Are you Prepared?

Martha Stokes CMT teaches you how to prepare for the most active trading season...

MetaStock® SPRS Series - Week 134 – August 30, 2013 - MetaStock Spatial Pattern Recognition Skills Series  written by Martha Stokes CMT

September through February are the busiest and most active trading months of the year, with heaviest trading volumes and higher energy.  Even though August appears to be quiet on the surface, there is a huge amount of activity just below the slumping Index action. If retail traders only watch the indexes they miss all of the underlying activity in August, which gives vital information about what to expect for trading in September and forward.

Explorations that are customized to follow the indexes, do not track what is crucial to successful trading. Without this information retail traders are utterly reliant upon less than 10% of the listed stocks, and NONE of the Exchange Traded Derivatives which at this time is 1,395 ETFs. The NASDAQ currently has 2,663 listings, the NYSE has 4,632, AMEX 438, and OTCBB 1,076.

The S&P500, Dow, and NASDAQ only represent 630 companies. 

 

The remaining 9,574 trading instruments on the exchanges represent a far larger body of stocks that do not always follow the lead of the indexes. In fact of you were to study this huge group of stocks and ETFs, you would discover that often times these lead the indexes. This is because they expose the direction and sentiment of the giant funds. They reveal the Sell Side institutions and Buy Side institutions and their interest or lack of interest, their accumulation or their distribution in and out of sectors and industries, and whether they are going to move into large cap or are vested in smaller cap stocks.

All of this information is available IF you use Explorations that are defined to track the institutions both Sell Side and Buy Side, and where they are placing money and where they are rotating. This activity is not seen on the indexes. It can only be studied by using Explorations designed to expose what is going on with the vast majority of stocks and ETFs that are not listed on indexes.

If you are a TechniTrader® Student using our Advanced Tools specifically designed for MetaStock, you have all the Explorations you need to study the underlying market beneath the major indexes in relation to how the indexes are performing.  In addition you also have specific Explorations for your trading styles such as Swing or Position trading, price levels, strategies, and quiet accumulation tracking bottoming or topping action. 

The goal of trading should be to streamline your trading process so that you spend more time trading and less time trying to find stocks to trade.  This means understanding the market conditions so that you can select the right stocks for the current trading conditions, the correct strategies to use based on which market participants are in control of price at that time, and the overall sentiment of the underlying securities because these lead the market action most of the time.

If you are still using the 3 major indexes as your guide to trading you are missing a huge chunk of critical information. This can be one of the reasons for chronic losses, whipsaw trades, and disappointing net profits.  Upgrade your trading process by incorporating not only the 3 major indexes, but also the analysis of the bulk of the market which are the underlying securities not listed on the 3 big indexes.

For more information regarding Explorations that are defined to track the institutions both Sell Side and Buy Side, sign in to watch a free TechniTrader - MetaStock Webinar "Explorations: Beyond the Basics" CLICK HERE or http://goo.gl/bhE7F3

Trade wisely,

Martha Stokes CMT

http://technitrader.com

Member of Market Technicians Association

Master Rated Technical Analyst for Decisions Unlimited, Inc.

Instructor and Developer of TechniTrader® Stock Market Courses

For additional training visit http://technitrader.com

This Stock Discussion and Training Lesson is sponsored by TechniTrader.com

MetaStock® Partner

©2013 Decisions Unlimited, Inc. dba TechniTrader® All Rights Reserved.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader® and its instructors or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues.  At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader® and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader® is not a broker or an investment advisor it is strictly an educational service

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

http://technitrader.com

Member of Market Technicians Association
Master Rated Technical Analyst for Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses

© 2013 Decisions Unlimited, Inc. All Rights Reserved.

Disclaimer: All statements, whether expressed verbally or in writing, are the opinions of TechniTrader, its instructors and/or employees and are not to be construed as anything more than an opinion. Students/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor; it is strictly an educational service.

The Power of Key Pivot Points

What really drives the market in either direction...

MetaStock U - Week 3 - The Naked Traders - The Power of Key Pivot Points - August 9, 2013
By: Chief Trader Bruce E. Dinger
 

New traders are always wondering what really drives the market in either direction…the answer is simply supply and demand – price action – or what many professionals refer to as KPPs – Key Pivot Points.

The KPPs of a stock are very powerful psychological buying and selling areas that enable a trader to focus on their entries, exits, and most importantly the ability to manage their risk. These KPPs of a stock attract buyers and sellers into a trade and when combined with the dominant trend of the stock can produce amazing results for a trader.

Some traders primarily use the KPPs of a stock to manage their trades from A to Z. This includes outlining a clear entry and clean exit. The KPPs also guide a trader to help determine a stock’s ATR (average trading range) and how long it typically takes for a stock to make its move. Learning how to identify KPPs and combining them with “price action” increases your chances for taking your trading career to new levels.

We have found over the years of trading that the best indication of a stock’s movement is price action and how the price reacts with the KPPs. This is because price action will reflect the emotions of the market place. When a trader combines price action with the KPPs of a stock, this can be a very powerful tool for gauging the stock’s next move.

