e a r th i s o u t in
som e inst a nces b ut l ike th e m a j ority
,

o f ch a rt i ndic a tions th ere a re very

,

m a ny excepti on s to th e ru l e T h ere .

a ppe a rs som e l ittl e fou nd a tion for the

s uppos ition however a s it i s l ogic a l
, ,

to s uppose th a t th e more import a nt

th e contem pl a ted move th e m ore stock ,

wil l the i nsiders wish to bu y a nd the

longer tim e wil l b e requ ired i n which :

to a ccu m ul a te it .

T h e ordin a ry s 1n g l e l i n e ch a rt which
—1 az
 Ta p e R ea di n g
I f one wishes a m ech a nic al trend in
d i c a to r a s a s uppl em e nt a nd a gu ide
to h is T a p e Re a di ng he h a d bes t keep ,

a ch a rt composed o f the a ver a ge d a ily

high a n d l ow of eight or te n l e a ding
stocks . For conven i ence i n fi guring
thi s a ver a ge it is wel l to t a ke ten
A C o m po s ite stocks s ay Union R e a ding St P a u l
, , , .
,

C h a rt Pen nsy l v a n i a N Y C e ntr al a nd E rie

, . .

a m on g th e r a il ro a d s a n d Am al g a m a ,

ted S m elters Stee l a nd C a r Fou ndry

, ,

a m on g the i ndu stri al s First fi nd th e .

a ver a ge high a nd a ver a ge l ow for the

d a y a n d m a ke a ch a rt showin g which
w a s tou ch ed fi rst T hi s w il l b e found
.

a more rel i a b l e guide th a n th e Dow

J
,

ones a ver a ges wh ich only con sider

,

th e closing bid o f e a ch d a y a nd which , ,

a s strongly il lu str a ted in th e M a y ‘

1 90 1 , p a n ic frequ ently do not f a irly

,

rep res ent th e d a y s a ctu a l fl u ctu a tions

’
.

S u ch a composite ch a rt is of no v a l
u e to the T a pe Re a der who sc a l ps a n d
closes out eve rythi ng d a ily B u t it .

shoul d b enefit thos e who re a d the t a pe

for th e p urpos e of c a tch i ng th e i m
port a nt five or ten point moves Such .

a tr a der will m a ke no commitments not

in a ccord a nce with the trend a s shown ,

by this ch a rt His re a son is th a t even

.

a well pl a nned bull c a mp a ign in a

stock will not usu al ly be pushed to
com pletio n in the f a ce o f a down trend
i n the gener al m a rket T here fore he .

w a its u ntil th e tren d conforms to his

i nd ic a tion .

-1 34
Th e U s e of C h a rts as G u i d es and I n d i c a to r s

I t s eem s h a rdly neces s a ry to th a t s ay

a n up trend in a ny ch a rt is indic ated
by consecutive h igher top s a nd bot
toms like st a irs going up a nd the r e
, ,

vers e by rep e a ted steps tow a rd a low

er l evel A s eries of top s o r bottom s
.

a t th e s a m e leve l sh o ws res ist a nce A .

protr a cted z ig za g w ithin a short r a di

-

u s a ccomp a n ied by very s m a l l vol u m e

me a ns l ife l es snes s b ut w ith norm al or
,

a bno r m a l ly la rge vol ume a ccu m ul a ,

tion o r dis tribution is more or l ess evi

de u ced .

T here is a sty l e o f ch a rt wh ich w a s Th e V o l u mi

origin a ted by T h e A n a lyst it b ein g
“ ”
,
Ch a rt
especi a l ly a d a pted to th e study o f vol
umes The following rough sketch
.

w il l give a n ide a of it

Vo l ume Ch t
ar

W hen ma de to cover a d a y s move ’

m e nts i n a stock this ch a rt i s p a r ti c u

,

l a r l y v a lu a bl e in s howin g th e qu a ntity
o f s to c k a b sorbed a t v a rio u s l ev el s .
 Ta pe R ea di n g
C om p a riso ns a re re a di ly m a de by a dd
ing the q u a ntities hori z ont al ly M a ny .

oth er s u ggestions w i ll b e de rived from

the stu dy o f th is ch a rt .

An i mport a nt p oint i n -con nection

with th e m a ki ng of ch a rts is the tre a t
me nt of a stock which sel l s ex divi -
Di vi d en d s
de nd . M a ny peop l e consi der a divi
de nd a s equ a l to a correspondin g de
cl i ne in m a rket p rice ; i n f a ct th e most ,

prom in ent p ub l ish er O f ch a rts fo ll ows

this m ethod W e do not a gree
. In .

ou r O pi n ion whe n a stock sel l s ex divi -

( l en d th e s c a l e shoul d be ch a nged s o

th a t th e stock wil l show the s a m e rel a

tive pos ition a s b efore the d ivi dend .

For i nst a nce if a stock i s 1 3 8 b efor e a

,

d ivi dend a mou nti ng to 2 pe r cent a nd

se ll s a t 1 3 6 ex divi dend the 1 3 8 l i ne
-
,

becom es th e 1 3 6 l i ne etc , .

T here is a noth er form o f ch a rt whi ch

i s som e ti m es v a l u a b l e in d ete cti n g the
begi nnin g a nd e nd o f a m a n ip ul a tive
-

c a mp a i gn I t is b a s ed pri ncip a l l y on
.

vo l u m es a nd a ff ords a re a dy i ndic a tor

o f a ny u nusu al a ctivity i n a stock T h e .

sc a le is set a t the side to represent the

vo l u me a n d th e verti c a l li nes a re
dr a w n to show th e n u mber of sh a res
“

f o r the d a y . A plus or minus sign a t

the top o f e a ch vertic a l l ine m ay be used
to indic a te a n et a d v a n ce or decline f o r
‘

t h e d ay Some p eople a dd to this a n o b

.

lique line to show the r a nge for the d ay

‘

T h e p ro fi c 1 e n t Ta p e Re a d er wi ll .

doubtle s s prefer to disc a rd all m e

-1 3 6
 Ta pe R ea di n g
ch a rti ng o n e or two stocks is l ike r e ;
cordi ng the a ctions of one i nd ivi du a l
a s exemp l i fying th e a ctions o f a
la rge fa m i ly
.
IX . D a il y T r a d es v s. Lo n g p u ll
O p e r a ti o n s

US T no w I took a s m a l l tr ia n g u
la r p ie cebl otting p a per of

three eighth s o f a n in ch a t i ts
-

widest a n d stu ck i t o n th e en d
,

o f a pin I then threw a bl ot o f ink on

.

a p a per a nd put th e b l otter into cont a ct .

Th e ink f a irly j umped up into the blot

te r l e aving the p a per comp a r a tive ly dry
, .

T his is ex a ct l y how the m a r k et a c ts A b rp ti so on

o n th e t a p e wh en i ts a b sorptive p o w
‘

—
ers a re gre a ter th an the supply l a rge
qu a ntities a re t a ken a t the O ff ered
prices a nd at the h igher leve l s Prices .

le a p f orwa rd The dem a nd seems i n

.

s a ti able .

A fter two or three b l ots h a d thus

been absorbed the botter wou l d t a ke no
,

more It w a s thoroughly s a tur a ted Its

dem a nds were s a tisfied J
. .

ust in this .

w ay the m a rket comes to a st a ndstil l a t

the top o f a rise a nd h a ngs there Sup .

ply a nd dema nd a re equ a li z ed a t the new

price l evel .

Then I fi l led my pen with ink a nd ,

l et the fl uid run o ff the point a nd onto

the b l otter ( This i ll ustr a ted the dis
.

trib ution o f s tocks in the m a rke t ) Be .

.

-1 3 9
 Tape R ea d i n g
yond a cert a i n point the b l otter wou l d
t a ke n o more A drop formed a n d fe l l
.

to th e p a p er .
( Supp ly exceeded de
m a nd ) T he more I put on the b l ot
.

ter th e f a ster fe ll th e drop s ( L i qui

—
.

d a ti 011 m a rket seekin g a l ower l eve l ) .

T h i s i s a s i mp l e w a y o f fixin g m our
m in d s th e prin cip al oppos i n g forces
th a t a re con st a ntly oper a tin g i n the
—
m a rket a b sorption a n d distribut i on ,

dem a n d a n d s upp l y support a nd p r es

,

su re T h e more a dept a T a p e Re a der

.

beco mes i n weigh in g a n d me a su rin g

these e l ement s th e more su ccessfu l h e
,

w il l b e .

B u t he m u st rem ember th a t even hi s

most a ccur a te re a d in gs w i ll often be
n u ll ified by events wh i ch a re tra n s p i r
in g every m oment o f the d a y H iS .
‘

stock m ay st a rt upw a rd with a rush

a pp a rently there is power enough to
c a rry it sever a l points ; but a fter a d v a n
cing a couple o f point s i t m ay run up
a ga inst a l a rger qu a ntity o f stock th an
ca n be o b s o rb ed or some un f oreseen
,

incident m ay ch a nge the who l e c o m

W a tc h fu l n es s plexion o f the m a rket The Ta pe Re a der.

must be quick to detect such ch a nges ,

switch his position a nd go with this new

l y form ed trend .

