Sunday, March 9, 2014

TechniTrader Weekly Stock Discussion for MetaStock: “Options Trading Opportunities Increase”

MetaStock® SPRS Series - Week 161 – March 7, 2014 - MetaStock Spatial Pattern Recognition Skills Series written by Martha Stokes CMT

Options Trading has suddenly become far more popular with professionals and smaller funds learning to trade options.  This means that options retail traders will find more trading volume and trading opportunities than have been around in nearly 10 years.  It is the Renaissance of options trading and what the professionals are wanting right now more than anything is Stock Chart Analysis Training for Options.
The professionals realize that the secret to successful options trading has more to do with selecting the right stock to trade than choosing what option strategy to use.  The professionals are learning technical analysis for the stocks they are considering using in their options trading.
One of the many areas the professional option trader needs to learn is how to interpret the new technical patterns that have emerged over the past few years.  These patterns are due to the massive Financial Market Structural changes that every market has undergone, including the Options Market.
Training for the new technical patterns covers the new types of sideways action.  Stocks move sideways more often nowadays than they did even a decade ago.  The type of sideways pattern is critical to identify early on as it reveals who is in control of the sideways pattern, the direction the stock is likely to take out of that sideways pattern, AND most importantly the volatility AND velocity once the breakout occurs.
Volatility and Velocity are not the same thing. One is a sideways pattern, the other a sudden huge move out of the sideways pattern.
Determining when the breakout is going to occur and the direction, optimizes many options trading strategies and increases profitability trading options as well as stocks. One important thing all traders both retail and professional need to learn, is how to find the right sideways patterns with strong energy building that will have big moves out of the sideways pattern.
The Chart below shows a huge gap after a lengthy sideways pattern.
The sideways pattern also contains an island gap.  If you study the chart during the last 2 months, you can see that the sideways pattern became very consistent in its pattern, just moving within the range of the prior sideways pattern before the island gap.  Often the price barely moved. See the very precise tight consolidation of the 7 days prior to the huge gap up.  These price patterns reveal a steady controlled bracketed order that is totally controlling price for 7 days. This is one of several Dark Pool or Twilight Pool footprints.  Being able to see this pattern along with confirmation of the large lot indicators tells this is an ideal set up for a velocity or momentum move to the upside.
Quiet accumulation by large lot investors is obvious in the chart and the controlled price tells the technical analyst that these are very savvy investors, who are using professional orders that bracket and control price. Dark Pools use these orders. When you can trade with the giant lot investors from the Dark Pools and you can enter with them prior to High Frequency Traders gapping price, profits are easier and more consistent.
For more information on Options Trading go to:
Trade wisely,
Martha Stokes CMT
Chartered Market Technician
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
This Stock Discussion and Training Lesson is sponsored by
MetaStock® Partner

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