Trading High Volume Moves
This article was inspired by a LinkedIn group, where a threat was opened with the question: How long it will take to turn into a successful trader? The person, who opened the discussion, claimed trading for two years without success.
Aside from the aspect of time, what does it take to turn you into a trader?
Four Pillars of Trading Success:
1. Knowledge about trading and how the markets work
2. Following a defined trading concept.
- What assets or derivatives to trade.
- When to enter, exit, stop, and adjust a trade at a defined happening.
3. Building the mindset of a trader.
4. Practice.
To develop you into a trader, we put together a program, which combines the concept of NeverLossTrading and Traders State of Mind, preparing you in 10-weeks for trading with multiple assets and their derivatives: Futures and options.
You can find details at:
http://YourTradingCareer.com
In our teaching, we often refer to the aspect of following institutional money moves. Today we want to take the example of trading high volume moves, to explain, what this means.
1. Knowledge of How Markets Work
It is often assumed, that for every buying or selling, there must be an equal amount of buyers or sellers on the other side. Unfortunately, this is wrong and the reality is:
There must be and equal amount of buy and sell orders, which does not imply that we have an equal amount of buyers and sellers.
Market makers and other liquidity providers hold major share positions and every order basically goes through them. When a major exchange of stocks takes place, it can result in an imbalance at the side of the market makers, which usually happens when:
A) Shares start to sell-off at a high price level. By rapidly falling prices, market makers are forced to purchase stocks at for them unfavorable price levels.
At such an instance, the market makers have one clear aim: Reducing supply levels, with the goal of bringing prices up again to sell their access capacity at the same or higher price level were they purchased those stocks. Now, you know why double tops are a so typical. If the price action at the second top leads to a bullish cup breakout, the market makers are even happier: Then they hold shares at a more favorable price level and Pareto optimum is reached, where all participants won.
B) Shares find strong demand on a low price level and prices rally up.
In this case, the market makers sell higher than expected quantities at lower than expected price levels. To balance their position a typical market maker move is: Increasing the supply side of the stock, with the aim to initiate prices to fall. If prices drop, market makers can balance their “short” share positions at favorable price levels. Now, you no more wonder, why we have double bottoms.
2. Trading The Defined Happening: High Volume Moves
After we shared one of many institutional market actions you can learn with NeverLossTrading, we want to put you in the position to spot and trade such happening:
A) Watch out for a much stronger than average volume bar at a key reference time frame.
In our daily trading, instead of doing the work ourselves, we rely on the NeverLossTrading software, which identifies the happening for us by plotting a Cyan Color Volume Bar.
Fig. 1: High Volume Trade on the Daily Chart
B) After spotting the happening, how to trade it?
- When a Cyan Volume Bars is accompanied by a strong directional price move, then we trade the break of the high/low of the trade initiation candle for 1-SPU (Speed Unit = Expected Price Move. Find the dollar amount in the upper left hand corner of the chart).
- When no pricing decision is associated with the Cyan Volume bar, we apply our wait-strategy and trade with the next directional signal or when a price breakout occurs.
From the two potential trade setups, is there one, we favor?
Yes: The trade, where no directional price move is associated to the Cyan Bar.
In such constellation, the stock accumulating- or disposing institution was not yet identified and followed by the other market participants. However, the way we spot what is going on with the stock, other institutions know that something is going on and when the action is confirmed, they will act on it.
Why it this trade favored?
- It usually has less risk associated: Distance form trade entry to the bottom of the trade initiation candle.
- Mostly, we can expect an easy follow through, when the move happens; while big price moves associated with a Cyan Bar often result in a sideways move prior to a follow through.
At NeverLossTrading, our HF Trading programs help us to find and trade those instances. Bellow, a recent example:
Fig. 2: High Volume and NLT HF-Signals on the 1-Hour Chart
How to find shares with a high volume move?
One of our key slogans is: Trade What You See!
Hence, our students and members either spot the action right on the chart or rely on our daily scans, where we share assets with NeverLossTrading indicator alignment:
Fig. 3: Shares with Extreme Volume Moves in the Last Three Days
If you want to learn how to trade like this, check our offering:
http://www.neverlosstrading.com/Classes_Overview.html
And when it suits you, schedule for a personal consulting hour: contact@NeverLossTradiing.com
Or call +1 866 455 4520.
Good trading,
NeverLossTrading
Low Volume Breakout Trade
Today, by a conversation, I got reminded of a trade setup, I do not often refer to; however, it is very powerful. A couple of years back in New Jersey, I got to know a retired NYSE floor trader, who traded stocks and was learning how to do this with online tools. He surely had many stories to tell and when I asked him, which trade gave him the highest probable return, he said: “Low Volume Breakouts”.
