Reading the Tape:
From Livermore to Modern Trading

How Price Action Still Holds the Edge in Today’s Markets

In my early trading years (2001+), I dedicated all my time to reading the tape.
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I was glued to the order book, time and sales, and a 1-minute chart, learning to spot early algos and iceberg orders, then trading around them.
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Back then, algos were so primitive that if you identified one at work, you could assume there was more size behind it. You’d bid one tick above and use it as a wall of support.
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There were plenty of plays.
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But as the market evolved and algos became smarter, that game ended. Orders became harder to spot as they worked more discreetly, letting price drop, sweeping offers, and mixing it up to avoid detection.
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Fast forward to today, and the game has completely changed.
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Yet one thing remains constant: price and how it moves.

TAPE READING: THEN AND NOW

If you’ve read Reminiscences of a Stock Operator, you’ll know Jesse Livermore used to read the tape.

Back in the 1930s, traders watched prices come through a ticker tape machine, gauging market strength or weakness based on price changes.

For example:

  • 70,71,73,75,77,81,81,83,84 = Strong tape, urgent buying
  • 70,71,72,71,72,71,71,70,71 = Mixed, no urgency

They focused on:

  • Pace of the tape
  • Price changes
  • Price response to key levels

These insights helped them anticipate where the market might go next.

TODAY’S TAPE

Sure, we aren’t reading prices on thin strips of paper anymore, but the principles are the same.

Ask yourself:

  • How does price respond to a prior high or low?
  • What’s the speed of price change?
  • How much volume and range occurred in that 5-minute window?
  • Is there urgency in the price action at the open?

By observing how price reacts at key levels and critical moments, you can uncover who’s in control, and use that insight to inform your trades.

These days, I believe that’s enough edge without needing Level 2 or the Order Book. (Though if watching the ladder works for you, keep going!)

We’ve almost done a full circle. Watching price only, then watching price and market depth, now back to watching price whilst the robots battle it out on the book…

The tape may have evolved, but price still tells a story.