Friday, August 23, 2013

How to Follow the Pros of the Market...

Retail Traders need better, more intuitive chart analysis tools...

MetaStock® SPRS Series - Week 133 - August 23, 2013 - MetaStock Spatial Pattern Recognition Skills Series written by Martha Stokes CMT: 

How To Follow the Pros of the Market

With High Frequency Trading Companies, Dark Pool Automated Transaction Systems, and more and more Pro traders actively trading stocks, Retail Traders need better, more intuitive chart analysis tools to help them find stocks that are poised to move PRIOR to the big moves up or down.
Often times, the HFTs’ attempt to sell down further is thwarted by Dark Pools buying in incrementally without exposing their pre-trade interest. This can cause retail traders, who chase after the HFTs, to take losses.




Rather than chasing HFTs, retail traders need to learn to spot the Dark Pool activity that forms in stronger bottoms.
This is made far simpler with TechniTrader Quiet Accumulation, TTQA, which is a quiet accumulation indicator.  The chart above shows a stock stuck in a range-bound bottoming formation that failed to move up after several attempts. HFTs tried to move it down, but it bounced right back up due to Dark Pool buyers.  Volume bars hold above the average line consistently and the TTQA indicator shows the footprint of the Dark Pools as the price moves up just below the prior resistance level.
As energy builds with Professional Trader activity and Dark Pool activity, the stock moves up to form a tight consolidation at the prior resistance level. Tight price action is indicative of a very controlled entry used primarily by Dark Pools and Pro Traders.  This is not HFT action but the giant funds buying quietly. 
TTQA confirms the momentum energy and price action continuation, resting again, and then moving up further.  The steady increase of TTQA is even more reliable than the volume bars to allow you to hold as the stock moves up with momentum energy.
Momentum energy is reflected first in the dominant buying power of the Dark Pools. Although their pre- trade interest is dark, once their orders are executed, these orders are displayed, often delayed but displayed to the lit market.  Learning to see their buy-in areas using candlestick pattern analysis with modern leading indicators, such as TTQA, will help the retail trader get into a momentum run earlier for higher profits and easier-to-manage trades.
As we approach the fall and winter months when trading activity increases, these momentum runs will also increase. 
Many retail traders continue to use outdated chart analysis and indicator analysis. This puts these traders at higher risk of whipsaws and missing out on the faster moving stocks.
Watch a demonstration in Metastock of how to catch HFT activity HERE.
Trade wisely,
Martha Stokes CMT
Member of Market Technicians Association
Master Rated Technical Analyst for Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses

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