Asking him for the happening, he explained how the floor got quiet and then at one point the selling or buying started and he went right with the commotion. This sure does not help us as private investors, and the commotion on the few floors, which are left, is not really an indication for the direction to take. Surely I tried listening to the “Squawk Box” but it is annoying – “62 and a half, a half, a half” – and does not lead to any good trades.
Hence, the challenge was to translate the actual happening into an algorithm on the volume development over time. The key question was, what is low volume and in respect to which time unit?
First, we needed a natural model and a referring mathematical model to measure when such a situation occurs.
Signal Transmission gave it to us:
We know those signal curves from the radio as FM (Frequency Modulation – lower sketch) and AM (Amplitude Modulation – upper model).
After hundreds of iterations, the algorithm was found to compute this trade situation and it now highlights this trade situation by a yellow volume bar on the NeverLossTrading Top-Line Chart.
SPY: Low Volume Breakout Trade (Yellow Volume Bar, Circled on the Price Chart)
Check for the yellow volume bars and watch the NeverLossTrading_Wave_Indicator, which measures the price move, like and Oscilloscope. Observe the relations well and you will see how the Yellow Volume Bars occur right prior to a price move and provide us with wonderful trading opportunities.
For our trading, we mark the high and low of the Yellow Volume Bar Price Candle and trade the Low Volume Breakout to the up- or to the downside. All price bars are altered by algorithms: Colored bars highlight institutional activity. Gray bars occur on average volume.
This is just a little trade, you can learn with NeverLossTrading.
Check out our offering: http://www.neverlosstrading.com/images/Mentorhsip%20Programs%20%20Overview%20Large.png
If you are serious in learning how to trade like this and much, much more: contact@NeverLossTrading.com for a personal consulting hour.
Plan Your Trade and Trade Your PLan
Why do companies make a business plan and shareholders hold them accountable for it?
To produce a structured success and not leave the future to a random happening.
How does that relate to trading?
A trading plan involves a set of rules governing the conditions under which you buy and sell.
The NLT charts print those rules right on the chart:
With the calculation of a SPU (Speed Unit), you receive a quantifiable unit of measure to estimate the future price move of any tradable asset. The red lines on the chart identify stop lines, helping you to estimate for every trade the expected Reward and the potential Risk to take, prior to entering into a trade. When the odds are in your favor, then you place your order.
On the chart, you see initiated trades which only got active, when the spelled out price threshold was surpassed: Filled. In case this condition was not met the order was Not Filled.
AAPL on the NLT-Top-Line Chart
A specialty of NeverLossTrading is, that you will learn the skills and techniques to adjust a trade, when the assumed conditions are not met and the trade turns against us. Instead of triggering a stop and making a loss, you will know how to add to a trade and adjust it, turning potential losers into potential winners
This is just a very brief introduction to our trading concepts. If you are interested in learning more, schedule for an individual introduction, were you can experience and test how NeverLossTrading works:
contact@NeverLossTrading.com
Good trading!
NeverLossTrading
A Division of Nobel Living, LLC
401 E. Las Olas Blvd. Suite 1400
Fort Lauderdale, FL 33301
Call: + 1 866 455 4520
Stock Market: Predicting Future Price Moves
Technical analysis is used to predict a future happening on the price chart. At this point, two different theories should be iterated:
One says, there is a price behavior, which repeats itself. Examples would be, head and shoulders, flag patterns, cup and handle and many others are patterns that are recorded and assumed that they repeat themselves. Our studies and documentation show that the probability of those assumed patterns to conclude in the desired prediction is in the range of 55% – 57%. The other theory states that price behavior is random and cannot be predicted. Those models are often based on the “De Finetti Theory”, which states that probability does not exist in an objective sense. Rather probability exists only subjectively within the minds of individuals. With NeverLossTrading, we do not go that far and we rather relate to a random price distribution as it is expressed in a “Markov Chain”, where the price development is random, but in the vicinity of an expected statistical price distribution.
How does NeverLossTrading fit into this?
You will find both theories considered, while an independent price behavior model was chosen:
Key to the NeverLossTrading pricing model is the institutional engagement in an asset, which is detected and reported. Assuming “crowd behavior”: Followers are jumping on the chosen direction of leaders and a confirmed entry price level is defined. By the predicted price distribution of 1-SPU (Speed Unit), a future price-point in the natural distribution of prices (Markov) is extrapolated and traded. The trade orientation is rather short-term and does not follow long-term price patterns like head and shoulders: Individual price moves to the up and downside are traded.