To show how a n oper a tor m ay be

ca ught twice on the wrong side in one
d ay a nd sti ll come o u t ahe a d let us ,

l ook a t the t a pe o f December

Union P a cific opened be l ow the pre
v io u s night s c l ose :
’

5 0 0 .

—t 4 o
 Ta pe R ea di n g
liquid a tion h a s sta rted S O he .

S E L L S 2 00 U N IO N P A C I F I C A T 1 7 6 .

Th a t is he dumps over h is l ong a nd

goes short a t 1 7 6 .

The we a kness continues a nd the re is

no sign o f a r ally u nti l a fter the sto ck
h a s stru ck 1 74 /2 This b eing a bre a k o f
6 M points since yesterd ay the Ta pe ,

Re a der is now wide aw a ke for sign s o f

.

a tu rn re al i z ing th a t every a ddition al

,

fr a ction b rings h im nea rer to th at po i nt,

w h erever i t m ay be .

A fter tou ch in g 1 74 M t h e tren d o f

th e m a rket ch a n ges co mp l ete l y Lar .

ger l ot s a re i n dem a n d a t the o ff ere d

p rices T h ere is a fi n al drive b u t very
.

l itt l e stoc k come s out o n it D u ring

N
.

t h i s drive h e
B U YS I oo U N IO P A C I F I C A T 1 74 M ,

a n d a s sign s of a r all y m u l tip l y h e

B U YS I oo U N IO N P A C I F I C A T I 7 5 M .

From th a t m omen t it i s e a s y s a il in g .

T here i s a mp l e op p ortu n it y for h im

to un l o a d h i s la s t pu rc h a se j u st before
th e c l os e when h e

B o
S E LL S 1 00

u g h t .
U N IO
o
S ld .
N P A C I FI C AT
P r ofi t
1 7 8 56 1 7 8 54
1 7 6 56 1 7 8 54
1 7 6 56 176
1 7 4 56 1 76
1 7 5 54 1 7 6 56
C o m m i ss ions a nd t ax s e 1 3 5 00

N et pr fi o t f o r th e d a y
 D il y
a T ra d es vs , L o ng Pu l l O p era ti o n s
Th is i s d o in g v ery we ll con s ideri ng
he was ca ugh t tw i ce o n th e w ro n g
s id e an d in his w ig g l i n g s p a i d $ 1 35 in
co mm is s io n s a nd taxe s .

S uc c ess i n tr a di n g b e ing c h ie fl y a
q ue st ion o f red u cin g a nd e l i m in a t ing
lo s se s co mm iss io n s inte rest a n d rev

N
, ,

enu e s ta mp s l et u s s ee w h eth er h e
,

m igh t h a ve u sed better j ud gme nt H i s .

fi rst tra d e see m s to h a ve been ma de o n

w h a t a ppe a red to b e in side b uyi n g O .

tre nd h a d d eve l op ed He s a w rou nd

.

l o t s b ei n g t a k en a t 1 7 8 54 a n d ov er a nd
r ea s one d t h a t a r all y shou l d na tu ra ll y
fo ll ow prono un c ed s uppo rt H is mis .

t a ke w a s in not w a itin g for a c l e a rl y

d efi ned trend I f t h e b uyin g w a s
W a iti n g fo r
.

s tron g e nough to ab sorb all off er in gs th e T re n d

a n d tu rn the m a rket h e wou ld h a ve ,

don e better to h a ve w a ited ti ll t h is w a s

cert a i n W hen a stock h o l ds s te ad y
.

w it h in a h al f poin t r a diu s i t doe s n ot

sign ify a revers al o f tre n d b u t ra ther ,

h a l ti n g p l a ce fro m w h ich a n ew
’

m o v e in eithe r dire ction m a y b egi n .

H a d h e fo ll ow ed the fi rst sh a rp
mo ve h i s ori gin al tr a de wou l d h a ve
,

—
,

b een o n t h e short not the l ong s ide .

T his wou l d h a v e s a ved h im h is fi rst

l os s w ith i ts a ttend a n t expen ses a g
“

g r e a tin g a n d wou l d h a ve ne a r
l y o u b l e d the d a y s profits
’
.

H is s e co nd l oss w a s m ade on a tr a de
w h i c h invo l ved o n e O f the fi nest p oin ts
in th e a rt o f Ta p e Re a din g vi z th a t
-
, .
,

o f distin gu ish in g a r all y from a c h a n ge

 Ta pe R ea d i n g
i n tren d . A good w ay to d o th i s suc
c e s s fu l l y fi gu re where a s tock is
i s to
du e to com e a fter it m a kes a n u pturn ,

all owin g th a t a n orm al r all y i s fro m .

o n e h al f to tw o th irds o f the dec l ine

-
"

T h a t is when a s tock dec l in es two

,

a n d a h al f poi nts we c a n l o o k fo r a t
'

n .

l e a st a poin t a n d a qu a rter r a l l y u n.

l ess the pres sure i s s ti ll o n I n c a se .

the de c l in e i s n ot over th e r all y wi ll ,

fa l l short .

Di s ti n g u i s h i n g Wh a t di d Un i on d o a fter it tou ched

a M ere R a l l y I 76 M ? I t sol d a t 1 76 56 M 1 7 7 M . .

H a v i n g dec l in ed fro m 1 79M to 1 76 M f

,

2 M po i nts it w a s du e to r all y a t l e a st
,

1 M points or to 1 7 7 M , I ts fa i l in g to .

m a ke thi s fi gu re indic a te d t h a t th e
d ec l in e w a s n o t over a n d th a t h is sho rt
position shou l d b e m a int a ined .

Fu rthermore th a t la s t j u mp o f h al f
,

a poin t b etween s al es s howed a n u n

he al thy con di tion o f the m a r k et For .

a few mom ents there w a s eviden t l y a ,

cess a t ion of se ll in g then somebody ,

re a ch ed for a h un dred sh a res O ff ere d

.

a t 1 7 7 M A s th e n ext s al e w a s I 76 M
.

the ho ll own es s o f the ris e bec a me a p

p a ren t .

W h i l e th is r all y la sted the l o ts w e re ,

s m al l T h is of its e l f w a s re a son for

.

n ot covering H a d a gen u in e dem a n d

.

sp run g fro m either l ongs o r shorts a

ste a dy ri se o n in cre a sin g vo l u mes
, ,

wou l d h a ve t a ken p la ce T he a b sen ce .

o f su ch i ndic a tion s seems to u s n ow

a re a s on for n o t coverin g a nd go ing
l on g a t 1 76 M .
 Ta pe Re a d in g
aw a y fro m the t a p e or who i s tr a d ing
w ith a n a rbitr a ry stop T he Ta pe .

Rea d er wi ll se l dom ta ke over h al f a

o in t to a point l oss for th e re a son th at
p
a s w il l gen er a l l y b uy o r se ll a t or ,

c l ose to th e p ivot al po int o r the l in e

,

o i res ist a n ce
-
T h ere fore sho u l d the
.
,

tr en d o f h is stock s uddenly re v erse h e ,

is w ith it in a momen t T h e l os ses .

in t h e a bove m en tioned Un ion P aci fi c

tr a n s a ction s ( M a nd M re specti v e l y )
a re perh a p s a fa i r a ver a ge b u t fre ,

q ue n t l y h e w i l l be a b l e to tr a de wi th
a ris k o f on l y M M o r M , .

T h e f a ct th a t th i s pos sib l e l os s is
c on fi ne d to a fr a ction shou l d not l e a d
h i m to tr a de too fre qu en t l y I t is b et .

ter to l oo k on p a rt of the t im e ; to re st ‘

the m in d a n d all ow t h e j u dgmen t to

c la rify D u ll d a ys wi ll ofte n co n str a in
.

o n e fo r a ti me a n d a re therefore ben
.

e fi c ia l .

T h e b ig mon ey in Ta p e Re a di ng is
ma de d uring ve ry a ctive m a rket s B ig .

sw ings a n d la rge v o l u m es prod uce u n

m i sta k a b l e in dic a tion s a n d a h a rv est
fo r t h e e xp e ri en c ed op er a tor H e we l .

comes twe n ty th irty a n d fi fty po int

,
-

mo v es in stoc k s l i ke Re a din g Un ion

o r C o n so l i d a te d G a s — p O We r f u l p la ys e
,

b y fi n a n c ial gi ants .

