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.
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.
The meeting of minds between bulls and bears are represented in each measured unit of volume. The volume is a still picture of the psychology of the crowd trading a particular stock or market. Rising volume confirms the trend while falling volume questions the trend and whether the dominant group can keep it going.
In a sell off, increasing volume into the move tells you that panic has firmly settled in as traders scramble for the exit. If you look carefully, you’ll also see newbies jumping in as they bet the market is going to reverse. Keep in mind that in order for a sell order to execute, someone has to be a buyer. Every trade has these two sides. Jumping in to buy in a downtrend is known as trying to catch a falling knife. Most often it is a bad idea. Never bet against the wisdom of the crowd. Let some other newbie put on that trade. When all the sellers have exited the stock, the volume on the downside falls off as the downward move begins to run 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 one-day splash of uncommonly high volume often marks the beginning of a trend when it accompanies a breakout from a trading range. A similar splash tends to mark the end of a trend if it occurs during a well established move. Exceedingly high volume, three or more times above average, identifies market hysteria. That is when nervous bulls finally decide that the uptrend is for real and rush in to buy or nervous bears become convinced that the decline has no bottom and jump in to sell short.
A divergence between volume and price usually means that a stock is 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.
