Friday, April 10, 2015

041015 MSWeekly – How To Track Lge Lot Institutions

How To Track Large Lot Institutions
Patterns In Stock Charts
Main challenges individual investors and retail traders face today, are figuring out when High Frequency Traders are going to suddenly appear and when Dark Pools are quietly buying or selling. There are distinct candlestick and indicator patterns to tracking the Large Lot Institutions that use Dark Pools, which repeats over time.
C:\Users\Adrienne\Downloads\Depositphotos_5481813_s.jpg
The following is the cycle of the buying pattern step by step:
  1. Dark Pools are buying into a stock. Their interest in a stock is no longer seen on the market maker limit books prior to the execution of their trade because they use Alternative Trading Systems ATS. These are giant Mutual and Pension Fund investors buying for the long term, most of the time.
  2. Professional and Floor traders who are closer to the action of the Dark Pools, jump in for short term trade action. Some are Intraday traders while others are Swing traders.
  3. High Frequency Traders HFTs discover the Dark Pools either via a notification once the Dark Pools have bought what they want which is a news alert, viewing the transactions posted after clearing, or due to a ripple in Volume. The ripple in Volume occurs when a Dark Pool order cannot be totally filled on the Alternative Trading System ATS platform, so some of the order is filled on the exchanges.
  4. Smaller funds chase the HFTs due to news, causing price to surge with emotional responses to the HFT action.
  5. Retail traders chase the smaller funds ending up getting into a stock just as a whipsaw or reversal occurs, due to sudden profit taking by the HFTs.
This pattern of buying is repeated over and over, often frustrating retail traders who unwittingly get in the way or buy unaware of who is controlling price at that time.
The buying patterns can be seen in the stock charts, and every individual investor and retail trader should learn them. Part of the pattern is in Price, part is in Volume, and part is in large lot versus small lot indicators.
C:\Users\Adrienne\Pictures\041015 MSWeekly chart image.png
The first candle indicated by the red arrows on the far right is HFTs which is evident in Price, Volume, and the indicator TechniTrader Quiet Accumulation TTQA.
The green vertical rectangle is Dark Pools and Professional Traders buying. Dark Pools are accumulating, while Professional Trades are trading short term. The small green horizontal rectangle is the high price range or top level price for the quiet accumulation buyers. They will not buy any higher than this, which means Professional Traders are going to take profits.
That brings the price down to the support low, which is the trigger level for more quiet accumulation. Meanwhile quiet accumulation is still going on, while uninformed retail traders are trying to sell this stock short. They struggle to push price down but due to lack of numbers, they are unable to control price.
Then as quiet accumulation ceases HFTs gap down price at market open, then drive it down on an inconsequential retail news item, and quiet accumulation drives it right back up.
But smaller funds chase HFTS trying to sell or sell short. It goes deeper this time as quiet accumulators wait, then start buying again. This is discovered by the HFTs which gap price up with high volume.
Summary
Learning to read charts properly is not just using an indicator cross over or a candlestick pattern. Relational Analysis™ must be applied to really understand who is in control of price. If you can recognize when the Large Lot Institutions control price and you know which groups chase price, then you will have a much stronger understanding of what price is going to do near term. In addition, recognizing the levels where quiet accumulation will trigger because these are automated orders, will help you avoid being on the wrong side of the trade. Being on the wrong side of the trade aka trading against the Large Lot Institutions is the main reason retail traders have so many losses.
Trade Wisely,
Martha Stokes CMT
www.TechniTrader.com

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

©2015 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved.
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

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.




No comments: