Support for Swing Trading

About Types of Swing 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. 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.


If you are a beginner and want to learn the basics about the Stock Market to get started in the right direction, go to my main website at TechniTrader.com and watch a series of lessons here:

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the basics of the stock market for new investors and beginning traders - technitrader
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.

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 run - technitrader

Selling was triggered by Volume Weighted Average Price VWAP 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.

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.For more information about Swing Trading:

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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.

Wilder’s RSI versus Stochastic Indicator

Exposing Bottoming Strength Prior To Gaps

Stochastic is the most popular of all of the Price Oscillators available for stock chart analysis. in review of Indicators, they should be set up for your own personal trading style and trading parameters. Being as specialized and proprietary as you can possibly be with your own unique set of trading indicators is a huge plus, and gives you a decided edge against the professionals in the market.
Using an indicator that is overly popular can be detrimental to your success as a Retail Trader. It can be hard to switch to a less known indicator because most traders want to be part of the crowd. But being part of the retail crowd means you are constantly at higher risk of whipsaw trades, as “Cluster Orders” are constantly being tracked by the High Frequency Trading Firms.
In comparing Wilder’s RSI versus the Stochastic Indicator, the advantage is that Wilder’s RSI is not widely used these days, and has the added feature of being highly adaptable and modified. Below in the middle chart window is an example of how I set up the Wilder’s RSI indicator for my TechniTrader Students, and below is Stochastic in the bottom chart window. This provides a visual comparison for you between these two indicators, in relationship to price action in the chart.
chart visual comparing the two indictors - technitrader
As with volume oscillators, a center line oscillation feature for Wilder’s RSI adds depth to the analysis. Instead of looking at merely Overbought/Oversold patterns of highs and lows, when the RSI starts to waver around its center line it exposes the bottoming pattern of the stock before it gaps up.
Stochastic as it is traditionally used strictly for Overbought/Oversold, is not exposing the bottoming action underway. The oscillation actually causes whipsaw risks during this bottoming phase.
Additional comparison of Wilder’s RSI versus the Stochastic Indicator shows that using RSI to expose the strength of the bottom via a center line that floats with price direction, tells you far more about the strength of the sideways pattern and the decided upside direction even though price is still sideways.
Also RSI is a very different formula compared to Stochastic. Wilder wrote it to expose whether the current price was stronger or weaker than “X period” or number of days ago.  Therefore what you are looking at is a Relative Strength relationship between the current price and “x number of periods” or number of days ago.
Therefore RSI can and does expose strengthening price action to the upside or downside in a sideways pattern. This is a huge benefit for Retail Traders because the markets move sideways about 60% of the time.
Summary
Although Stochastic is great for exposing the Overbought/Oversold aspects of a sideways pattern, what is even more important is to be able to anticipate what direction the stock will move and how fast it will move out of a sideways pattern.
RSI is superior in revealing strengthening price action, which in turn exposes momentum prior to gaps and fast runs. Use RSI as the market begins to bottom. It is a very underrated indicator that Retail Traders can use to see momentum building, prior to huge price gains.

I invite you to visit my Learning Center which is located on my main website TechniTrader.com. It is full of Webinars on a wide variety of topics including leading indicators, below is a link for you:
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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. 

Doji Example Review for Decoding Candlestick Charts

How to Develop Spatial Pattern Recognition Skills for Fast & Easy Reading of Stock Charts
When Candlestick Charts were first introduced to the western markets, everyone using Stock Charts and Technical Analysis relied on indicators more than Bar Charts, which were the most popular charts back then. Bar Charts are much harder to read, give less visual data, and take longer to interpret. Candlestick Charts were instantly popular because they made reading price fast and simple.
In the beginning Candlesticks were assumed to be the confirming indicator, which made pure price subordinate to indicators such as MACD and Stochastic both very popular indicators. However decoding Candlestick Charts and using Candlesticks as the entry signal rather than just confirming a continuation of the trend or a reversal of the trend, enables traders to use pure price as their entry and exit signal.
Spatial Pattern Recognition Skills™ SPRS are something most traders do not have, and need to develop. It takes a while to learn how to read Candlesticks as quickly and as easily as you are reading this text, but when you can do so it opens up a world of information about why price is moving as it is and how it will move next.
During Trading Range Market Conditions as we have now, keen SPRS are imperative. Otherwise the markets seem merely volatile, unpredictable, and confusing. By learning SPRS you can speed up the entire analysis process, and find strong picks to trade.
Everyone who uses Candlesticks knows what a Doji Candlestick is, however where it forms can reveal a great deal. As an example using the Doji for decoding Candlestick Charts, the Doji can be a resting day candle and the stock will continue moving down, OR the Doji can be an exhaustion pattern in which the stock will reverse, OR the Doji can expose Dark Pools controlling price.

