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
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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.
