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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: The ChrisMeister who wrote (4021)	9/16/1999 6:02:00 AM
From: Bilow	Read Replies (1) \| Respond to of 18137

Hi The ChrisMeister; About that "tick volume." I think that this is the total number of trades, rather than the total number of shares traded. It seems like there are three dimensions to trading, price, volume, and the number of trades. We could probably say interesting things about the various patterns that could exist between all of them. Everybody knows about things like coils and trading ranges being associated with declining volume, for instance. I trade some stocks (on CyberTrader) with what is called a tick chart. This is a chart that has price as the vertical dimension, and trade number as the horizontal dimension. Regular charts use time as the horizontal dimension. On a tick chart, each new print adds a point on the right hand side of the chart. The CyberTrader tick charts have a useful feature. If you click on a point in the tick chart, you can find out the bid and ask prices at the time of the print. If I am thinking about making a longer term investment in an illiquid stock, this allows me to get an idea as to whether the retail interest in the stock has been buying or selling. When stocks are going parabolic, they generally start to flatten out in the tick charts before they flatten out in the regular charts. What is happening is that the stock is finding it harder and harder to keep rising (or falling). Each new price level finds more and more sellers. This causes the slope on the tick chart to decrease. But you cannot see this on the regular chart, because as the stock is going parabolic, more and more people are buying or selling. So the stock can still be rising at the same number of dollars per minute, and thus the regular chart still looks like the stock isn't starting to nose over. Essentially what I am talking about here is the number of trades (or maybe share volume count) required to clear out a level. This is a very useful number to have a feel for. Veteran traders that are long a stock going parabolic up will sometimes exit when the movement stops, even though the stock hasn't started down again. I think this technique works better on stocks that have a sudden, single, not very good, reason to pop. A good example would be a stock that got a mention on CNBC. If the stock is a good story stock, it could keep going up for days, as brokers sell it to the bag holders. -- Carl