Ticker tape was one of the earliest communication mediums that transmitted stock prices over telegraph lines. It consists basically of a paper strip that runs through a stock ticker machine. The sound of the printing process was named ''Ticker'' and therefore took the name '' Ticker tape''.
As media developed, the paper ticker tape gradually became out of use in the 1960's, as TV's and computers became the main tools to transmit financial information. Ticker tape trading is one of the strategies used in high-frequency trading (HFT), which is a combination of highly sophisticated algorithms, co-location and high speeds. It is also viewed as a primary form of algorithmic trading in finance.
Given the fact that so much information is unwillingly embedded in market data, such as quotes and volumes, and by observing them, computers are capable of extracting information that hasn't crossed the news screen yet. Indeed, for online crypto trading, ticker tape trading often aims to recognize and detect the beginnings of large orders in the market, as well as monitoring large amounts of stocks for significant price changes or volume activity. The software will eventually generate buy or sell orders.
What is Ticker tape?
Ticker tape is a digital electronic device that conveys information and details about the trade by showing numbers and stock symbols. The device got its name from the original mechanical machine’s ticking sound. The idea behind the ticker tape trading is to use Tape Reading and computers as a support system on actual trade strategy.
Why Ticker Tape for Trading?
Most of the information about trading is embedded in market data like quotes and volumes. By observing this data, we can predict and extract information that has yet to pop up at news screens. Since all this data is public, such strategies are fully legal and compliant with laws. But, human error can cause a lot of loss. Here the ticker tape comes in. The biggest advantage of ticker tape is that they can interpret and analyze data in real time, filtering a lot of pages with numbers while astonishingly predicting price movement accurately and providing a helping hand to traders. This legendary market talent has extra perks, allowing traders to know the emotional intensity of members while they reveal the day's laggards and leaders. Tape reading is a gateway to adding firepower to market strategies.
Purpose of Ticker Tape
Tick trading’s basic aim is to identify the beginnings of big orders that are being placed by customers in the market. For instance, a pension fund buys something and drops a large order in the market over several hours or several days. This will cause an increase in price due to increased demand. Anyone can try to spot this and buy security and then earn a profit by selling it back to the pension fund. Here, ticker tapes help a lot in predicting a rise in prices that includes monitoring large stocks for unusual or significant price changes and volume activity. This also includes trading news, announcements, and other event criteria.