The reason Dark Pool Quiet Accumulation is easy to recognize in a candlestick formation, once it is understood how giant Institutions using Dark Pools buy and sell, the patterns become obvious and are instantly easily recognized. In the chart example below the tight formation of Doji first being white, then black, and then white again is a Dark Pool Quiet Accumulation Candlestick Chart pattern. 
chart example as doji in a dark pool quiet accumulation - technitrader

Since this is also a compression consolidation of Doji, it is also indicating a likely Breakout pattern. The stock may either run with High Frequency Trading HFT triggers or gap. Entering early in this tight consolidation of Doji, ensures that the trade is executed before a potential run or gap. The more compression there is then the more velocity behind the Breakout, with the pattern definitely favoring an Upside Breakout. The way the Doji have formed in the Candlestick Chart tell the Technical Trader with strong SPRS, that this is an Upside Breakout about to occur soon.
Summary
The chart example also gives other information regarding decoding Candlestick Charts. The stock has bottomed decisively and recently. It has no strong resistance above price. The tight consolidation of Doji was preceded by speculative trading triggered first by Professional Traders, then HFTs, and then Smaller Funds. The stock went sideways as Professionals took profits while Smaller Funds bought. Now it is in a very tight formation. The control of price requires a very specific type of order that only Dark Pools use regularly.
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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. 

Improving the Use of Bollinger Bands®

Adding Quantity, Volume, or Flow of Funds Indicators to the Analysis

One of the most exasperating things that happen to Retail and Technical Traders is to find a chart with a perfect setup but the stock has already gapped or run up with a huge one day gain, as High Frequency Trading HFT algorithms triggered the running or gapping of the stock up in the first few minutes of the trading day.

Many traders want to learn how to capture these gains, and be in the stock before a huge gap or big run day and improving the use of Bollinger Bands is the best method.

Bollinger Bands are the best Channel Indicators for Technical Trading, and for finding breakout compression patterns prior to gaps or runs. The ability of the bands to expand and contract, makes them the ideal Channel Indicator to use. However as with ALL Channel, Price, and Time Indicators they require additional indicators as directional signals.

Bollinger Bands tell you that a stock is poised for a strong Momentum Run or gap, but do not tell you whether the Breakout will be to the Upside or Downside. During Trading Range Market Conditions such as we currently have now, it is impossible to “guess” the Breakout direction solely using Price and Time Indicators.

Employing Quantity, Volume, or Flow of Funds Indicators provides the complete set of indicator analysis to determine the direction of the Breakout when using Bollinger Bands. When trading Options this eliminates the need for Options strategies that buy both a Call and a Put, because the trader has no idea what direction the Breakout will go. When trading Stocks it eliminates the risk of whipsaw action, or just assuming that because the Indexes are down that the Breakout will be down also.

This is especially helpful during Bottoming Market Conditions when stocks frequently retest prior bottom lows. Below is a chart example with Volume and Quantity Indicator windows.

chart example with volume and quantity indicator windows - technitrader


1. Quantity Indicators reveal the slow Quiet Rotation™ and Quiet Distribution, and Quiet Accumulation patterns by the giant Buy Side Institutions. The TechniTrader Quiet Accumulation TTQA Indicator was designed for MetaStock users for this purpose. Quantity indicators are used by Professional Traders regularly but are rarely used by Retail Traders. There are both line and histogram Quantity Indicators available.

