Ready to learn how to ethically steal TONS of money from other stock market traders with this one indicator?
This money pulling indicator is used by billion dollar hedge fund traders like Steve Cohen who's firm has average over 40% a year!
Some 40 traders work under him. He is the king of tracking the volume of any given stock or market.
Volume is one of the most overlooked indicators by amateur traders.
We all have holes in our learning. You need to read this article and make sure you plug the holes you might have in your learning of how to effectively use the volume indicator.
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.
When a stock is trending higher, watch the volume. If the volume is increasing into the upward trend, it means that greed is causing more and more traders to take notice of a particular stock and to dog pile into that stock. As the stock continues to trend higher, the volume will continue to build which tells you that more and more traders are piling into the stock and that extreme greed has firmly gripped the market participants. Now keep an eye on the volume. Fear will slowly begin to replace greed as the volume begins to fall off and the uptrend starts to run out of steam.
Volume goes beyond just telling the conviction of a current trend, it gives you several clues.
A spike in volume on 1 day often signals the beginning of a new trend when it occurs on a breakout from a trading range. A spike in volume like this can also signal the ending of a trend. Very high volume that is 300% or more of the average volume signals market hysteria. This is when fearful bulls finally decide that this uptrend is for real and rush in to buy or it is when fearful bears become convinced that a decline has no bottom and rush in to sell short.
A divergence between volume and price usually means that a stock is at a turning point.
When prices rise to a new high but volume falls, it shows that the uptrend attracts less interest. When prices fall to a new low and volume falls, it shows that lower prices attract little interest and an upside reversal is likely. Price is more important than volume, but good traders always analyze volume to gauge the psychology of the crowd.
This money pulling indicator is used by billion dollar hedge fund traders like Steve Cohen who's firm has average over 40% a year!
Some 40 traders work under him. He is the king of tracking the volume of any given stock or market.
Volume is one of the most overlooked indicators by amateur traders.
We all have holes in our learning. You need to read this article and make sure you plug the holes you might have in your learning of how to effectively use the volume indicator.
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.
When a stock is trending higher, watch the volume. If the volume is increasing into the upward trend, it means that greed is causing more and more traders to take notice of a particular stock and to dog pile into that stock. As the stock continues to trend higher, the volume will continue to build which tells you that more and more traders are piling into the stock and that extreme greed has firmly gripped the market participants. Now keep an eye on the volume. Fear will slowly begin to replace greed as the volume begins to fall off and the uptrend starts to run out of steam.
Volume goes beyond just telling the conviction of a current trend, it gives you several clues.
A spike in volume on 1 day often signals the beginning of a new trend when it occurs on a breakout from a trading range. A spike in volume like this can also signal the ending of a trend. Very high volume that is 300% or more of the average volume signals market hysteria. This is when fearful bulls finally decide that this uptrend is for real and rush in to buy or it is when fearful bears become convinced that a decline has no bottom and rush in to sell short.
A divergence between volume and price usually means that a stock is at a turning point.
When prices rise to a new high but volume falls, it shows that the uptrend attracts less interest. When prices fall to a new low and volume falls, it shows that lower prices attract little interest and an upside reversal is likely. Price is more important than volume, but good traders always analyze volume to gauge the psychology of the crowd.
About the Author:
By Shawn Tilman. I hope this article helps you better your trading and make a ton of cash. For more FREE expert stock trading tips and advice go to stock market