With our mathematical models and software programs, we measure the setup stage of a price move:
First, prices accumulate prior to a price move and our indicators are identifying this stage by measuring price-, volume- and volatility development, with the NLT-specific market pressure model. In the next phase, -prices test the high/low of a price-range prior to breakout. Again, our sensors are triggered and alarm us. Next, the price breakout is noticed by key market participants and is either confirmed – and we trade along with it or not confirmed – and we stay out of the trade.
With NeverLossTrading, we built a natural behavior model, which considers repetitive action in behavior of leaders and “crowd behavior”: The crowed is following the leaders. With our mathematical models, we translated this into a trading plan, which gives us defined entries and exits. As an example, the price behavior on the chart is sectioned in: “Purple Zones”, which define times where a rather random price behavior with counter trade activities is expected and “Outside Purple Zones”: When specified institutional activity is detected, directional price moves are traded.
- Blue to the upside
- Red to the downside
With that, NeverLossTrading has its individual model of price behavior and uses independent and proprietary indicators to measure the desired effects and approximates their outcome, resulting in high probability trading.
When you are serious in being part of this program: contact@NeverLossTrading.com
How To Identify Sideways Moving Markets In Advance
Looking at a chart, you always know in retrospect that prices moved sideways, but how to know in advance?
In the NeverLossTrading concept, we integrated a study, which measures changes in implied volatility and informs the trader by painting a “Purple Zone” on the chart, indicating, that the price/volume development of a share has reached this critical stage of consolidation. Then, we either apply short term sideways strategies, or wait for the breakout signal, to trade along with the direction after the breakout.
In the “Purple Zone”, we find little directional movement with various counter price trend activities until a breakout to the up- or downside occurs. To support the visibility of such price development, we shade the price chart for the time-period purple and produce a very powerful indicator, signifying:
- Apply short term sideways strategies, with limited risk or do not to initiate trades when the Purple Zone continues, by not knowing when it ends and in which direction prices might breakout.
- Trend-trade when the Purple Zone is over, if the first candle outside the Purple Zone shows an arrow pointing to the trade direction:
- Purple Arrow: To the upside
- Purple Arrow: To the downside.
At times we get asked why the zone is purple?
The answer is: It marks a time-zone of indecision where the market forces negotiate until an upside or downside price-move concludes the decision making process. The color purple is achieved by mixing red (down-color) and blue (up-color).
For the beginning financial market investor, the best is not to trade in the “Purple Zone”, but right after, when a trend is established.
More advanced traders gauge the price range in the zone and take trades already at the first break out. By being aware that even light-tower-candles that occur can quickly be reverted while the “Purple Zone Indicator” is present.
If we are in a trade that enters a “Direction Change Zone”, we either exit the trade or adjust the range for the stop not to be taken out by radical price movements. If we are unwilling to accept additional risk and still want to stay in the trade, the stop line (red line) of the Double-Decker at entry into the “Purple Zone” builds the point where we put our stop.
A directional arrow after the Purple Zone identifies a high probable trade entry.
If there is no arrow on the first candle after the Purple Zone, the study recommends not to enter into a directional trade.
The best trade entry for a trend trade is two ticks above/below the trade proposal painted on the chart.
The same functionality applies for Intra-Day- and Swing-Trading Charts. After our new software update, we are now allowing in the NLT-Purple-Zone-Indicator to put a computer generated price proposal at the end of the Purple Zone arrow:
The trade direction-pointing arrow after the Purple Zone now resides on the price level of the cloud and identifies the new price direction to trade.
The width of the cloud can be adjusted from the factory setting of 2 to a higher or lower level:
If the level is set to zero, the Purple Zone Cloud disappears.
If it is set to 1, it narrows the width of the cloud.
A setting above 2 widens the cloud setting.
Further: The alert sound and the end of Purple Zone alert can be set to individual preferences.
Additional Switch Functions:
- If you want the computer generated trade proposal, set the switch on “Yes”.
- To receive a sound alert, when the End-of-Purple-Zone -Indicator is triggered, put the switch on “Yes”.
The “Purple Zone Indicator” is an integral part of our software package. See, how you can integrate it in your trading. We offer four mentorship programs, geared to the need of the individual Investor:
- NLT Top-Line, for the Independent investor, where we install real-time analysis software.
- NLT HF-Stock-Trading: For frequent traders, able to trade the markets every day.
