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Microcap & Penny Stocks : ECNC (OTC:BB) - eConnect
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To: roulette who wrote ()9/12/1999 3:15:00 AM
From: Jorjenzak  Read Replies (1) of 18222
 
fwiw...found it interesting and hope to read/learn more. Stole it from post on RB VALH thread:

A Must Read...

wallstreethero.com

This is a GREAT site- concise market commentary from a group of private investment fund managers who run it "as a means for the average every day investor or trader to get a glimpse inside the professional side of the game".

Read todays article, "Trading 101: Avoiding Fake-Outs";
it describes a typical trap used by MM's when a stock hits a key technical point like a 52-week high.

Here's an excerpt from the article:

...for those of you who don't know what a fake out or whipsaw is, it is
basically when a stock gets to a key technical point where the market makers know there
are a ton of buyers or sellers waiting, once it gets to that point and the buyers or sellers are
lured in, the market makers reverse direction on the stock trying to "fake out" the
investors/traders who are trying to profit from the momentum. Once they manage to squeeze
out those who attempted to profit from this key technical point, they reverse the stock once
again and send it in it's initial direction of momentum.

Your first step in avoiding fake outs is to recognize they do exist. Market makers are just as
greed driven as me and you are, if they see a chance to profit from the madness of the
crowds they will and they know as well as you and me that the madness of the crowds often
triggers around key technical points. A key technical point would be described as a point of
resistance for a stock, a new high or low point for a stock (ex. 52 week high or low), a key
trending point for a stock. Here is exactly how it works, we will use YHOO as an example...
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