KPPs are also referred to as support and resistance areas. It is one of the most critical things to learn to identify if a trader is looking to trade for a living. It provides a thesis of buying or shorting (trading it to the downside) a stock. Learning how to identify KPPs will enhance a trader’s results because of (3) three major factors involved:

1. It requires the trader to identify a clear entry point
2. It requires the trader to identify a clear exit point
3. It helps the trader identify quality trades with solid reward to risk ratios

So how do you identify the KPPs of a stock?

In most cases, this cannot be done with just a single time frame, but rather done most effectively by using multiple time frame analysis. A trader will find a stock has primary and secondary KPPs, and it is not always easy for the novice trader to distinguish between the primary and secondary KPPs. However, if the trader incorporates both long and short-term charts, it will be easier to recognize the cluster areas of previous buying and selling of a stock.

These clusters will become easier to recognize as the trader spends more time examining various charts and studying multiple time frames. As a trader finds these clusters and compares them to other time frames that the stock huddles around, these should be marked and noted on the chart as either a primary (strong area) or secondary (moderately strong) KPP. The more times that the stock revisits a specific area, the stronger the KPP.

Keep in mind that the market leaves tracks from investors and the market has a long memory. The KPPs will help a trader identify where the main action takes place - where traders view and interpret good buy or sell zones. It is recognizing these areas that will help a trader identify their entry points, exit points, and effectively manage their risk.

There are many moving parts to the market and much for a trader to watch, but we have found as traders and educators of the stock and options market that learning how to effectively identify a stock’s Key Pivot Point is critical to continued success in the market place; regardless of whether your goal is to invest and build long-term wealth or day trade the market to create cash flow.

About Bruce E. Dinger

Chief Trader Bruce E. Dinger, CEO and Chief Trader of TNT Trading the Stock Market, formed the The Naked Traders with the concept of teaching other independent traders how to "strip themselves of all emotion" when they trade or invest in the stock market.

Mr. Dinger has spoken on some of the largest stages around the globe, including CNBC, BusinessWeek, SuccessMagazine, The Women's Financial Conference, Rich Dad's, On-Line Trading Academy, Success Resources, and many others. He has one of the best reputations in the financial markets for helping students achieve their goal of becoming an independent trader or investor. Mr. Dinger can be reached at info@TheNakedTraders.com.

Trading a Momentum Market Using Swing Trading Techniques

MetaStock SPRS Series - Week 131 - TechniTrader® Stock Discussion for MetaStock Users - Trading a Momentum Market Using Swing Trading Techniques - August 9, 2013
By: Martha Stokes C.M.T.
 

Summertime momentum markets are rare. It takes two things occurring simultaneously to create a momentum market:

1. A rush of new monies into stocks.
2. Advances in new technologies.

We have both right now. The Bond Markets are a Trillion-dollar market but in one month alone, there was a dumping of bond funds in historical proportions. This amounted to nearly 80 billion dollars being pulled from bonds in one month. This is a huge red flag for current bond holders and bond fund managers that a major shift of sentiment has occurred.

The money has to be place somewhere in one of the several Financial Markets. It is moving from Money Market Accounts directly into stocks, creating a momentum energy market not seen in many years.

To swing trade a momentum market, you need to understand the dynamics of not only swing trading but also how momentum action behaves, how it is different from a velocity price action, and how it is NOT volatility as many will claim but ENERGY that continues in one direction with building volumes and rising prices followed intermittently by resting day patterns rather than retracements.

Momentum price action is unique and learning to read these charts requires far more understanding of candlestick patterns than is taught in books written a decade ago. Within the past 3-5 years, the way price reacts, how candles and where candles form, for how long, and when price will suddenly move again has changed dramatically. Just learning the candlestick patterns in a book or from an article online is not sufficient for highly successful swing trading in momentum markets.

Below, the TTQA indicator exposed Dark Pools buying. By itself, price doesn’t look like anything during some heavy Dark Pool buying. But the energy that is generated when Dark Pools buy incrementally without moving price causes big runs to follow, such as this chart has.

On the chart below, the failed sell down that started with the engulfing black is best seen in the indicators, which accurately tell you that the sell down attempt has failed and more upside is coming. This allows you to enter the stock prior to the gap.

In the chart below, shifts of sentiment, increasing volume patterns, building underlying energy in TTQA, all are vital cues that tell you the resistance level is going to be blasted right though, that this time resistance will not hold back this stock moving out of a long term bottom.

The crucial analysis you need in order to find stocks BEFORE they move suddenly, running or gapping up quickly, is relational analysis: the interpretation of the relationships between price, volume, lot size, and who is trading the stock at that time.

When you combine relational analysis, the new candlestick patterns that have just started to form in the past few years, and Hybrid Indicators like TTQA, your ability to choose fast-moving stocks and have strong momentum swing trades will be faster, easier, and far more reliable.

Did you miss our most recent webinar for MetaStock users?

Watch it here: Accelerate Your Indicator Analysis

Trade wisely, 

Martha Stokes, C.M.T.

For more information email: info@technitrader.com
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
http://technitrader.com
MetaStock Partner

©2013 Decisions Unlimited, Inc.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor it is strictly an educational service.