- NLT Wealth Building: If you are trading two times a week/month.
- NLT Income Generating: For day-trading futures and options.
Schedule for a private consultation: contact@NeverLossTrading.com
3 Investor’s Business Daily (IBD) Stocks Traded With NeverLossTrading
IBD delivers unique stock investment research, education and stock tips for new or seasoned investors, combined with daily business and financial news.
Where would NeverLossTrading fit in with that?
You will see and learn, how multiple directional opportunities arrive with NeverLossTrading: We supplement buy and hold with clearly laid out buy- and sell-strategies, which can be executed from any type of account: IRA, Cash, Custodian, Margin – we even provide trading strategies for your 401(k) holdings.
The following chart shows CLF (Cliffs Natural Resources Inc.): The share dropped $13 in the last 6 months. If it remained in your portfolio and traded with the NeverLossTrading concept, you had a sound opportunity to book a $42 gain instead of $13 loss. This is where we supplement concepts (see our chart).
You will see in our next example, how you can learn powerful trades on weekly charts: AAPL (Apple Inc.): So far, in the year 2012, the AAPL share gained about $175 in value. Traded by the NLT indicators, a gain of $623 would have been possible for you (see our chart on the right).
How is that possible? Spare 15-Minutes on YouTube:
Prices move in wave patterns: We are actively trading the up and down waves and benefit in both directions of the price move.
Our indicators spell out price thresholds and we only trade, when those are surpassed.
If you want to learn how to trade like shown: contact@NeverLossTrading.com
We offer four mentorship programs, geared to the need of the individual Investor:
- Independent, running own analysis on our software: NLT Top-Line.
- Frequent trader, able to trade the markets every day: NLT HF-Stock-Trading.
- Trading two times a week/month: NLT Wealth Building.
- Day Trading Futures and Options: NLT Income Generating.
Watch our introduction at YouTube: https://www.youtube.com/watch?v=uev08Mtfd0Y
You will learn multiple strategies to trade the markets: All with limited risk and upside potential.
In addition: Every day, we scan the markets for more than 30,000 shares selecting those which show NLT indicator alignment to support our mentorship students in finding trading opportunities.
If you want to receive a first introduction, sign up for a free week of NLT opportunity reports and an invitation to an upcoming webinar:
http://www.neverlosstrading.com/Webinar_Sign_Up.html
Please consider, you will only be able to harvest the opportunities until you see them on the NeverLossTrading chart.
We are looking forward to hearing from you.
NeverLossTrading
Make Money When the Stock Market Falls
NeverLossTrading gives you the instruments on hand and teaches you how to read market direction, to benefit if the markets go up, down or sideways.
How to read the market direction?
NLT HF-Trading Chart (click the chart to magnify)
Check out our little YouTube video for more details:http://www.youtube.com/watch?v=9drYtkV1bcI
Our chart shows five orange color upwards pointing lines: The NLT-Trend-Channel.
The midline, the lower- and the upper-line are crucial for directional readings:
- Up-trending stocks trend between the midline and the upper line.
- Down-trending stocks use a price range between the midline and the lower line.
Knowing this, allows us already to make sound trading decisions. In addition, our charts spell out defined trade entries, with a price threshold, which has to be surpassed for us to enter a trade.
- Buy above $136.46 and if the price of candle, following the trade-proposing candle surpasses this crucial price level we trade the upside.
What is the current trend reading?
On October 17, our chart showed an NLT Top-/Bottom finder signal: Pink, proposing to short the market, when the price for SPY (ETF of the S&P 500 Index) drops below $145.42, which happened the next day and was followed through on October 19, with a strong red candle showing an NLT sell-sign: Sell below $143.05.
The October 19 candle also broke the midline of the NLT Trend-Channel and with that all traders should either exit long positions or find some form of protection, and position themselves short. In our mentorship classes you will learn:
- How to read and trade with the trend.
- When and how to make directional investment decisions without selling the entire portfolio.
- How to short position yourself short with any type of account, even 401(k) accounts.
- How to find forms of protection which will preserve your capital.
- Where to enter and exit directional trades frequently and how to compound interest.
Trading can be easy for you, trading red and trading blue:
- Red framed price ranges propose to trade to the downside.
- Blue framed price ranges propose to trade to the upside.
- Purple Zones, show were the market is not decided and when to best stay out or apply sideways strategies.
To learn all this ask for a personal demonstration, where you can pick the symbols to test our system on:
We are looking forward to share with you how to be on the right side of the markets.
Best regards,
NeverLossTrading