A nd this fa ct rem ind s us o f one o f

th e things we h a ve h eretofore i ntend
ed to re a son o u t : I s it better to
cl o s e tr a des e a ch d a y or ho l d through ,

re a ction s a n d if necess a ry for se v er al

, ,
 D ai l y T r a d es vs . L o ng Pu l l O pera ti o n s
d ays or w eeks in order tO s ec u re a ’

la rge p ro fi t ?
T h e a n s wer to th is que s tio n d epend s
M s o me w
‘
mt upon the temp er a m ent o f
the Ta pe Re a der I f h is m a ke u p is ‘n c é
0

.
- fi
D‘ ef

s uc h th a t h e c a n c l o s e l y fo ll o w t h e
sm all s win gs w ith profit gr a du all y b e ,

comin g more e xpert a n d ste a di l y in s

cre a sin g h i s co mm itments h e w i ll ,

s h ort l y a rr ive by th a t rout e I f h is

“ ”
.

dis pos ition is su c h th a t he c a n n ot tr a d e

i n a n d o u t a ctiv el y b u t is con te nt to
,

w a i t fo r b ig oppo rtu n itie s a n d p a tient

en ou gh to ho l d o n for la r g e pro fi t s h e ,

wi ll al so get there
“ ”
I t 15 i mpos s i bl e
.

to s a y wh ich s ty l e o f tr a ding w o u l d
p rodu ce the b est a v er a ge res u l ts b e ,

c a u se it depends al together upon in

di v idu al qu al i fi c a tion s .

L ooking a t th e qu estion b ro a d l y we ,

shou l d s ay th a t the Ta pe Re a der who

understood the l ine s th u s f a r s u g es t
c d in th is seri es m igh t fi n d i t oth
,

di ffi c u l t a n d l e s s p rofit a b l e to oper a te
so l e l y for th e l on g s w ings I n th e .

fi rst p la c e h e w ou l d b e ob l ige d to l et
,

twen t y o r t h irty opportun itie s p ass b y

to every o n e th a t he wou l d a ccept T he .

sm all swings o f one to th ree points

grea t ly outnumber the fi ve a nd ten "

po int movements a nd there wou l d b e

,

a con sider a b l e p erce nt a ge o f l o s i n g

tr a des no m a t ter h ow h e oper a ted .

I t wou l d seem al so tha t cl ose con

t a ct with the tick eR would no t g i v e
-

th e c orrec t perspec tiv e fo r l ong pu l l

- 1 4?
 Ta p e R ea di n g
o per a tion s M a ny of the indic a tion s
.
,

s u ch a s the extent o f re a ction s l ines ,

o f res i s t a n ce etc w i ll b e f o u n d e qu al
, .
,

l y oper a tive in th e b ro a der S w i n gs ,

j u st a s a n en la rgem en t of a photo
S wi n g s gr a ph ret a in s th e l in e s o f its Origi na l .

Ta p e Re a din g seem s es senti all y a pro

fe s s io n _for th e m a n who i s ment all y
a ctive a n d fl exibl e c a p a b l e of m a kin g ,

q u ick a n d a ccu r a te decision s a nd keen

l y s e n s i ti v e to th e most m in ute i n
o

d i c a tio n s O n the other h a n d tr a di ng

.
,

for th e l a rger swin g s requ ires one to

ign ore the minor progn ostics a nd to
‘

-
,

p u t some stress upon the in fl uen ti al

news o f th e d ay a nd its e ff ect upon ,

sentiment ; he must st a nd re a dy to .

t a ke la rger l osses a n d in m a ny w a ys
h a nd l e h imse l f in a m a nner al together
d i ff eren t fro m th a t of th e s m all s wing
tr a der .

The more c l ose ly we l ook a t the prop

o s itio n the more the two methods o f
,

oper a tin g see m to dis un ite th e bro a d ,

swin g p la n a pp e a rin g b est a d a pted to

thos e wh o a re n o t in con tin uou s to u c h
w ith th e ticker a n d who therefore
h a ve th e a dv a nt a ge of dist a n ce a n d
p ersp ective .

I n a s u b s equ en t s er i es w e h o pe to ta k e
,

u p th is s u b jec t i n d etail , i n a n efi o r t to
s h o w h o w th e b u s i n es s a n d th e pr of es
s io n a l ma n w h o ca n n o t a tten d h is b r o
‘

k er s ofii ee, m ay pr ofita b l y appl y i n tel l i

'

g e n t f o res ig h t to th e s to c k ma r k e t u n d er
the s h a d e of h is ev eni ng l a mp .

-1 4 8
 Ta p e R ea di n g
s h ou l d form n o s m all p a rt o f th e Ta p e
Re a der s in co me B ut h e mu st sep a
’
.

r a te s u ch tr a de s fro m h is regu la r d a i l y
tr a din g ; to all ow the m to con fl ict
wou l d destroy the e ff e cti v eness of
b oth I f he fi n d s th e l ong p u ll tr a de
.

i nterferin g w ith th e a ccu r a cy of h is

j u d gm en t h e shou l d c l ose it o u t a t
,

on ce H e mu st p la y o n o n e side o f
.

the fen ce if h e c a n not oper a te on both .

O n e c a n re a di l y foresee how a tr a
d e r w ith o n e h un dred sh a res o f Stee l
a t 4 3 fo r t h e l ong pu ll a nd two hu n,

dred f o r the d ay wou l d be tempted

,

to c l ose o u t a l l three hundred o n i n

d ic a tio n s o f a dec l ine T his is w h ere
.

he c a n test h i s a bi l ity to a ct i n a du al
c a p a city H e m u st a s k h im se l f : H a ve
.

I good re a son fo r th inking Stee l w i ll

s e ll down fi ve points before u p five ?
I s thi s a s m a l l re a cti on or a big sh a ke
down ? Are w e sti ll in a bu ll swin g ?
H a s th e stock h a d i ts n orm al r a l ly
fro m the la st dec l in e ? T hese a nd
m a ny oth er question s w i ll en a bl e hi m
to decide whether he shou l d hol d this
hu n dred sh a res or c l e a n hou se .

I t t a kes a n e x c ep tio n a l y stron g w i ll

a n d c l e a r he a d to a ct i n th i s w a y w ith
o u t interferin g w it h on e s regu la r tr a
’
o

din g Anyon e c a n s e ll two h u n dred

.

a n d ho l d o n e hun dred ; b ut wi ll h is
j udgmen t b e b i a sed bec a u se h e i s s i m
u l ta n eo u s l y l ong —
a n d short b ull is h
a n d be a ri sh ? T here s th e ru b "
’

Th e re a l Ta pe Re a der i s a pt to p r e e
 D il y T d
a raL g P l l Op r ti
es vs. on - u e a o ns

fer a c l e a n s l ate a t 3 P M every d ay

'

. .
,

s o th a t he c a n s i t down to h i s tic k er
a t th e n ext morn in g s op en ing a n d s a y ’
,
“
I h a ve n o co m mitments a n d n o O p i n
i on I W i ll fo ll ow th e fi r s t stron g i n
.

d 1c a t10n H e wou l d r a th er a v er a ge
$ 1 00 a d a y for ten d a ys th a n m a ke
o n o n e tr a de in the s a me l ength
”

o f time Th e risk is gener al ly l imited

.

to a fr a ction a n d h a vin g a rrive d a t a

poin t wh ere h e i s showing ev en s m a l l
a ver a ge d a i l y profit s h is re qu ired c a p ,

it al per 1 00 sh a res n eed n o t b e over

to
Suppo se fo r sixty d ays o n 1 00
s h a re oper a tion s h i s a ver a ge p rofits
over l os ses were on l y a qu a rter o f a
point a d a y At th e en d of t h a t
.

tim e h i s c a p it al wou l d h a ve been i n

cre a sed b y $ I SOO en abl ing hi m to
, ,

tr a de in 2 00 sh a re l ots Another th ir .

ty d a ys with si mi la r resu l ts a n d h e
could tr a de in 3 00 sh a re l ots a nd so -
,

on I do n o t mention thes e fi gu re s fo r
.

a ny other p u rpose th a n to a g a in em
p h a s i z e t h a t th e obj e ctive poin t i n
Ta p e Re a din g i s n o t la rge i ndividu al
pro fi ts b ut a contin uou s chippin g in
,

o f s m all a ver a ge n et profits p er d a y .

A b 0ut tw o month s a g o I a m to l d a
'

, ,

m a n from th e West c a m e into the

o ffice o f T H E T I C K E R a nd s a id th at he ,

h a d b een impres se d by th is serie s on A n I n c i d ent

Ta p e Re a ding a n d h a d come to N ew
,

Yor k fo r th e so l e p u rpose o f tryin g

h i s h a nd a t it H e h a d $ 1 000 wh ic h
.
,
 Ta p e R ea d i n g'

he was w i l l in g to los e in demon str a

ting wh eth er h e w a s fitted for the
work .

He w a s a dvised not to tr a de in over

ten sh a r e l ots
-
a nd w a s especi ally
,

w a rn ed a g a i n st oper a tin g a t a l l u nti l

a fter he h a d a ctu a lly studied the ta pe
for tw o or three month s .

Recently I a m in formed h e c all ed

, ,

a g a i n a n d re la ted som e o f h i s exp er i

en c es . I t seem s th a t he c ou l d n o t a h
st a in from tr a ding but st a rted with ,

in two o r th ree d a ys a fter he decided

o n a broke r a ge hou s e H e st a ted th a t.

durin g th e tw o month s h e h a d m a de
forty two tr a des o f ten sh a res e a ch a n d
-

h a d n ever h a d o n h a n d over twent y

fu l l Sh a res a t a ny on e ti m e H e a d mit .

ted t h a t h e h a d frequen t l y m ixed

gu esswork a n d tip s with h i s Ta pe
Re a ding b u t a s a ru l e h e h a d fo ll owed
,

the t a p e .

