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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: Ken Wolff who wrote (1890)4/5/1999 4:32:00 PM
From: Ken Wolff  Read Replies (1) of 2120
 
My methods of trading are based on trading the traders. We don't trade stocks, we trade other traders. People are behind every blink we see on our screens, making decisions. For this reason it is important to understand the way that people think and behave.

For example:

Stocks are priced in fractions. People, in their minds, generally think in terms of more even fractions. I call these whole numbers for lack of a better term. Generally a person will ask, for example, for 1/2 glass of water, rather than 9/16. For this reason, stocks tend to change directions at these even fractions. Why? Because people tend to think in terms of buying a stock at 12 rather than 12 1/16. They also think in terms of taking profits at 1/2 rather than say 11/16.

No one thinks to himself, when that stock gets to 13/16, I'm putting my order up. They tend to think in terms of 1/4, 1/2, 3/4, and whole numbers.

Ken
www.mtrader.com
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