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             TechniTrader Stock Tips Review

                          by Martha Stokes CMT

"Why Does A Stock Market Crash" by Martha Stokes CMT

                                 See List of 5 Tips for Details 

For new Independent Investors and new Retail Traders a Stock Market crash is a very scary event. They do not know what to think and wonder what they should do, hold and wait or sell and run. Many times the information they hear on the news is inaccurate or misleading.

Here is a list of tips for details on a better understanding of why does a Stock Market crash:

1. There are two sides to every stock transaction, a buyer and a seller to maintain an orderly market. The structure is designed so that there will always be a buyer and seller, as Market Makers step in or High Frequency Trading firms acting as Market Makers offer stock out to complete the order.

2. For every buyer of a stock order, there must be someone willing to sell stock of an equal amount. Sometimes orders are grouped in order to meet the demand of the buyers. For example there may be a buyer who wants to buy 1000 shares of stock, and sellers who want to sell 100 shares which are not enough to fill the order. The Market Maker computers since this is all automated now, will go and search for sellers who equal 1000 shares and this may be one seller or many sellers.

3. All orders must be filled within a set amount of time, which is required by law. Usually a retail order will fill within a minute or less, often within seconds.

4. When there are too many people who want to sell their stock, and there are no or very few buyers the stock price will fall because there is a lack of buyers. When prices are falling most people are afraid to buy a stock. The result is that stocks tend to fall faster than they move up.

5. Most investors believe those who are Selling Short cause downtrends. What they do not realize is that selling short provides the buy side during a Stock Market sell down, when panicked investors want out of stocks. Without “Buy to Cover” as the Sell Short buying is called, stocks would fall faster, steeper, and lose far more value. The reason why Selling Short is legal, is because the market needs someone to buy, as the stock is losing value and falling. Without Buy to Cover orders, stocks would fall faster and lose far more value.

Summary

Understanding the mechanisms of the market is important, especially a Stock Market crash. When investors and traders understand how something works and why it works the way it does, it helps them make informed decisions rather than acting on fear of losing money or greed when prices are rising speculatively. Rarely do investors buy low and sell high. This is because they do not know how to read stock charts, which would show them what is really going on with a stock price.

Get started in the right direction. I invite you to watch a series of short Videos about the basics of the Stock Market for New Investors & Beginner Traders on my website TechniTrader.com HERE. Sign Up for full access.

Followers of this blog may request a specific article topic by emailing: info@technitrader.com

Trade Wisely,

Martha Stokes CMT

http://technitrader.com 

Chartered Market Technician

Instructor and Developer of TechniTrader® Stock and Option Courses

©2016 Decisions Unlimited, Inc. All Rights Reserved.

TechniTrader is the Registered Trademark of Decisions Unlimited, Inc.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor, it is strictly an educational service.

Posted on August 27, 2016 by Registered CommenterMartha Stokes CMT | Comments Off | EmailEmail | PrintPrint

"Money Flowing In And Out Of A Stock" by Martha Stokes CMT

                   Market Participant Groups and Market Orders

Professionals often speak of money flowing in and out of a stock, but how can that be if there are an equal number of buyers and sellers? It is because Money flow is the balance of the lot sizes, and at most times there are four positions in any one stock which are Buy, Buy-to-Cover, Sell, and Sell Short. Each of investor and trader in the stock has their own separate agenda. Each may come from a different Market Participant Group, and there are now nine of these groups in the stock market including giant Institutional Investors which are giant Mutual and Pension Funds, Wealthy Individual Investors, Corporations, Professional Traders, High Frequency Traders HFTs, Small Funds, Retail Traders, Small Lot Investors, and Odd Lot Investors.

Buyers are anticipating that the stock is going to move up. Their order types span the spectrum  for example Market Orders, Limit Orders, and Buy Stop Limit Orders. Buy-to-Cover BTC orders are traders who are panicking because they were selling short in the stock and are afraid that stock is going to move up more than it recently has, or they sold short and they are now taking profits. Most BTC are usually Market Orders or Limit Orders. 

