The present invention discloses a method of automatically decoding holographic signals by establishing an optical clock and performing subsequent optical signal analysis. In addition to a primary holographic image, the present invention comprises an optical image which generates a periodic pattern to create an optical clock for initializing the data reading device. By using a light source illuminating the optical image, diffraction signals are received by the detector(s). With a scanning (swiping) motion, signals of the optical clock and the primary image are read and the signals are processed and compared. The optical pattern can further be processed through an encryption algorithm and stored in a magnetic stripe, computer chip, hand held processor or a host computer for verification.