Rotation Patterns Explained with Stock Indicators

Buy Side Institutions Using Dark Pools
Most Technical and Retail Traders have heard about Buy Side Institutional Accumulation and Distribution, but few understand another institutional action which is ROTATION.
Accumulation is the acquiring of hundreds of thousands, to millions of shares of stock over an extended period of time. Quiet Accumulation is the most common nowadays which is when institutions use Dark Pools aka Alternative Trading Venues that do not show their activity on the exchanges. Buy Side Institutions are able to hide their 100,000 – 500,000 share lot activity from High Frequency Traders HFTs, Independent Investors, Retail Traders, and Small Mutual Funds and Small Pension Funds Managers by using the Dark Pool venues. This enables them to buy large to giant quantities of stock over time without disturbing price. The primary difference between exchange activity and Dark Pool activity is the ability of the Buy Side Institutions to not alter the trend that is underway at that time.
Buy Side Institution Quiet Accumulation INCREASES the amount of money in the stock market fueling Bull Markets and Uptrends, even though the Institutions buy in such a way so that price does not move much when they are buying.
Distribution is the selling of a large quantity of stock overtime, OR because of redemption demands. High redemption demands tend to occur near the end of an Intermediate Term Correction or the end of a Bear Market. Therefore Dark Pool Distribution is often faster than Dark Pool Quiet Accumulation. Dark Pool Distribution is when Buy Side Institutions sell huge quantities of stock without moving price much.
Buy Side Institution Quiet Distribution REMOVES money from the stock market, which fuels more downside selling.
Rotation patterns occur during the mid to final years of a Great Bull Market, which is a Bull Market that lasts for more than 4 years. Quiet Rotation™ is the systematic, and carefully calculated selling of shares of one stock and the buying of another stock. Rotation patterns tend to slowly bend trends either into a Bowl Bottoming Formation OR into a Rounding Top Formation. Platforms are also a common pattern for Rotation, into or out of a stock.
Quiet Rotation does not remove money from the Stock Market. Instead it merely MOVES MONEY AROUND from one industry to another and from one stock to another.
The chart below with a monthly view shows the commencement of a Rounding Top Formation that developed due to steady Quiet Rotation over the past several months.
monthly time line showing a rounding top formation - technitrader

This stock is slowly losing Institutional percentage holdings as these giant institutions quietly rotate out. Their goal is to not disturb the Uptrend buying frenzy of Independent Investors, new Investors, and Retail Traders who rely upon recommendations and gurus for stock picks. As the stock moves up with smaller lot buyers who have less capital than the giant institutions, the trend slowly bends under the weight of the large to giant lot Quiet Rotation of the giant Buy Side Institutions.
This is a critical pattern to recognize for Technical and Retail Traders especially in highly popular recommended stocks, as weakening trendlines due to Quiet Rotation are harder to see in candlestick patterns early on.
What is essential to have are indicators that reveal the Dark Pool Rotation patterns before price begins to bend and round, which can create whipsaws for Swing and Day Traders resulting in losses that could have been avoided.
Summary
The TechniTrader Volume Accumulation TTVA and TechniTrader Flow of Funds TTFF indicators clearly show the steady Quiet Rotation pattern over time, even as price moves up. This allows Technical and Retail Traders to avoid entering a stock that is actually weakening into a Rounding Top Formation, rather than what at first may appear to be merely a consolidation or sideways pattern.
By recognizing Quiet Rotation Patterns early on enables Technical and Retail Traders to be prepared for Corrections and Selling Short, by Swing Trading the downside action if they have the education.
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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock


Chartered Market Technician

Instructor & Developer of TechniTrader Stock and Option Courses

TechniTrader DVDS with every course.

This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner


©2016 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved. 
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only. 

Support for Swing Trading Stocks

About Types of Swing Trading Style Runs


Support and resistance are often areas of Technical Analysis that are not fully understood. This week the lesson will be on support for Swing Trading which includes Momentum Runs, Velocity Runs, Volatile Runs, and Intraday Swing Style Runs.

Swing Trading is a “one run” trading style, which can be as short as a few minutes intraday or as long as 10-12 days depending upon whether it is a Standard Swing Run, Momentum Run, or Velocity Run. Swing Trading runs also appear in volatile conditions, as two major Market Participant Groups collide buying and selling against each other. 

 

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The key to understanding how support will behave and whether it is sufficiently strong enough for the trading conditions as well as the trend, sentiment, and market bias is to learn how to interpret who is controlling price which defines how support will hold or collapse.

 

Dark Pools control vast quantities of shares of stock, trillions in assets worldwide and use the largest lot orders. Dark Pools are giant and large Institutions both on the Buy Side and Sell Side and when they buy, this creates underlying energy building as they remove liquidity on the buy side with their large lot accumulation activity.

 

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Support is less viable when the giant Institutions are not actively buying the stock, and price can over-react to even minor profit taking by the Professionals who also use larger lots.

The chart example below had a Standard Swing Run out of an extreme sell off price action.

chart example with a standard swing trading run - technitrader


Selling was triggered by Volume Weighted Average Price orders which activated as volume rose above average levels. These are automated orders. There was no support to halt the run down, until the stock fell into an earlier Dark Pool Buy Zone™ that formed a few months after it IPO’d.

