Monday, May 7, 2012

Quantity Indicators and Your Technical Analysis

MetaStock SPRS Series - Week 67 - TechniTrader® Stock Discussion for MetaStock Users - Quantity Indicators and Your Technical Analysis - May 7, 2012
By: Martha Stokes C.M.T.

During my last MetaStock Webinar, we went over various indicators and how to set up your unique trading plan and process.

What I find most retail traders miss in their analysis is a complete set of data for analyzing their stock picks prior to trading.

Most retail traders have studied information from the internet, seminars, books and so on, that stress the importance of price. Price was the main analytical tool for both technical and fundamental analysis for nearly 100 years. Price was considered so important that the preponderance of indicators that were written for stock and option analysis are price and time indicators.

However, in the past few years, a major shift has occurred in the overall Market Structure for the stock market and other financial markets.

This shift has gone mostly unnoticed by retail traders and is the cause of most chronic losses retail traders continually endure.

What is lacking in most retail trading systems, strategies, and technical analysis is the reality that price is no longer the most important factor in technical analysis. For diehard price pattern analysts this can be a tough fact to accept. It can be even tougher to try and change from an all price and time indicator setup.

If you wish to compete and be successful in the new Market Structure, then you must employ quantity indicators in your analysis. If you want consistent success, the ability to enter before price moves, and the ability to exit prior to a retracement or correction, you must incorporate even more quantity indicators.

Below are two of the indicators that are essential for consistent success as a retail trader.

Volume bars colored to make it easier to read whether volume is rising to the upside or increasing to the downside.

TTQA exposes large lot dominance on the buy side or sell side for short term trade analysis.

Chart 1

Quantity indicators have several categories:

1. Quality which exposes whether there is sufficient volume and energy to sustain the move.
2. Flow of Funds which exposes whether the institutions are moving money into or out of a stock.
3. Hybrid Accumulation and Distribution Quantity based indicators which expose whether the institutions are quietly accumulating or quietly rotating out of a stock.
4. Volume Oscillators which expose the oscillation of volume patterns.

TTQA is designed to reveal the quiet accumulation or quiet distribution patterns on stocks. This is a unique indicator designed by TechniTrader for MetaStock exclusively. It is not a public domain indicator which protects it from HFT trading activity.

TTQA is an essential indicator because the giant funds who control the largest lots of stocks DO NOT move price. Rather, they buy in incrementally with a predetermined price range that keeps price tightly controlled. Since they use Dark Pools to buy or sell, their activity is not revealed as it once was, during intraday activity.

The only way to see where the big funds are buying BEFORE price moves, is in this type of indicator.

TTQA provides quick and reliable information to the short term trader than can make a huge difference in your profitability by exposing contrarian patterns before a sudden move up or down.

Trade wisely,

Martha Stokes, C.M.T.
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
MetaStock Partner

©2012 Decisions Unlimited, Inc.

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