2. Volume Oscillators are also seldom used by Retail Traders. These offer a significant advantage over Price and Time Oscillators, which tend to give false signal during Momentum Runs, Velocity Runs and other fast moving price action that exceeds the parameters of the price oscillator scaling.

3. The Flow of Funds Indicators are another group of indicators that help determine direction of a Breakout. Oftentimes Smaller Funds and Independent Investors are selling, at the same time giant Buy Side Institutions are quietly buying the same stock hidden from view on Dark Pool venues. These types of indicators show whether money is flowing into or out of the stock.

By incorporating additional indicators into the stock analysis, Retail and Technical Traders can significantly improve their trading profits by identifying the direction of the Breakout prior to price suddenly moving with momentum, a gap, or velocity action caused by HFT triggers.

Summary

Quantity, Volume, or Flow of Funds Indicators are easy to interpret, provide the missing data for a complete stock pick analysis during sideways patterns, and are best for improving the use of Bollinger Bands.

For Options Traders, this is a far more useful analysis than traditional Options Indicators, and it can lower contract costs by providing the missing data needed to choose the proper contract and Option strategy.

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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. 

Understanding Momentum Run Action

How to Use Momentum Price Action for Higher Profits
Most Retail Traders exit runs too early, losing most of their profits from a Momentum Run when Swing or Day Trading. Indicators that reveal weakening or stronger patterns in runs can help Traders hold during brief episodes of Resting Days or mild profit taking, allowing for much higher Return On Investment ROI for that trade.
Two indicators that help Traders during a Momentum Run are the TechniTrader Volume Accumulation TTVA and the TechniTrader Flow of Funds TTFF. 
The TTVA indicator is a center line Volume Oscillator, designed to show when Dark Pool accumulation starts and when the run is starting to lose momentum energy before profit taking or reversal. The TTFF indicator provides additional information as to how much activity is coming from the Buy Side Institutions, as opposed to just Retail Traders or Investors. 
The combination of these two indicators helps Swing, Momentum, and Day Traders make better hold and exit decisions resulting in lower risk, less stress, and higher profits for each trade.
When a Trader can increase the profits of every trade made it increases their monthly income, reduces the risk of choosing weaker stock picks just to have something to trade, and helps to gain confidence while developing the skills of trading.
Regardless of which MetaStock trading system or strategy you employ to find stocks to trade, finalizing the selection using leading Hybrid Indicators will dramatically reduce weak trades that net losses, and will increase profits with stronger picks that run more points.
The chart example below shows a very common Momentum Run action, that is occurring right now in many stocks. 

 example showing a common momentum run action - technitrader

This is due to Dark Pool Quiet Accumulation going on, which is hidden from those trading on the Exchanges, Electronic Communication Networks ECNS, and other venues. When Dark Pools accumulate, they are removing vast quantities of liquidity, and this in turn creates the Momentum Runs out of a bottom low.
In the chart example see the first long green arrow indicating where TTVA signaled early that a Dark Pool Buy Zone™ was trigged, and then the stock drops to its final low. By knowing in advance that Dark Pools have commenced accumulation even while the stock makes a lower low, allows Swing Traders to prepare for the sudden upside Momentum Runs that follow. 
TTFF tells the Trader that this is a few giant Buy Side Institutions bargain hunting to invest funds, and that Smaller Funds are not yet aware of their giant lot buying on the Alternative Trading Systems ATS Dark Pool venues. The stock bolts upward when Professional Traders discover the accumulation, barely pausing at the initial Dark Pool Buy Zone. It then continues to run up into resistance before profit taking occurs, which stalls price but does not cause a major price collapse. Runs of this type can be very lucrative for a Technical Trader who understands the dynamics behind this price action. Learning to use Accumulation, Large Lot, and Flow of Funds Indicators is crucial to successful Swing Trading in these Market Conditions. 
Summary
These patterns can also be seen on intraday charts, and can be used by Day and Intraday Traders. Price patterns are important, but what is even more critical to track is WHEN and WHERE the giant Buy Side Institutions, who control trillions of assets start their bargain hunting buying activity.
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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.