This type of support for Swing Trading is stronger because more accumulation is likely at this level. As the stock ran with Standard Swing Run pattern it encountered two days of profit taking in between each day it ran up, forming a white longer candle. This is weaker support, even at the extreme sell off conditions. The first run up has long tails and wicks, common when there is a mix of sellers and buyers that are almost equally weighted.

 

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Summary

However as the stock climbs, bias shifts to the upside and candles shrink to Resting Day patterns. In this instance intraday support levels are very weak, the more reliable and consistent support is at the lows of the white one day run up candles. 

If intraday support is used on a Standard Swing Style Run which lacks strong momentum, then whipsaw intraday is a huge risk. This pattern overall has weaker support as it climbs vertically. 

TechniTrader is "The Gold Standard in Stock Market Education." Go to the TechniTrader.com Learning Center and watch a wide variety of webinars, to experience for yourself the excellence of TechniTrader education. 

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Followers may request a specific topic for a blog article by emailing info@technitrader.com

Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock


Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDS with every course.

This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

©2016-2017 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved. 
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.

TechniTrader "Use Dark Pool Chart Patterns for Higher Profits" by Martha Stokes CMT

Calculate the Cost of Trading when Determining Profits


To use Dark Pools Chart Patterns for higher profits, is an area of Technical Analysis that has not made its way into most stock market books, articles, and information available on the internet. The reason why Dark Pool technical patterns aka footprints are not yet part of the Technical Analysis standard of teaching, is that these are NEW chart candlestick patterns.

Dark Pools did not exist in the 1980’s, 1990’s, or early 2000’s decades. These are relatively new trading venues for the giant Institutions who demanded obscurity, due to the rise of the High Frequency Trading Firms in the mid 2000 decade after the switch from fractions to decimals. Basically High Frequency Trading Firms morphed out of the Small Order Execution System Bandits, during the rouge Floor Traders era.

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Nearly all large and giant lots are transacted nowadays on the hidden Alternative Trading System venues called Dark Pools, which are used by giant Institutions. However what can not be hidden, is their easy to identify candlestick footprints on stock charts.
There are many different types of Dark Pool footprints that the giant Institutions leave on charts, due to their preferred professional order types.

One of the more common candlestick footprints happening is the “Basing Bottom Formation,” which is a brand new type of bottom. In order to use Dark Pool Chart Patterns for higher profits, the key element in this pattern is to identify the Dark Pool Quiet Accumulation and enter early before the stock runs up.

See a chart example below of a Basing Bottom Formation caused by Institutions buying using Dark Pools.
chart example with dark pool buy zones - technitrader

However, early entry can be problematic if a trader is using Price and Time Indicators, as well as both Momentum and Price Oscillators. You may get an early crossover, but then the stock moves sideways up and down in a choppy pattern which causes whipsaw exits and losses. 

Another problem getting in early is that many Retail Traders wait and wait for signals from Momentum Indicators, which gets them into the stock very late in the run. This means instead of a high profit trade, the Retail Trader takes a meager profit. The Retail Traders Market Participant Group includes those who have learned to trade from home.


TechniTrader is "The Gold Standard in Stock Market Education." Go to the TechniTrader.com and watch the Basics of the Stock Market for New Investors and Beginning Traders Webinar Lessons, to experience for yourself the excellence of TechniTrader education.

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True profit is one big part of trading that most Retail Traders fail to include in their profit evaluation. How to calculate the true cost of your trading is considering more than just the cost of Charting Software, Broker fees and charges, and possibly subscriptions to Newsletters.
To accurately calculate whether a trade is profitable or not, you must also include ALL of the normal business expenses for Trading as a Business. 

Trading as a Business includes the following:

1. You MUST pay yourself something for your time. How much could you make an hour, working for a corporation in your field of expertise or your degree? That is the minimum amount you should use as a base for trading expense as an hourly wage.

2. You must also include the average losses. You must take an average of your losses each month and divide it into your trades per month, and subtract that loss from your profits of every profitable trade.

3. Other expenses include your computer, printer, and other hardware depreciation. 

4. In addition there is the office space in your home, electricity, internet, phone, and office expenses such as paper, pens, and journals. 

5. Finally add up the cost of time attending webinars, the reading articles, and also if you pay a paper trading simulator fee.

Summary

If you did an accurate calculation of your true trading costs, you would find that taking a .25 cent profit on a 100-1000 share trade is not at all profitable. You are actuality losing money every time you trade. So learning how to enter a stock trade earlier based on recognizing a Dark Pool Buy Zone™ is crucial, and can turn your trading into a career.

TechniTrader is "The Gold Standard in Stock Market Education." Go to the TechniTrader.com Learning Center and watch a wide variety of webinars, to experience for yourself the excellence of TechniTrader education.

Go to the TechniTrader

http://technitrader.com/learning-center/
Followers may request a specific article topic for this blog by emailing: info@technitrader.com

Trade Wisely,

Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDS with every course.

This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

©2016-2017 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved. 
TechniTrader is also a registered trademark of Decisions Unlimited, Inc.
Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.