What is Painting the Tape?
In the finance world, painting the tape means to trade securities in a manipulative way in order to influence the reported trading data for those securities.
How Does Painting the Tape Work?
Let's say traders A and B want more people to buy the stock of Company XYZ. They decide to paint the tape by buying big blocks of Company XYZ shares from each other so that the ticker shows a huge jump in trading volume for the stock. The idea is that unsuspecting investors will see the spike in activity, think something is brewing, and buy the stock. This in turn drives up the price of Company XYZ shares, which is what traders A and B want. They sell their shares for a profit.
There are other ways to paint the tape, such as calling in a client's huge buy order in, say, five-share increments, so that it looks like lots of people are crowding to buy the stock.
Why Does Painting the Tape Matter?
It is illegal to buy or sell a security for the explicit purpose of changing the stock price.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
When I went to kindergarten, it didn’t take me long to get in trouble. At the very first parent-teacher meeting, my mother was informed that I was quite a little talker in class. My teacher...
Read More →
Most of us are constantly trying to minimize risk. We put on sunscreen to minimize the risk of developing skin cancer. We put on ...
Read More →
Instead of relying on full-service brokers and the mainstream business press for...
Read More →
What's the biggest mistake investors make? Analyzing a company's prospects without paying any attention to the bigger picture. With that in mind, here's how to assess the big...
Read More →
Steve Jobs once famously commented that simplicity is genius. That attitude helped Apple Inc. (Nasdaq: AAPL) redefine the personal electronics space and create an entire...
Read More →
