Add Quantity, Volume, or Flow of Funds Indicators to the Analysis for Stocks and Options Trading
One of the most exasperating things that happen to Retail and Technical Traders is to find a chart with a perfect setup but the stock has already gapped or run up with a huge one day gain, as High Frequency Trading algorithms triggered the running or gapping of the stock up in the first few minutes of the trading day.
Go watch the Bollinger Bands Training Webinar, and learn to find Stocks before big breakout runs, indicators
to use with Bollinger Bands for higher profits, and the most important
Bollinger Band Patterns.
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Bollinger
Bands tell you that a stock is poised for a strong Momentum Run or gap, but do
not tell you whether the Breakout will be to the Upside or Downside. During
Trading Range Market Conditions such as we currently have now, it is impossible
to “guess” the Breakout direction solely using Price and Time Indicators.
Employing
Quantity, Volume, or Flow of Funds Indicators provides the complete set of
indicator analysis to determine the direction of the Breakout when using
Bollinger Bands. When trading Options this eliminates the need for Options
strategies that buy both a Call and a Put, because the trader has no idea what
direction the Breakout will go. When trading Stocks it eliminates the risk of
whipsaw action, or just assuming that because the Indexes are down that the
Breakout will be down also.
Go watch
the “How to Trade Stocks & Options with 5
Simple Steps Training Webinar” for New Investors Training with how to Use Stop Losses &
Trailing Profit Stops.
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This is especially helpful during Bottoming Market Conditions when stocks frequently retest prior bottom lows. Below is a chart example with Volume and Quantity Indicator windows.
The solution to How to Improve Bollinger Bands is to add Quantity, Volume, or Flow of Funds Indicators and here are explanations how and why that works:
1. Quantity Indicators reveal the slow Quiet Rotation™ and Quiet Distribution, and Quiet Accumulation patterns by the giant Buy Side Institutions. The Balance of Power BOP Indicator in TC2000 with a Shift of Sentiment™ pattern reveals the exhaustion of selling, followed by Quiet Accumulation as shown in the chart example. Quantity indicators are used by Professional Traders regularly but are rarely used by Retail Traders. There are both line and histogram Quantity Indicators available.
Go watch the Best Volume Indicators for the current Stock Market, training webinar to learn why volume is as
important as price analysis, and why volume leads price.
3.
The Flow of Funds Indicators are another group of indicators that help
determine direction of a Breakout. Often times Smaller Funds and Independent
Investors are selling, at the same time giant Buy Side Institutions are quietly
buying the same stock hidden from view on Dark Pool venues. These types of
indicators show whether money is flowing into or out of the stock.
By incorporating additional indicators into the stock analysis, Retail and Technical Traders can significantly improve their trading profits by identifying the direction of the Breakout prior to price suddenly moving with momentum, a gap, or velocity action caused by High Frequency Trading triggers.
Go to the Learning Center and watch a wide variety of webinars, including Technical Analysis, How to Trade Stocks, How to Improve MACD, and Candlestick Patterns.
By incorporating additional indicators into the stock analysis, Retail and Technical Traders can significantly improve their trading profits by identifying the direction of the Breakout prior to price suddenly moving with momentum, a gap, or velocity action caused by High Frequency Trading triggers.
Summary
Quantity,
Volume, and Flow of Funds Indicators are easy to interpret, provide the missing
data for a complete stock pick analysis during sideways patterns, and are best
for improving the use of Bollinger Bands.
For
Options Traders this is a far more useful analysis than traditional Options
Indicators, and it can lower contract costs by providing the missing data
needed to choose the proper contract and Option strategy. For further
information about trading Options with a simple method and without using chains or the Greeks methods, watch the TechniTrader Trading Options for Beginners
Webinar.
Go to the Learning Center and watch a wide variety of webinars, including Technical Analysis, How to Trade Stocks, How to Improve MACD, and Candlestick Patterns.
Go to the TechniTrader
TechniTrader
The Gold Standard in Stock Market Education
Trade
Wisely,
Martha
Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.
Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDs with every course.
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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.