Swing Trading Momentum and Velocity Runs

Indicators Signal Entries and Exits
Swing Traders need specific tools to help them choose the best stock picks for the fast-paced Swing Trading Momentum and Velocity Runs that occur, as stocks fall so quickly that Bargain Hunters move in. Bargain Hunting is the realm of the largest lot buyers and occurs mostly on the short term trend.
Sudden reversals with the right indicators can help confirm that the signal is a true momentum signal, and that the stock is poised for sudden momentum or velocity action. This is because Dark Pools quickly remove liquidity creating an imbalance between supply and demand that Professional Traders search for, in order to buy into the Momentum Runs that follow.
By employing one of the professional style indicators such as TechniTrader Quiet Accumulation TTQA, an early alert is shown on the chart as indicated by the green arrow in the bottom chart window.

This stock has fallen into a high of a prior Dark Pool Buy Zone™ price range. The zone or range is below the low of the white candle, but both TechniTrader Volume TT Volume and TTQA clearly show a sudden shift is about to occur. High Frequency Traders HFTs are still trying to sell the stock down, as Retail Traders sell short without recognizing the Shift of Sentiment™ has begun.
The next day HFTs drive the stock down in a few minutes after market open, so quickly that Retail Traders are unable to enter without extreme risk. The risk is that orders in the Dark Pool Buy Zone now trigger, and Time Weighted Average Price TWAP Dark Pool orders quickly move the stock up in the same day. 
The Shift of Sentiment on TTQA which is a professional style indicator, clearly reveals their activity before the stock runs with momentum. Volume is also a key indicator but in a different analysis.
This allows Retail Traders to trade with Professional Traders, who provide reliable and consistent run activity. Instead of chasing a run, Retail Traders are able to trade with the Profesionals. The consolidation is a period of resting. Professionals are taking profits while the Smaller Funds Volume Weighted Average Price VWAP orders are firing off creating the high bars on TTQA. Resistance is the red line drawn above price.
Summary
TTQA is a special indicator that has several different patterns which are easy to read and interpret. It can reveal aspects of who is in control of price, where Dark Pools are buying or selling, and when HFTs are likely to create big sudden moves.
It also shows Professional Trader and Smaller Funds activity. This new type of indicator can be an excellent addition to any Traders indicator tool kit but is particularly useful to Swing, Momentum, Velocity, and Day Traders.
Being able to plan an entry rather than chase a run, is a key ingredient to high income from Swing or Day Trading.
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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using MetaStock charts, 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. 

Center Line Price Oscillators


The Benefits of a New Type of Price Oscillator

Most Price Oscillators are designed strictly for overbought or oversold conditions. These indicators work well when price is oscillating between a high and low range, but tend to show overbought signals when a stock is about to go momentum. The tendency for these the older style overbought/oversold price oscillators is to show an overbought crossover signal as price begins momentum action, which often causes Technical Traders to exit a trade just before huge profits could have been captured.

By using a Center Line Price Oscillator during momentum phases of price action Technical Traders can hold, instead of selling just as the stock is about to run with strong velocity or momentum action.

The TechniTrader Center Line Price Oscillator called TTRSI uses a floating center line that provides flexible indicator action as price moves up. It is ideal for momentum and velocity price action as it will reveal the underlying momentum, whereas a standard price high/low range oscillator such as Stochastic shows an extreme overbought pattern that most traders use as an exit signal.

The chart example below shows the TTRSI indicator with center line oscillation in the middle chart window, and Stochastic in the bottom chart window for easy comparison.

chart example with center line oscillation - technitrader

This indicator is designed for analysis of price during a momentum or velocity run, and it is superior to Stochastic for momentum analysis.

Traders using Stochastic would have exited prior to the big gain day missing out on the largest one day gain for this run, that continued the next day. RSI then indicates the run has fatigued, and the risk of profit taking at this point means either exit or tighten the intraday stop loss.