H i s l os ses were s e l dom over a p oint

a nd h i s gre a test l oss w a s o n e a n d a
h al f poin ts H i s m a ximu m profit w a s
.

three points He h a d a t times tr a ded

.

in othe r st o cks b eside the l e a ders I n .

sp ite o f h i s i nexperi en ce a n d h i s a t ,

te mp t to m ix tip s a n d gu esses w ith

s h rewd j u dgmen t h e w a s a ctu all y
,

a h ea d o f th e g a me a fter p a yin g o u t ,

a bou t $ 1 2 5 in co mm is sion s etc , .

T h i s w as especi all y s u rp r 1s 1n g 1 n
view o f th e tr a der s m a r k et th rough ’

which he h a d p a ssed Whi l e the .

a mou n t o f h i s net p rofit w a s sm all

,

—1 5 2
 N
X V a r io u s E x a m pl es
. an d Su g g es ti o n s

E CE T tr a din g o b s erv a tions

a nd experim ents h a ve con
v i n c e d m e th a t it i s i mp ra c ti

c abl e a nd al most i mpos s ib l e to

g a u ge th e e x ten t of a movem ent by
i ts in iti al fl u ctu a tion s .

M a ny i mport a nt swi ngs b egi n i n the

most m od est w a y T he top of a n i m
.

po rt a nt de c l i ne m a y pres ent nothin g

more th a n a l ight vo l u m e a nd a drift
-

ing ten d e ncy tow a rd l ower pri ces s u b ,

s equ e nt l y d eve l opin g i nto a h e a v y ,

s l u mpy m a rket a n d endin g i n a vio

,

l e nt dow nw a rd p l u nge .

I n a previou s n umber I s uggested

th a t the Ta p e Re a der sel ect on l y those
moves wh ic h s eem to o ff er op portuni
ties fo r wide swings My op i n i o n n o w
.

i s th a t t h e op er a tor shoul d a i m to
c a tch eve ry i mport a nt s win g i n th e
l e a din g a ctive stock T o do thi s h e
.

m ust a ct p rom pt l y whe n a stock goe s

i nto a n ew fi e l d o r oth erwise gives a n
in dic a tion a nd h e m ust b e re a dy to
,

fo ll ow wh erever it l e a d s If it h a s
.

b een moving within a three point r a di -

u s and s udden l y t a kes o n n ew l i fe and

-1 5 4
 V a ri o u s E xa mp l e s a nd S u g g e s ti o n s

a c t1v i ty , b ursti ng t h rough its form er

boun ds he m ust go with it
,

I do not me a n th a t he s h ou l d try to
c a tch every wrigg l e If th e stock ris e s .

th ree points a nd then revers es one o r

o n e a nd a h a l f points o n l ig h t vo l u me ,

he m ust l ook upon it a s a perfect l y ‘

n a tu r al re a ctio n a n d not a ch a nge of

trend T he exp ert oper a tor wi l l not

.

ordin a ri l y l et a l l o f thre e points get

a w a y from him H e wil l keep p us h in g
.

his stop up b ehind u nti l th e fi rst good

re a ction puts h 1m o ut a t close to the
h igh figu re This le aves him i n a po
.

sitio u to repurch a se on the re a ction ,

provided no better opportunity pre

sen ts itse l f H a vi ng p urch a sed a t s u c h
.
‘

a ti me h e wi ll s e l l o u t a g a i n a s the
,

price on c e mo re a ppro a ch es the h ig h

figure u n l e s s i ndic a tions p oint to its
,

forgin g through to a new hig h l eve l .

E ve ry movem ent of the m a rket a nd

o f e a ch stoc k p a sses th rough s t a ges
corresponding to thos e i n th e l ife of
a n i ndividu a l a pt l y des cri b ed b y my
,

o l d co ll ege ch um B i ll Sh a kespe a re a s
, ,

T h e Ta p e R e a de r
“
T h e S even Ages .

a im s to get in durin g In fa n cy a n d o u t
a t O l d A ge .

Usu a l l y a movem ent gives signs

whe n i t begins to totte r A recent .

ex a m pl e w a s given i n th e ris e i n Un ion

J
P a cific abo ut u ne 2 1 s t to 2 3 d
when the s tock rose from 1 87 74 to
n -

a ccomp a nied by a n a bnorm a l

a dv a nce i n the preferred E a ch morn .

-1 5 5
 Ta p e R e a d i ng
in g th e L o ndon price for both iss ues
c a m e h igher a nd there w a s pers iste n t
buying a ll d ay in the New Y ork m a r
ket After touch i ng 1 94 % the move
.

m en t comp lete l y fi zzl e d o u t B uying .

pressu re ce a sed T h e preferred re a ct .

ed sh a rp l y a n d the com mo n c a m e ba ck
,

to T here a fte r its r all ies were

feebl e the press ure w a s a l l o n the
J
,

down side a nd tod a y un e 2 6 th it i s

, , ,

stil l he a vy a t
A new b ul l move m ent m a y h a ve its
birth durin g gre a t we a knes s or pres
s u re .
J
ust p rior to th e a bove tim e
Re a ding w a s pou nded dow n to I 4 7 %
,

th en to 1 4 7 V a nd the resist a nce wh ich

,

it offered a t thi s l eve l g a ve notice th a t

a new swi ng w a s a bout to b e i n a u g u
r a ted T h ese were signs th a t th e Ta pe
.

Re a der h a d b etter get bu l l ish Pur .

ch a s es coul d h a ve b een m a de with on l y

a fr a ction al risk a nd s ubsequent p rof ,

its were chi efly on the bul l side Tw o .

or three d ays l ater the price touched

1 5 5 72 then it went ab ove 1 5 8
, .

Im p o rta n c e o f T h e more w e study volu mes the ,

V o l u me s b etter w e a ppreci a te thei r v a l u e in

Ta pe Re a ding It frequently occurs .

th a t a stock wi ll work within a three

poi nt r a nge for d ays a t a tim e without
giv i ng o ne a ch a nce fo r a resp ect a bl e
s i z ed s c a lp W itho ut goin g o u t of
.

thes e bou nd a ries it s u ddenly b egi ns ,

com ing o ut on th e t a p e in thous a nds

~

i n s te a d o f hun d reds T his i s evidence

'

th a t a new movem ent h a s st a rted b ut ,

 T a pe R ead i n g
l as t tim e Re a ding struc k 159 % une,
I I
cou nted som e a r es
—
5

w it i n ab out h al f a poi nt o f 1 59 un

mist akabl e noti ce of a com ing dec l in e .

Th is w as a c a se w h ere th e stock w as
u t u p b e fore b ei ng p ut dow n a n d t h e ,

a p e Re a der w h o i nterpreted t h e mo v e
c or rect l y an d la y ed fo r a good d own
s w ing wo ul d a v e m a d e cons ider abl e
money .

We fre q uent l y h e a r peop l e comp la i n

in g th a t t h e p ub l ic i s not i n th is ma r
“

k et a s thoug h th a t w ere a re a son

,

w h y stocks s hou l d n ot 0 up or th e
ma r k et sho u l d b e a v o id e f T h e sp eak
e r i s u su al l y o n e o f thos e who c on st i
.

Pu b li c tute t h e p ub l ic but h e reg a rds the

“ ”
,

expre s s io n a s
“
signi fyin g every o u t
s id e r e x cept myself
”
I n the j u dg ment
.

of m a ny the m a rket i s better o ff wit h

o u t th e p ub l ic T o b e s ure bro k ers
.
,

do no t enj oy so la rge a bu s iness th e ,

fl uctu ations a re not s o rioto us but th e ,

m a rke t m oves i n a n order l y w a y a nd

responds more a ccur a te l y to p rev a i l
ing conditio ns .

A ma rket i n w h ich the pub l ic pre

dom i na tes re pres ents a sort of specu la
tive ja g i ndu l ge d i n by t h ose whose
“ ”

stock m a rket kn ow l edge s h ou l d be

r a t ed at E veryone recogn i z e s the
f a ct th a t wh en th e smoke c l e a rs a w a y
’

the Street i s ful l of v ictims who didn t ’

kno w h ow a nd cou l d n t w a it to l e a rn ’
.

T h eir p l ungi ngs produce viol ent fl u c

tu a tio n s however a n d i n t h i s res pec t
’

, ,
 Va r i o u s E xa m p l es and S u g g es ti o n s

a re of a dv a nt a ge to the Ta pe Re ad e r
w ho w o u l d m u ch r a ther s ee te n p o mt a

t h a n t h ree p o int s w in g s
-
.

