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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: Nazbuster who wrote (42)1/6/1998 9:47:00 PM
From: Ken Wolff  Read Replies (1) of 2120
 
Daniel,

I have started to notice that an active stock will have mild price fluctuations for awhile, then suddenly a series of smaller trades will go off all at the same price. What I cannot tell is if this is a signal at all, a signal for an uptick, or a signal for a downtick. In addition, I have no clue as to how far the move will go and whether it will offer enough change to trade it

Very interesting observation.

Generally, I like to have a pretty good idea of the direction of the trade if I am to play it. The trade must be one of the patterns I am familiar with and have memorized. I find the oscillation bottoms of an active stock by tracking the trades occurring at the bid or ask. When I see a trading PAUSE (bid/ask stops moving), that tips me off to a possible direction change.

Next I consider the potential movement UP or DOWN depending on the trade. I usually like the most recent high or low to be about 3/4 of a point to provide me with enough potential for profits. So if I see my trade go down about a dollar from the high, I will execute a BUY when I note the PAUSE and trades occurring at the ASK outnumbering trades occurring at the BID (signals a direction change and an upward movement). I hope this helps.

Ken
mtrader.com
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