Summary

Center Line Price Oscillators are superior to standard overbought/oversold price oscillators during momentum and velocity Market Conditions. Momentum or velocity price action occurs after giant lot Buy Side Institutions have been accumulating a stock for some time by suing Dark Pools. When Professional Traders and High Frequency Trading firms HFTs discover this accumulation then they drive price upward out of Bottoms, minor Corrections, Platforms, Consolidations, and Compression Patterns.

Using a Center Line Oscillator for price enables Traders to hold longer, and enjoy the gains of a momentum or velocity run.

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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. 

Dark Pool Quiet Rotation Patterns

How Giant Buy Side Institutions Changed Market Structure

Dark Pool Quiet Rotation Patterns™ are here to stay, despite what the retail news media hype portends. The Securities and Exchange Commission SEC has investigated the practices of giant Buy Side Institutions using Dark Pools, and it has been proven that they are not getting any price advantage.
Dark Pools are used to hide giant lot orders by Buy Side Institutions, and to ensure when the giant lot orders are triggering there is no major disruption of the current trend.  If you are new to trading, this is critical information to learn. If you traded during the 1990’s and before 2005, then this is even more important. It is a major Market Structure change that has altered everything you would have learned previously about trading stocks, and continues to change price and volume patterns today.
The following are 3 major Dark Pool patterns to learn:
  1. Dark Pool Quiet Accumulation Patterns
  2. Dark Pool Quiet Rotation Patterns
  3. Dark Pool Quiet Distribution Patterns
Most traders learn “Accumulation and Distribution” patterns, which are broad terms not clearly defined. Unfortunately QUIET is very different now with Alternative Trading Systems ATS venues. The term “quiet” means it is not visible in the chart, unless you use specific indicators and KNOW what to look for in price action.
Many Retail Traders are prone to sticking with outdated Methodologies, Strategies, and Trading Systems so it is a leap of faith for them to accept the new reality of stock trading. However until you learn the Dark Pool patterns, trading profits are likely to be a disappointment or if you are just trading as a hobby then you may be content with breaking even. Remember to truly calculate profitability, you have to include your time as an hourly wage expense for Trading as a Business.
Today we are studying Dark Pool Quiet Rotation Patterns, which differ from Quiet Distribution Patterns. The term Quiet Distribution refers to a mandatory selling of shares of stock held in trusts and charters.  Giant Funds Managers of Buy Side Institutions do not wish to sell the stock, but are forced to do so based on sudden huge redemption demands by their uninformed Mutual Fund Investors. Distribution dumps a huge amount of stock for sale suddenly, removing money from the Stock Market so there is an outflow of monies aka funds. 
Rotation is always quiet these days and well hidden from view, and eventually it may cause a topping action. Quiet Rotation does not remove monies from the Stock Market. The Giant Funds Managers are merely moving money around from one stock to another.
The chart example below has been under Quiet Rotation for some time.
chart example with quiet rotation - technitrader

The TechniTrader Volume Accumulation TTVA which is a Volume Oscillator in the middle chart window clearly reveals a contrarian Volume pattern, or that Volume is heavier on the sell side than on the buy side. The TechniTrader Flow of Funds TTFF Indicator in the bottom chart window, reveals that the flow of money into this stock is not keeping up with the fast pace of the Retail Traders and the Smaller Funds. Both of these Market Participant Groups trade like they belong on the retail side of the market, rather than on the professional side.
The giant Buy Side Institutions use these two Market Participant Groups as a cloak to hide their Dark Pool Quiet Rotation Patterns. By not disturbing the trend but allowing the stock to climb higher due to retail trading and smaller fund buying patterns, the Dark Pools actually benefit as they sell hidden on their ATS venues.
Summary
TTVA the Volume Oscillator, starts heading down and diverging contrarily from the price action which is a critical point all traders need to recognize. Sure you can trade the stock as it moves up, however if you are not aware of the heavy Quiet Rotation out of this stock, a buy could end up being a serious major loss. This stock gapped down after barely rising above prior resistance.
TTFF lags behind price, which is moving with speculative emotional buying by smaller lots.
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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.