To off set this t h er e a re som e d i s ad

,

v a n t a ges First i n a ma rket w h er e

.
,

t h ere i s rioting of a ccu m u la ted ma r

g i n s,
”
th e t a p e i s s o f a r b ehi nd th a t i t
is se l dom o n e c a n s e cure a n exe c ut io n
a t an yw h ere n e a r h is price T h is is .
O rd ers
especi all y tru e w h e n a ct iv ity b re ak s
out i n a stoc k which h a s b ee n c o m
p a rat i ve l y dul l So m a ny p eo p l e w it h
.

mo ney w a tc h i n g the t a pe a re a tt ra c t
, ,

ed b y th ese a pp a rent opp o rt u niti es ,

t h a t the s cr a m bl e to get i n res u l ts i n

every on e p aying more tha n he figur ed ;
t h u s t h e Ta pe Re a der fin ds it i mp o s
s ib l e to kno w w h ere h e i s a t u nti l h e
gets h is report H i s t a pe prices a re
.

fi v e m i nute s st al e a n d h is broker i s s o
b usy i t t a ke s fo u r or fi v e m in utes for
a n e x ecution i ns te a d o f o ne o r two
m in u tes .

I n th e next p la c e stop o rd ers a re ,

ofte n fill ed a t from s m al l fr a ctio ns to

poi nts a w a y from h s stop price t h ere
i —
i s no te ll i ng wh a t fi gu re h e w i ll g et ,

whil e in ordin a ry m a rkets he c a n p la c e

h i s stops w it h in y, of a resist a n ce p o i nt
a nd freq u en t l y h a ve th e pri c e c om e .

w ithi n of h is stop w it h out c a tch ing

it.

So it is a ques t ion whether all t h ing s ,

considered 3 h e presence o f the p u bl i c

,

i s a h e l p o r a detr ime nt to s u cc e s s f ul
Ta p e Re a ding .
 Ta pe R ea d i ng
Spe a king o f stop orde rs : T h e w a ys
i n wh ich o ne m a y m a n ip ul a te h is stops
fo r prote ction a nd a dv a n ta ge beco me ,

S to p O rd e rs mo re n u m erou s a s exp erie nce i s a c

q uired .Re m emberi ng th a t the Ta pe
Re a der is oper a ting for a fr a ction al
.

a ver a ge p rofi t per tr a de o r per d a y , ,

he c a n not a ff ord to l et a poi nt profit

r u n i nto a los s or f a i l to p l ug a la r
“
.

ge r p rofit a t a poi nt where a t l e a s t a

porti on o f it w il l b e preserved .

O n e of my rece nt d a y s tr a din g wi ll
’

il l u str a te this ide a I h a d j ust closed .

o ut a coup l e o f tr a des i n wh ich t h ere ,

h a d bee n l os ses tot al i ng s l ightly over

a point B oth were o n the l ong side
. .

T h e m a rket beg a n to show s i gns o f a

b re a k a n d s in gl ing ou t Re a di n g a s the
,

most vu l ner a b l e I got short of it a t

, ,

1 5 094 . I n a few m om e nts _i t sol d below

1 50 . My stop w a s m oved d o w n s o
there cou l d n t be a l os s a n d soo p a
’
,

s l ight r all y a nd a noth e r b re a k g a ve

m e a new stop which i ns ur e d a p rofit ,

com e wh a t m ight A t h ird driv e st a rt

a n d I p u shed the stop do wn to
.

ed ,

of th e t a p e p r i ce a t th e ti me
.

with i n ,

as it w a s la te 1 n the d a y a nd I c o n s i d
ered this the fi n al pl un ge B y the tim e .

my order re a ched the fl oor the price

wa s we ll a w a y from this l atest stop
a nd wh e n the s e ll i ng b ec a m e most vio
l ent I tol d my b roker to cover a t th e “

m a rket T he p rice p a id w a s within

o f the b ott omfor the d a y a nd net
.

ted 2 5 43 a fter com m i ssio ns w e re p a i d .

 Ta p e R e a din g
fu rth er p ro fi t ; ( 2 ) T he norm al r all y
to 5 2 wil l c a tch h i s stop a nd en a b le
hi m to p ut the stock out a g a i n a t th a t
p rice T h e third conti ngen cy i s th a t
.

it wi ll r a lly to ab out c a tch h is

stop a n d the n go l ower H e c a n s c a rce .

l y mourn over the l os s of a further

profit i n s uch a c a se .

p
S c a l in g o n I f the stock refus es to r a l l y th e fu l l
B o th S i d es
point to wh ich it i s entit l ed th a t is if , ,

it com e s up to 5 1 % o r a n d stil l a cts

he a vy it m ay be expected to b re a k
,

lower a nd there usu a lly is a mple

,

time to get short a ga in a t a price ‘

th a t wi ll a t le a st cover co m m is s
ions .

T here is nothi ng m ore confusi ng

th a n to a tte mpt s c a lpi ng on both s ides
of the m a rket a t once Yo u m a y go .

lon g o f a stock which i s b ei ng pu t up

o r i s goi ng up for som e speci a l re a son ,

a n d short o f a noth er stock whi c h i s

pers iste nt l y we a k B oth tr a des m a y
.

p a n out s u cces s fu ll y bu t m e a ntim e the

,

j ud gm ent w il l b e i nterfered with a nd

some f oolish mist a ke will be m a de in
fo u r _c a s es o u t o f five A s Dickson G . .

W a tts s a id ,
Act s o a s to keep the
m in d cl e a r th e j u dgm ent trustworthy
,
”
.

T h e m in d i s n o t cl e a r when th e tr a der
is workin g a ctive l y o n two oppos ing
s ides of th e m a rket A b e a rish in dic a
.

tion i s f a vor a b l e to o n e tr a d e a n d u n ,

fa vor a bl e to th e other He fi nds him .

sel f i nterpreti ng eve ry deve l opm ent a s

b eing to hi s a dv a nt a ge a n d forgetti n g
— 1 62
 Va ri o u s E xa m p l es and S u g g es ti o ns

the i mp ort a n t f a ct th a t h e i s a l so o n
the op posite s ide
I t is m uch b etter if y o u a re s hort
of o n e stock a n d s e e a nother th a t l ooks
l ike a p urch a se to w a i t u nti l yo u h a ve
,

c ov ered your short tr a de ( on a dip i f

pos sible ) a nd the n t a ke the long s ide
,

of the other iss ue T h e be s t ti m e fo r

.

both covering a nd goi ng lon g i s on a

recess ion wh ich i n s uch a c a s e serves a
d ou bl e p urpos e T. he m i nd shou l d b e
m a de up i n a dv a nce a s to wh ich de al
o ff ers th e best ch a nce for p rofit , s o th a t
when the moment fo r a ct 1on a r
rives there wi l l be nothing to do
but a ct .

This is one gre a t a dv a nt a g e the

Ta pe Re a der h a s over other oper a tors
who do not employ m a rket science .

By a process o f elimin ation he decides

which side o f the m a rket a nd which
G etti n g in
stock a ff ords t h e best opportu nity H e .

e ither g ets in a t the i nception of a

moveme nt or w a its fo r th e fi rst rea c
t io n a fter the move h a s st a rted H e .

k nows j us t a bout wh ere h is stock wi l l

com e on t h e re a ction a n d j u dges by
th e w a y it th en a cts whether h is first
impressio n i s confi rmed or nul l ified .

After he gets i n it m u st com e up to

expect a tion s o r he shou l d a b a n don th e
tr a de I f it i s a b u l l move th e vo l u m e
.
,

m ust incre a se a nd th e rest of the m a r

ket o ff er som e s upport o r a t l e a st not
O ppos e it T he re a ctions m ust show a
.

s ma ll er vo l u m e th a n the a dv a n ces in ,

—1 63
 Ta pe R ea di n g
d ic a ti ng light pressure a nd e a ch u p
,

w a rd swi ng m ust b e of l onger dura tion

a nd re a ch a new high l eve l or it ,

will me a n th a t the rise h a s spent

its force either tempor a ri ly or fi n
a lly.

Ta pe Re a din g i s the on l y known

m ethod o f tr a ding which gets you i n
a t th e begin nin g keep s you posted
,

Ad v a n ta g e s o f
throughout th e move a n d gets yo u out
,

Ta p e R ea d in g wh en it h a s cu l m i n a ted .

I f a nything more a pp ro a c hi ng per

fec tio n i n thi s reg a rd exists wi ll som e
o ne kind ly come to the front with
it ?
H a s a nyone eve r h e a rd of a m a n a ,

method syste m or a nyth ing e l se th a t

, ,

th a t wil l do this for you in W all

Street ?

I t h a s m a de fortun es for the co m

p a r a ti v e l y few who h a ve fo l lowed it .

It i s a n a rt i n wh ich on e c a n becom e
high l y expert a nd more a nd more s u c
c e s s fu l as p r a ctice a nd experience
s a ndp a pers his work a nd shows h im wh a t
to avoid .

I shou l d l ike to h e a r from my re a d

e rs who h a ve fol l owe d this s eries ,

wh ethe r th ey h a ve been oper a ti ng u n

der i ts gu id a nce o r not I shou l d l ike
.

to know how m a ny h a v e st a rt ed to
perfect th ems e l ves i n Ta p e Re a ding ,

a n d how m a ny h a ve been a ided in di

r e c tl y ; wh a t portion s a n d whi ch ide a s

h a ve benefited them most ; wh a t poin ts

a re not c l e a r o r still u n c o v ered P l e a se
.

