Monday, March 14, 2016

031116 MetaStock - Understanding Momentum Run Action MLHR chart

Understanding Momentum Run Action

How to Use Momentum Price Action for Higher Profits

Most Retail Traders exit runs too early, losing most of their profits from a Momentum Run when Swing or Day Trading. Indicators that reveal weakening or stronger patterns in runs can help Traders hold during brief episodes of Resting Days or mild profit taking, allowing for much higher Return On Investment ROI for that trade.

Two indicators that help Traders during a Momentum Run are the TechniTrader Volume Accumulation TTVA and the TechniTrader Flow of Funds TTFF.

The TTVA indicator is a center line Volume Oscillator, designed to show when Dark Pool accumulation starts and when the run is starting to lose momentum energy before profit taking or reversal. The TTFF indicator provides additional information as to how much activity is coming from the Buy Side Institutions, as opposed to just Retail Traders or Investors.

The combination of these two indicators helps Swing, Momentum, and Day Traders make better hold and exit decisions resulting in lower risk, less stress, and higher profits for each trade.

When a Trader can increase the profits of every trade made it increases their monthly income, reduces the risk of choosing weaker stock picks just to have something to trade, and helps to gain confidence while developing the skills of trading.

Regardless of which MetaStock trading system or strategy you employ to find stocks to trade, finalizing the selection using leading Hybrid Indicators will dramatically reduce weak trades that net losses, and will increase profits with stronger picks that run more points.

The chart example below shows a very common Momentum Run action, that is occurring right now in many stocks.


This is due to Dark Pool Quiet Accumulation going on, which is hidden from those trading on the Exchanges, Electronic Communication Networks ECNS, and other venues. When Dark Pools accumulate, they are removing vast quantities of liquidity, and this in turn creates the Momentum Runs out of a bottom low.

In the chart example see the first long green arrow indicating where TTVA signaled early that a Dark Pool Buy Zone™ was trigged, and then the stock drops to its final low. By knowing in advance that Dark Pools have commenced accumulation even while the stock makes a lower low, allows Swing Traders to prepare for the sudden upside Momentum Runs that follow.

TTFF tells the Trader that this is a few giant Buy Side Institutions bargain hunting to invest funds, and that Smaller Funds are not yet aware of their giant lot buying on the Alternative Trading Systems ATS Dark Pool venues. The stock bolts upward when Professional Traders discover the accumulation, barely pausing at the initial Dark Pool Buy Zone. It then continues to run up into resistance before profit taking occurs, which stalls price but does not cause a major price collapse. Runs of this type can be very lucrative for a Technical Trader who understands the dynamics behind this price action. Learning to use Accumulation, Large Lot, and Flow of Funds Indicators is crucial to successful Swing Trading in these Market Conditions.

Summary

These patterns can also be seen on intraday charts, and can be used by Day and Intraday Traders. Price patterns are important, but what is even more critical to track is WHEN and WHERE the giant Buy Side Institutions, who control trillions of assets start their bargain hunting buying activity.
Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock

Instructor & Developer of TechniTrader Stock and Option Courses
This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

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Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.




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