Fighting the Tape
What Is Fighting the Tape?
The term fighting the tape alludes to the act of putting a trade(s) that conflicts with the predominant trend(s) of the market. The phrase comes from the time in history when stock prices were imprinted on a ticker tape.
Conflicting with the tape is acting such that is in opposition to what is generally done when the market is moving in a specific course, and fighting the tape is aggressively acting in a contrary manner the tape is moving.
How Fighting the Tape Works
Investment strategies shift from one investor to another. Strategies require an outline of how much money an investor will put up, their risk tolerance, investment horizon, objectives, and their necessities later on. A few investors decide to adopt a more aggressive strategy since they actively look for gains, while others — who might be more understanding — will brave any waves in the market to safeguard their capital.
Fighting the tape is viewed as by some to be an active, aggressive strategy. It means executing a trading strategy that conflicts with the laid out position for a given market at some random time. In less difficult terms, fighting the tape is similar to conflicting with the market.
As verified over, the phrase originated when share prices were listed on a ticker tape, which has been supplanted with an electronic rendition. The steady stream of prices on the ticker tape showed whether prices were rallying — going up — or falling. Somebody who buys stocks while the overall market is falling is supposed to be fighting the tape, as is somebody who sells stocks while the overall market is revitalizing.
Instances of Fighting the Tape
Different instances of fighting the tape are shorting stocks while the market is revitalizing, or going long while the market is falling.
Fighting the tape is seen by the majority of traders as a poorly conceived notion that disregards common sense. Be that as it may, in volatile markets, deciding to fight the tape can lead to productive trades, since such markets can roll out directional improvements rapidly and unexpectedly. On the other hand, traders can likewise lose everything in the event that the market keeps on moving against them for a prolonged period.
Fighting the tape is viewed as a contrarian position by a trader, as traders who decide to trade against the tape are taking positions that go against the impression of the general market. There are shifted reasons a trader would take a contrarian position, going from hostility and self image to strong sentiments that the market is going to reverse.
Traders who fight the tape just to take a contrarian position with another person's capital might be settling on an unethical choice.
Special Considerations
There is no ethical dilemma for individual investors who fight the tape since it is their own money they are risking by moving in opposition to the market. That isn't the case for traders who risk other elements' money. This is while fighting the tape turns into an ethical issue.
Consider the case of a the trader tape due to a doubt that the market will unexpectedly reverse. Heading in opposition to the current path of the market will position them to capture this reverse course, meaning the trader is acting sincerely. Be that as it may, what might be a the said about a trader tape just to take a contrarian position? This person is risking someone else's money just to take a philosophical position, making this is seemingly an unethical position.
Features
- Fighting the tape is the contrarian act of putting a trade inverse to current trends.
- Albeit fighting the tape might give off an impression of being an ill-conceived notion, it can lead to productive trades as markets can roll out directional improvements rapidly and suddenly.
- Traders who buy when the market falls or sell when the market rallies are supposed to be fighting the tape.