—164
XI . O b s t a c l e s to b e O v e r c o m e
P o ss ibl e P r o fi t s

E N TA L po ise is a n in d is pe n
s ab l e f a ctor in Ta pe Re a ding .

The mind shou l d be abso l ute

l y free to concentr a te upon
the work ; there should be no fee l ing th a t
cert a in things a re to be a ccomplished
within a given time ; no fe a r a nxiety or ,

a mbition .

When a Ta pe Re a der h a s his emot ions

wel l in h a nd he wi ll p lay a s though the
,

ga me were dominoes When a nything .

inter feres with this a ttitude it shou l d b e

e l imin a ted I f for ex a mple there b e a n
.
, ,

unusu al series o f l osses the tr a der h a d ,

better suspend oper a tions unti l he dis

covers the c a use .

Fo ll owing a re some o f the obst a c l es

which a re l ike ly to be encountered :
1
. On e m ay be tr a ding too o ften .

M a ny opportunities fo r profit deve l op

from e a ch d ay s movements ; on ly the
’

very choicest shou l d be a cted upon .

There shou l d be no h a ste Th e m a rket .

wil l b e th ere to morrow in c a se to d ay s

- -
’

opportunities do not meet requirem ents .

'

2. Anxiety to m a ke a record to a void ,

l osses to secure a cert a in profit for th e

,

a ss
 Ob s ta c l es to B e Ove r c o me

d ay or period will g re a tly w a rp the j udg

ment a nd le a d to a low percent age o f
,

profits Ta pe Re a ding is a good de a l like

.

l aying eggs I f th e hen is not le ft to

.

pick up the necess a ry foods a nd retire in

pe a ce to her nest she wi ll n o t produce ,

proper l y I f she is worried by dogs a nd

.

sm a l l boys o r tries to l ay seven eggs out

,

o f m a teri al for six th e net proceeds m ay ,

look l ike a n ome l et .

The Tape Re a der s profits shou l d de ’

v el o p n a tur al ly He shou l d buy or sel l

—
.

bec a use it is the thing to do no t b e

c a use he w a nts to m a ke a profit or fe a rs
to m a ke a l oss .

3
. Th e m a rket m a y b e unsuited to
Ta pe Re a ding oper a tions When prices .

dri ft up a nd down without tr en d like a ,

ship without a rudder a nd few positive ,

indications deve l op the percent a ge o f ,

l osing tr a des is a pt to be high When .

this condition continues it is we ll to hold

o ff unti l the ch a r a cter of the m a rket
ch a nges .

O ne s broker ’
m a y be giving poor S e rv i c e
4
.

service In a ga me a s fine a s this every

.
,

fr a ction counts E xecutions o f m a rket

.

orders should a ver a ge n o t over two

minutes St0p orders shou l d be report
.

ed in l ess time a s such orders a re o n the

fl oor a nd a t the proper post when they
become oper a tive By close a ttention to .

det a i l s in the h a nd l ing o f my orders I ,

h ave been abl e to reduce the a vera ge

time o f my ex ecu tio n s to l ess th a n one
‘

minute T he quickest report obt a ined

.

—1 6 7
 Ta pe Rea d in g

t us f a r required b ut twen ty fi v e secon d s

h - .

To the bes t ofmy know l edge this is a

record for New Y ork Stock E xch a nge
executions o f orders given from a n o i
fi ce .

A consider abl e portion o f my orders

are e x ecuted in f ro m th ir ty to forty sec
v aryin g a cco rding to wheth er my
on d s ,
b roker is ne a r th e phon e o r in a dista nt
’

c ro wd wh en the orders re ac h the fl oor

an d h o w fa r the de fi niti v e
”
crowd is
from h is phone
’
.

I h a ve a rr a nged a spec i al order s l ip

which distingu ishes my or ders It re a ds :

N
.

A T THE O FFE RE D
P
E P O RT
C E
STA
A
T
D
N
 Ta pe R ea d in g

a f a ctor This gives h im a ch a nce for a

.

l itt l e se l f ex a min a tion

-
.

I f a person is in poor physical condi

tion or his mental al ertness b e l ow p a r
for a ny re as on he m ay be un abl e to
,

st a nd the ex ci t ent a tten ding the wor k .

L oss o f sleep , or ex a mp l e m ay render

,

one unfit to ca rry all the quot a tions in

his he a d or to p la n a nd execute his
,

moves quickl y an d a ccur a te l y When .

a nything o f this kind occurs which pre

vents the free p lay o f all th e f a cu l ties
it is b est to b ring the d ay s wor k to a ’

c l ose
.

Some o f my rea ders thi nk it futi l e to

a im fo r a fra ctional a ver age pro fi t pe r
tr a de when th ere a re m a ny fu ll points per
d ay to be m a de by ho l ding on through
d ays a nd weeks a nd getting fu ll b ene fi t o f
the b ig moves Adm itting th a t it is
.

possib le to m a ke m a ny more po ints a t

times there 15 a risk o f l oss es corres pond
ing to th e pro fi ts a nd the question i s not
how mu ch we c a n ma k e b ut h o w much ,

we c a n m a ke ne t .

Ta pe Rea ding reduces p ro fi t m a king -

to a m a nu f a cturing b asis .

T o show how the nimbl e eighths pi l e

up when their cumu lative power is fu lly
emp l oyed I h a ve prep a red a tabl e r ep re
,

senting the resu l ts o f 2 5 0 tr a ding d ays ,

st a rting with a ca pit al o f $ 1 It is

,

a ssumed th a t the Ta pe Re a der h a s re ach

ed th a t st age o f expertness where he c an
aver a ge one tr a de a d ay a nd a pro fit o f
p e r tr a de a,
nd th a t a s f a st a s

—1 0 7
 O b s ta cl es to B e O ve rco me

is a ccumu la ted he a dds 1 00 sh a res

‘

to his tr a ding unit .

I ca n he a r the expressions o f those

w h o l ook over these figures :
“
Oh "
Th a t l ooks all very wel l on pa per but

N
,

w a it ti ll it comes to doing it in the m a r

ket .

T hese resu l ts depend sol e ly upon the The imb l e

Ta pe Re a der s abi l ity to m a ke
’
more E i g h th
th a n he l oses per d ay T here is no l imit .

to the numb er o f sh a res he c a n tr a de in ,

provided he h a s the m a rgin I f he is a t .

all proficient his m a rgi n wil l not be

depleted more th a n a few points be fore
he m a kes up his l osses a nd more He .

is n o t pyr a miding in the ordin a ry sense

o f the word ; he is simp ly doing a n in
cre a sing volume o i sh a res a s his c a pit al
exp a nds Al l pr o gressive b usiness men
.

incre a se commitments a s f a st a s w a r
r a nted by their c a pit al a nd oppo rtunities .

W h at p o fi t f 1
a r o -8
p e r da y w ou l d am o nt to i n
u

2 5 0 d ay s i f p o fi t s wr er e u e s d as a d d iti o n al m g i n
ar .

sh a s re a d a y

N
Le

et
ss ta x

p cp fl t

—l 7 1
00
 Ta pe R ea d i n g
A ssuming th a t there a re a bout three
hundred Stock E xch a nge sessions in the
ye a r the two hundred a nd fi fty d ays
,

figured represent fi v e sixths o f a ye a r -

or ten months From th a t time on .

‘
,

h a v ing struck his ga it the Ta pe Re a der ,

c a n with out incre a sing his unit to over

,

1 2 00 sh a res m a ke $9 00 a week or $4 6
, ,

8 00 a yea r .

O n e tr a der who for ye a rs h a s be en

O r c omi n g
ve
th e
“
K 1tty
’
tryin g to sca lp the m a rket a nd who cou l d
“ ”
n ever quite overcome the kitty reports ,

th a t his first a ttempts a t a pplying these

ru l es resu l ted in a loss o f about $2 0 per
tr a de This he gr a du ally reduced to
.

$ 1 2 ,
then to $8 fi n all y succeeding
, in
throwing the bala nce over to the credit
side a nd is now abl e to m a ke a d a i ly
p ro fi t o f from $ 1 2 to $ 3 0 per 1 00 sh a res .

This is doing very wel l indeed I h av e .

no doubt th a t his pro fi ts wi ll continue to

incre a se .

Some peop l e seem to ho l d the opinion

th a t a s the pro fi ts desired a re on ly M
a ver age per tr a de one shou l d l imit him
’

sel f in t a king profits Perh a ps I .

h a ve not m a de mysel f c l e a r in this

respect .

I b uy a nd se ll when I get my indic a

tions I n going into a tr a de I do no t
.

kn ow whether it wi ll show a profit or a

loss o r how much I try to tr a de a t a
, .

point where I c a n secure protectio n with

a stop from Mto Mpoint a way so th a t ,

my risk is l imited to this fr a ction p l us

‘

'

commission a nd t ax I f the tr a de goes .

—1 7 2
 Ta p e R ea d i n g
sixth the stock went M above the se ll ing
, ,

price a t which my order w a s given I .

h ave never seen nor he a rd o f this fe a t

being a ccomp l ished be fore by a nyone in
Wal l Street Det a i l s fo ll ow :
.

