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Trading Options Using Technical Analysis

June 6th, 2010 by admin in Forex Options with 0 Comments

Trading Options Using Technical Analysis

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What are some good websites for forex daily technical analysis?

May 24th, 2010 by admin in Forex Analysis with 1 Comment

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What are good websites for forex daily technical analysis?

May 17th, 2010 by admin in Forex Analysis with 3 Comments

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Richie Rich Trader Opens Closed Door To Reveal His Best Stock Market Indicator

November 18th, 2009 by theforexman in Forex Basics with 0 Comments

Professional stock trading insider avows under oath: this stock market tool is NOT prohibited!

Steve Cohen, a master trader, is known to use this indicator for his billion dollar hedge fund company. Cohen’s firm, S.A.C., which has as its name his initials, is a billion dollar hedge fund monster. His actual trading profits have averaged approximately 70 percent per year.

He has over 50 traders working under him. He is the grand master of studying a stock’s volume.

Volume is one of the most overlooked indicators by amateur traders.

Even if you think you understand volume, you owe it to yourself to read this article to make sure you understand how to correctly interpret volume for massive profits.

Think of each tick in the volume as a temporary meeting of two minds: a seller and a buyer. Shares or contracts that have exchanged hands are measured by volume. You will most often see volume shown as a histogram bar under the stock price. Volume gives you hints about the underlying psychology of bears and bulls. Increasing volume verifies trends while decreasing volume questions the longevity of the current trend.

In a sell off, increasing volume into the move tells you that panic has firmly settled in as traders scramble for the exit. Now notice the upticks and shallow buy orders every now and then: These are the rookie stock traders buying a downward move in hopes that the trend reverses and heads back up. Remember, in order for a sell order to execute, there has to be a buyer somewhere. Buying a downtrending stock is known as trying to catch a falling knife. Most often it is a bad idea. Only fools place their bets against the wisdom of the crowd. Let another dummy do that. When all the sellers have exited the stock, the volume on the downside falls off as the downward move begins to run out of steam.

In an uptrend, rising volume shows that greed has a firm grip on the people trading it. It too depicts sellers ditching their position calculating that the market is going to reverse. Keep in mind that in order for a buy order to be processed there must have been a seller. Closing your position into an upward move makes sense if your original profit target has been hit. When fear begins to replace the greed, the volume on the upside begins to fall as the upward move runs out of steam.

But volume tells more than just the conviction of the current trend. Volume gives traders several useful clues.

A spike in volume on 1 day often signals the beginning of a new trend when it occurs on a breakout from a trading range. A similar splash tends to mark the end of a trend if it occurs during a well established move. Super heavy volume, two or more times the average daily volume identifies market psychoneurotic behavior. That is when anxious bulls at last determine that the uptrend is for real and hurry in to buy or uneasy bears become confident that the fall has no bottom and leap in to sell short.

Divergences between price and volume tend to occur at turning points.

When prices ascend to afresh high while volume dips, it demonstrates that the uptrend appeals to less and less stock traders. When prices fall to a new low and volume falls, it shows that lower prices attract little interest and an upside reversal is likely. Price is more important than volume but a master traders knows how to analyze volume in order to gauge the psychology of market participants.

May this article help you be better trader and pull in a ton of money. For more FREE expert stock trading tips and advice go to stock market and for a the popular lite browser visit free stock analysis

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