Multi-Million Dollar Trader Reveals Favorite Stock Market Analysis Tool
Ready to learn how to ethically steal TONS of money from other stock market traders with this one indicator?
Steve Cohen, a master trader, is known to use this indicator for his billion dollar hedge fund company. Mr. Cohen's trading profits average over 50% a year!
Over 50 stock traders work for him. He is a guru of following a stock's volume.
More amateur traders overlook volume than any other technical indicator.
Even if you think you understand volume, you owe it to yourself to read this article to make sure you understand how to correctly interpret volume for massive profits.
Think of each tick in the volume as a temporary meeting of two minds: a seller and a buyer. Shares or contracts that have exchanged hands are measured by volume. Volume is usually represented by a histogram bar. The volume reveals secret motives and psychology of bear traders as well as bulls. Increasing volume verifies trends while decreasing volume questions the longevity of the current trend.
In a downtrend, rising volume shows that panic is setting in as people run for the exists. It also shows the foolish buyers stepping in to buy betting that the market is going to turn around. Remember, in order for a sell order to execute, there has to be a buyer somewhere. Buying into a downtrend is also known as trying to catch a falling knife. It is usually a bad idea to bet that the current trend is going to change. Don't bet against the wisdom of the crowd. Let some other fool do that. When all the sellers get out, the volume on the downside falls as the downtrend runs out of steam.
During an uptrend, look for rising volume. Rising volume in an uptrend means that greed has firmly gripped the crowd that is trading the stock. More and more greedy traders will dog pile into the stock. Selling into an uptrend should only be done if your profit thesis has been fulfilled. When fear begins to replace the greed, the volume on the upside begins to fall as the upward move runs out of steam.
Volume gives you useful clues in addition to telling you the conviction of a given trend.
If the volume spikes on a single day, it often means that a new trend is about to start, especially if it happens on a breakout from a previous trading range. If the volume spikes 300 percent or more above the average it often means that market hysteria has set in. This occurs when fearful bears decide that a downward move has broken key support and rush in to sell short or when bulls decide that an uptrend is for real on a resistance break and rush in to buy.
When price and volume diverge the stock is usually at a turning point.
If price rises while volume falls, it is a signal that the uptrend is not attracting very much interest. If price falls to a new low and volume falls at the same time, it is a signal that the downtrend is not attracting very much interest and an upside reversal is likely. Price is more important than volume but a master traders knows how to analyze volume in order to gauge the psychology of market participants. - 23208
Steve Cohen, a master trader, is known to use this indicator for his billion dollar hedge fund company. Mr. Cohen's trading profits average over 50% a year!
Over 50 stock traders work for him. He is a guru of following a stock's volume.
More amateur traders overlook volume than any other technical indicator.
Even if you think you understand volume, you owe it to yourself to read this article to make sure you understand how to correctly interpret volume for massive profits.
Think of each tick in the volume as a temporary meeting of two minds: a seller and a buyer. Shares or contracts that have exchanged hands are measured by volume. Volume is usually represented by a histogram bar. The volume reveals secret motives and psychology of bear traders as well as bulls. Increasing volume verifies trends while decreasing volume questions the longevity of the current trend.
In a downtrend, rising volume shows that panic is setting in as people run for the exists. It also shows the foolish buyers stepping in to buy betting that the market is going to turn around. Remember, in order for a sell order to execute, there has to be a buyer somewhere. Buying into a downtrend is also known as trying to catch a falling knife. It is usually a bad idea to bet that the current trend is going to change. Don't bet against the wisdom of the crowd. Let some other fool do that. When all the sellers get out, the volume on the downside falls as the downtrend runs out of steam.
During an uptrend, look for rising volume. Rising volume in an uptrend means that greed has firmly gripped the crowd that is trading the stock. More and more greedy traders will dog pile into the stock. Selling into an uptrend should only be done if your profit thesis has been fulfilled. When fear begins to replace the greed, the volume on the upside begins to fall as the upward move runs out of steam.
Volume gives you useful clues in addition to telling you the conviction of a given trend.
If the volume spikes on a single day, it often means that a new trend is about to start, especially if it happens on a breakout from a previous trading range. If the volume spikes 300 percent or more above the average it often means that market hysteria has set in. This occurs when fearful bears decide that a downward move has broken key support and rush in to sell short or when bulls decide that an uptrend is for real on a resistance break and rush in to buy.
When price and volume diverge the stock is usually at a turning point.
If price rises while volume falls, it is a signal that the uptrend is not attracting very much interest. If price falls to a new low and volume falls at the same time, it is a signal that the downtrend is not attracting very much interest and an upside reversal is likely. Price is more important than volume but a master traders knows how to analyze volume in order to gauge the psychology of market participants. - 23208
About the Author:
Written by Shawn Tilman. I hope this article helps you better your trading and make a ton of cash. For more FREE master stock trading tips and advice see stock market
posted by X - Men @ 6:01 AM
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