I h a d no open tr a des K an sa s C it
Southern which h a d been intense ly du l y
.

c a me o n the t a pe 2 6 00 a t 4 6 M I ga ve .

a buying order a nd be fore it cou l d re a ch

th e
“
po st the Ta pe s a id 4 6 73 a nd 4 7 . .

Th e stock rose ste a di ly a nd a fter se l l

ing a t 4 8 § é and coming ba ck to 4 8 M I
ga ve the se ll ing order I t h a s n o t touch
.

ed 4 8 % a ga in up to now .

Th e ne xt tr a de w a s in Re a ding I .

s aw th a t it w a s being he l d in check i
spite o f its gre a t strength Th e st .

h a d opened a t 1 5 8 A fter a certa in b u l ge

.

I s a w the re a ction coming When i t a r .

rived a nd th e stock w a s se ll ing a t I 5 7 M

, ,

I ga ve the buying order got mine at ,

1 5 7 §x§ a n d i t h a s not b een there since It .

immedi a te ly rose to 1 5 8 94 I noted se ll .

ing indica tions an d gave the order whi l e

the stock w a s a t th a t price o n the ta pe .

It did not rea ct su fficient ly to w a rr a nt

my picking it up a ga i n a nd la ter went to
which w a s M; above my se ll ing
indic a tion .

Southern P a ci fi c sudden l y l oo med up

a s a winner a nd I b ought it a t 1 3 5 I t
, . .

prompt ly went to I 3 5 M The rest o f the .

m a rket b ega n to l ook tempor a ri ly over

bu ll ed so I ga ve my order to sel l when
,

the stock w a s 1 3 5 M which proved to be

,

the highest for the d ay m a king the fi fth ,

—1 7 4
 Ob s ta c l e s to Be Ov erco me

time o u t o f six orders when my stock

moved al most inst a nt ly 1n my f a vor .

This i ll ustration is not prompted by

egotism It is given a s a n ex a mp l e o f
.

the high percent age o f a ccur a cy possi bl e

under this method o f tr a ding I do not .

pretend to b e abl e to a ccomplish these re

su l ts except occ a sion all y but I a m con ,

s ta ntl y striving tow a rd b eing a b l e to do

so in a la rge percent age o f my tr a des .

I f one m a kes 2 §/g points one d ay a nd

loses 2 points in the next two d ays he ,

is M a he a d for the three d ays or a n ,

aver age o f M per d ay He m ay h ave .

l osing a nd winning stre a ks get d is co u r a g,

ed and l ose his nerve a t times but i f he ,

is m a de o f the right stu ff he wi ll in time

overcome all ob st a c l es a nd la nd a t the de
sired go al .
X II . C l o s in g the T r a d e s — S u g g es
t io n s fo r S tu d en ts

H E stu de nt of Ta pe Re a din g ,

especi al ly h e who puts h is

know l e dge i nto a ctu al p ra c
tic e i s con st a nt l y evo l ving
,

ne w ide a s a n d m a ki n g dis coveries

whi ch m od ify o r n u ll ify h is fo rm er
m ethods . From e a ch n ew el ev a tion
he enj oys a bro a der view ; wh a t were
obst a cles dis a ppe a r ; h i s pro bl e m s
gr a du a lly s i mpl ify .

W e h a ve previous l y defined Ta pe
Re a di n g a s th e a rt o f determ inin g the
imm ed ia te trend o f prices I f one c a n
.

do th is s ucce ss fu ll y i n th e m a j ority of
h i s tr a des h is profits shou l d ro l l up
, .

B ut sce nti ng the tren d a n d getting in

right is on l y o n e h a lf o f th e bus i ness
-
.

K nowi ng when to clos e a tr a de i s j us t

a s import a nt if n ot the m ost i mpor
,

t a h t p a rt of a comp l ete tr a ns a ction .

At a cert a i n poi nt i n my tr a ding I ,

b ec a m e a w a re th a t a l a rge p ercent a ge
o f my losin g tr a des res u lted from f a il
u re to clos e a t th e cul m i n a tion of wh a t
I h a ve termed the im m edi a te trend An .

ex a m p l e w il l m a ke th is c l e a r : New
-1 7 6
 Ta pe R ea d i n g
the re a ct ion h a d ru n i ts cours e p icked ,

it _ u p a g a in
, provided i ndic a tion s were
sti l l bul l ish I f they were n ot I w ou l d
.

h a ve been i n th e pos ition of l ooking

to get s hort i nste a d o f w a iti ng for a
ch a nce to get out of my l on g .

H a vin g rese rved i n th e e a r l y p a rt

o f this s e ries th e right to revis e m y
Ta k in g Q ui c k
views I wi ll here record the cl a i m
P ro fi ts ,

th a t the b est res u l ts in Ta pe Re a d ing

l ie in scenting the moves which a re
l ike l y to occu r i n s ay th e n ext h al f
, ,

hou r gettin g i n whe n they st a rt a nd

,

ou t whe n they cu l m i n a te Th is w i ll in .

most ca ses ca use f a i l ure to get a l l o f

the moves in the one most a ctive stock
fo r th e d a y b ut sho uld resu l t i n m a ny
,

s m all pro fi ts a n d I b e l ieve th e fi n al

,

resu l ts wi ll e x ceed thos e re al i z ed b y

s itti n g on o n e stock throu gh re a ctio ns .

O bj e ctions to th e la tte r m ethod a re

zCh a n g e s in m a ny O n e i s the ch a nge in l e a der
Le a d er s h i p
.
,

sh ip which fre qu ent l y occurs s ever al

tim es durin g the s a m e s es sion It b e .

i ng the p urpose o f the Ta p e Re a der to

keep i n the l e a ding stock h e m ust a i m ,

to shift fro m on e is sue to a nother a s

they com e to the front .

I t i s ex a sper a ti ng to s e e yo u r stock
l ose its p rom ine nce a n d turn de a d
“ ”

on your h a nds especi ally i f it occurs a t

,

a point where p a rt o f th e profit h a s

dis a ppe a red . And there is l itt l e com
fort in a h al f point pro fit when some
-

other issue wou l d h a ve shown three

Cl o s in g T r a d es —S ug g es ti o n s f o r S tud e n ts

tim es a s mu ch E a ch d a y s s e s sion
.
’

should be m a de to y ie l d th e highest
poss i bl e a mount of revenue j us t a s ,

though it were the la st d a y o n wh ich

tr a ding coul d b e don e a nd th ere s eem s
,

no better w a y o f obt a inin g these re

s u l ts th a n by the la test a nd most a p

proved method mentioned ab ove .

T h e decks a re thus kept c l e a r for p

K e e i n g th e
wh a tever o ffers ; there is no de a d woo d D ec k s C l ea r
a bou t
T here i s a ve ry wide di ff erence i n
m ent al a ttitud e between th e m a n who
feels compel l ed to get out of s o m ething
a nd o n e who i s l o ng of money a n d .

l ooki ng for a ch a n ce to m a ke a fresh

tr a de .

T he st a rt a nd fi nish o f on e of these
s m a l l swi ngs is best i ll ustr a ted by a
tri a ng l e the na rrow en d rep rese nti ng
,
.

the com mencement a nd the w ide end ,

th e cu l mi n a tion An upw a rd move

.

wou l d a ppe a r thus

— 1 19
 These fi gures denote the widening
ch a r a cter o f a move a s it progresses
a n d a re intended to show how vo l u m e ,

a ctivity a nd n um b er o f tr a ns a ction s e x
p a nd unti l a t the end comp a r a tive ly
, ,

riotou s co nditions prev a i l T h e pri n

.

c ip l e works the s a me in the la rger

swings witness the s pecta cu la r rise i n
,

Union P a cific within a few ses sions

m a rking the end o f the August 1 909 , ,

boo m .

A fter c l osing o u t a tr a de the t a pe

w il l te ll o n th e fol l owi ng re a ction
whether you a re j ustifi ed i n t a king the
s a m e stock o n a g a i n or whether som e
other is s ue w il l p ay better F r e q u e n t
.

l y a stock wi l l be seen prep a ring f o r

a move two o r three sw i ngs a he a d of
th e o n e i n which it becom es the l e a der .

T h is is a fi ne point b ut with study

,

a n d pr a ctice th e most compl ic a te d i n

d i c a ti o n s cl a ri fy
.

—1 s o
 Ta pe R ea d i n g
I h a ve m et those who p i n thei r fa ith
to som e one point s uch a s th e vol u m es
,

u p or down a n d c a l l it Ta pe Re a di ng
, .

O t h ers u ncons cio us l y tr a ding o n m e

,

c h a n ic a l i nd ic a tio ns p retend to be
,

re a di ng th e t a p e T hen there i s a c la ss
.

of peop l e who r ea d the t a pe with th eir

to ngues c a l l ing o ff e a ch tr a ns a ction a
, ,

certa in a ccent on the higher or l ower

quota tions indica ting whether they a re
bu ll ish o r be a rish T hese a nd others
.

i n their c la ss a re m erely oper a ti ng on

th e s uperfi ci al I f they woul d spend
.

the s a m e five or s ix hours a d a y ( which

th ey now pr a cti c a l l y w a ste ) i n clos e
study o f th e b us i ne ss o f specu la tion ,

th e res u l t i n do lla rs wou l d be m ore

gr at ifyin g a t the e nd o f the ye a r A s .

it is th e m a j ority o f them a re now

,

l os i ng m oney .
t

I t is a sou rce o f s a tisf a ction how ,

ever th a t these Stu dies whi ch I b e

, ,

l ieve a re the first pr a ctic al a rtic l es ever

,

written o n the s ubj ect of Ta p e Re a d

in g h a ve st irr ed the m inds o f m a ny
,

p eop l e to th e possibi l iti es i n th e l i ne

of s ci entifi c specul a tion E vidence of .

thi s i s fou nd in the n u m erous com

m u n i ca tio n s receive d in respons e to
my recent i nvit a tion ; m a ny o f the m
from tr a ders s itu a te d in remote l oc al i
ties.

I n th e m a i n the w r iters w h o a re
, /

now c a rry ing o n l ong dist a nce O p er a

tions for the big swings a re desirous o f
testing their abi l ity a s Ta pe Re a ders .
C l o s in g T ra d es —S ug g es ti o n s f o r S tu d e n ts

No doubt thos e who h a ve writte n rep

resent but a sm a l l percent a ge o f the
number who a re thu s i nc l ined .

T o a l l s uch persons I woul d s a y

B efore you c a n m a ke a s ucces s o f Ta pe
Re a di ng you mu st a cquire a bro a d fu n
d a m e n ta l know l edge o f the m a rket A .

professio n a l s inger who w a s r e cent l y

c all ed upon to a dvise a youn g a sp ir a nt
s a id : “
On e must b ecome a person al
‘

’
—
ity th a t is a n intel l ig enc e deve l op e d
,

by the study of m a ny th i ngs bes id es

m usic ”
.I t is not enough to kno w a
few o f the under lying princip l es ; o n e
must h ave a d eep underst a nding .

T o b e s ure it is possib l e for a per

s o n to t a ke a n u mb er o f the
“
tricks of
th e tr a de herei n m entio ned a nd tr a de
su ccessfu ll y o n thes e a lone E ve n one .

i de a which form s p a rt o f the who l e

s ubj ect m a y be worked a nd el a bor a ted
upon u ntil it becom es a m ethod i n it
self T here a re endles s pos sibi lities in E nd l ess
P o s s ib il itie s
.

thi s directio n a nd a fter all it m a tters

,

l itt l e h ow the money is e x tr a cted from

the m a rket s o l ong a s it i s don e l eg i ti
,

m a te l y .

B ut re al Ta pe Re a ding t a kes e v ery

—
thing i nto a ccou nt every l itt l e ch a r a c
ter wh ich a ppe a rs o n th e t a p e p l a y s
i ts p a rt i n form in g o n e of th e en d l ess
s eries of mov i ng pictures
‘‘
I n m a ny .

ye ars study o f the t a pe I do no t re

’
,

member ha vin g seen two of th ese pic

tu res which were dup l ic ates
”
One .

c a n re al i z e fro
m
this how impossib l e
-1 8 3
 Ta p e R ead i ng
it wou l d b e to form ul a te a s imple s et
o f ru l es to fit every c a se or even the

m a j ority o f them a s e a ch d a y s session

,
’

p rod uces h undred s of s itu a tions ,

wh i ch s o f a r a s m emory serves a re
, ,

n ever repe a ted .

T he s ubj ect o f Ta pe Re a ding is

therefore pr a ctic all y i nexh a ustible ,

which m a ke s it al l the more i nterestin g.

to the m a n who h a s a cquired the study “

h ab it ”
.

H a vi ng fortified h im sel f w ith the

nece ss a ry fu nd a m ent al knowl edge the ,

s tuden t of T a p e Re a di ng shoul d thor

ou gh l y digest these Stu dies a nd a ny
oth ers wh ich m a y be obt a i n a b l e i n fu
t ure I t is not e nough to go over a nd
.

ove r a l esson a s a sch oo l b o y d o e s dri ,

v i ng the f a cts i nto h i s he a d by monot

o n o u s repetitio n ; t a pes m ust be pro

cured a nd the v a riou s i ndic a tions

m a tc h ed u p wit h wh a t h a s bee n stu d
ied . A nd eve n a fter o n e bel i eves h e
u nderst a nds h e w i ll p resently l e a rn
,

th a t to quote th e words o f a cert a in

,

song Y ou don t kn ow h o w much you

,
“ ’

know unti l you know how l itt l e you

O n e of my te a chers i n a n
”
know .

other l i ne o f study us ed to m a ke m e go
ove r a th i n g three or four ti m es a fter
I th oug h t I knew it j ust to m a ke sur e ,

th a t I did .

I shou l d s a y th a t it is al most i m ~

p oss ib l e for o n e wh o h a s never be fore

tr a ded f ro m the t a p e to go into a bro
ker s o ffi ce s t a rt right i n a nd O per a te
’
,

— 1 84
 Ta pe Rea d i n g

b ut spend th e s ession a t th e ti cker i n

thei r respective o fli c es . E xperience
h a s t a u ght th e m th a t they c a n produce
la rger profits by this method e l se ,

they woul d not fol low it T h e m a j or.

ity o f them tr a de in 5 00 sh a re lots a nd

-
.

up a n d th ei r b us in ess form s a n im p or
ta nt sh a re o f the d a i ly vo l ume .

I n tu i ti v e A n u mb er of s o c al le d se m i p ro fes
- -

Ta p e R ea d i n g s i o n a l s oper a te on wh a t m a y b e termed
intuitive t a pe re a ding . They h ave
no w el l defi ned code of ru l es a n d prob
a b l y could not exp la i n cle a rly j u st how
“ ”
th ey do it b ut th ey get the money
,

a nd th a t is the best proof of the p ud

di ng.

T h e existen ce o f even a comp a r a

tiv e l y s m a l l body of s uccessfu l Ta pe
Re a d ers i s eviden ce th a t money m a
kin g by th i s m e a ns i s a n a ccom pl ish ed
f a ct a nd shou l d encour a ge others .

O n e o f th e gre a test di ffi cul ties which

th e n ovi ce h a s to overcom e i s known
by the s la n gy b ut exp res sive term ,
“
co l d feet
.
”
To o m a ny peop l e st a rt
a n d d a bb l e a l ittl e without goi ng f a r
e nough to determ ine wh ether or not
th ey c a n m a ke a go o f it An d even .

th ose who get pretty we ll al ong in the

subj ect w i ll be sc a red to de a th a t a
strin g of l oss es a nd qu it j ust w h en
they shou l d dig i n h a rder .

For i n a ddition to l e a rning th e a rt

th ey m u st form a sort of tr a ding ch a r
a cter wh ich no a m ou nt of revers es c a n
,

dis cour a ge nor turn b a ck a nd wh ich

-1 8 6
Cl o s in g T ra d es —S ug g e s ti o n s f o r S tu d e n ts

const a nt ly strives to e l imin a te its own

we a k points such a s fe a r greed a nx , ,

i ety nervousness a nd the m a ny other

,
A T ra d i n g
ment a l fa ctors wh ich go to m a ke o r C h a ra c ter
un m a ke th e profit col u m n .

Perh a ps I h a ve p a inte d a d i fficu l t

propos ition I f s o the gre a ter w i l l b e
.
,

the rew a rd of those who m a ster it A s .

st a ted a t the begi n ni ng Ta p e Re a ding ,

is h a rd work T here seem s no goo d

.

re a son fo r al tering th a t op in ion .

I f thes e Stud ies a nd th ose i n the s e

ries which wi ll fo ll ow a re the me a ns o f
a dding a few more n a mes to the l ist o f
su ccess fu l specul a tors wh ether they ,

a re T a p e Re a ders or not I sh all fee l ,

compens a ted .

Th e E nd

-1 8 7
 N RETUR TO th e l

N NN
c rc u a tio n
i d e sk o f a ny
Unive rsity o f C a l ifo rnia Lib ra ry
o r to th e
O RTHE R RE G IO A L LIBRA RY FAC ILITY
Bld g 4 00 Ric h mo nd Fie ld Sta tio n
. ,

Unive rsity o f C a l ifo rnia

Ric h mo nd C A 9 4 8 04 4 098
,
-

ALLBO O KS MAY BE RE C A LLED A FTE R7 DAYS

2 mo nth lo a ns ma y b e re ne we d b y c a ll ing

N
-

( 5 10) 6 4 2 -
6 7 5 3
I ye a r lo a ns ma y b e
-
re c h a rg ed b y b ring ing
b o o ks to RLF
0
Re ne wa ls a nd re c h a rg e s ma y b e ma d e 4
d a ys p rio r to d u e d a te .

S E TO NN DUE AS STA MPED BE LO W

ILL

1 00
0

N
APR I 2
u c B E RKE LE Y
. .

OV 3 020
0
.