Those who are selling the stock are anticipating the stock is going to move down. On an uptrending stock this is profit taking near the top of the run. It can also be on a downtrending stock because the seller is afraid that the stock is going to move down more, and they have been holding through what they thought was a short Retracement. Most of these orders will be Sell At Market SAM. Sell Short Traders are anticipating that the stock is going to move down, and can place a variety of orders just like the buyers. Buyers and Sell Short Traders are both entering the trade. Buy-to-Cover and Sellers are exiting the trade. It is the mix of these kinds of buying and selling, coupled with the kind of investor or trader and the size of their share lots that causes money flowing in and out of a stock

If the buyers are mostly large lots and the sellers are mostly small lots, then who is in control? The answer is the buyers purchasing large lots. This is because at some point there will not be enough small lot sellers and those who are selling short will turn and start Buying-to-Cover, creating more of a shortage of sellers. Consequently this will put more pressure on the buy side.

There are always late comers to a stock run, and they are usually small lot buyers. As the stock moves up in price, more of the small lot buyers will step in pushing the price up even further.  Most small lot buyers typically use a Buy-At-Market order which is the worst kind to use to control the entry price. As the stock moves up in price the last of the Sell Short Traders will panic and Buy-to-Cover, causing the stock to gap up or jump even higher. This then triggers the large lot buyers, to start selling for profit. As profit taking begins, the stock dips in price. This causes the odd lot buyer to rush into the stock and buy because they have been told to “Buy-on-the-Dip." The news media by now has been talking about this stock and its great run, so consequently the odd lot uninformed investor finds the dip irresistible and buys on pure emotion without any analysis of the stock. This causes the final gap up and exhaustion pattern. 

Now while all of those odd lot latecomers are buying, who is selling to balance the equation? Market Makers are selling short, and smart money giant Institutions who were the first to enter are selling to take profits. Suddenly the large lots are now to the downside and what happens? The control switches to the sellers who are moving larger lots. Now money is flowing out of the stock, yet the price may go up a bit briefly. 

Large lots are usually wiser investors and traders, who know more than the other investors and traders. They are the Mutual and Pension Funds that have access to information often not yet available to Independent Investors and Retail Traders. It can be assumed that the smaller the lot size, the less the investor and trader knows and understands about the market. When the large lots dominate the buy side, money is flowing into the stock and they are controlling the price action. As smaller lots move in a shift of power occurs and the large lots move to the sell side, thus money is flowing out of the stock. The price will probably continue to move up for a brief period of time, but it is at risk of a sudden collapse when the odd lot buyers dry up and no more buyers come into the stock. 

As the stock collapses and reaches a price or equilibrium near a base or bottom, those smaller lots who held through the collapse reach an emotional point of extreme pain of loss and begin to sell in panic. In response the large lots and Market Makers switch roles again, Buying-to-Cover their profitable shorts and buying to hold as the stock moves up again. 

Summary

So money flowing in and out of a stock is constantly occurring and every time you take a position in a stock, there are three other positions at the same time in that same stock. You need to be aware of each of those, and make sure that you are with the right group. Most of the time, traders who are having problems with their trades are in the wrong group. Smart money which are the large lot Mutual and Pension Funds have their own agenda that has little to do with the small lot Independent Investor and Retail Trader. They are not aware of you, so keep your trading in perspective. This is a huge advantage that most Independent Investors do not appreciate, because being invisible is a good thing. Trading as an individual is a good thing too.

Get started in the right direction. I invite you to watch a series of short Videos about the basics of the Stock Market for New Investors & Beginner Traders on my website TechniTrader.com HERE. Sign Up for full access.

Followers of this blog may request a specific article topic by emailing: info@technitrader.com

Trade Wisely,

Martha Stokes CMT

http://technitrader.com

Chartered Market Technician

Instructor and Developer of TechniTrader® Stock and Option Courses

©2016 Decisions Unlimited, Inc. All Rights Reserved.

TechniTrader is the Registered Trademark of Decisions Unlimited, Inc.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor, it is strictly an educational service.

Posted on August 27, 2016 by Registered CommenterMartha Stokes CMT | Comments Off | EmailEmail | PrintPrint

"All About Bollinger Bands®" by Martha Stokes CMT

                      Market Conditions And Bollinger Bands

Bollinger Bands® are used as a technical indicator, that help Retail Traders read stock charts more easily. Bollinger Bands are a channel indicator. Channel indicators are lines that are drawn by the computer software program, above and below the price on the chart. The difference between Bollinger Bands and other channel indicators, is that Bollinger Bands expand and contract with the dimensions of the Candlesticks or Bar Chart price. 

Often times, a beginner who is just learning how to read charts has a difficult time seeing sideways price action, and when a compression pattern is forming. Compressions are important technical patterns to recognize early, because these tight price patterns end with a sudden velocity or momentum run up or down. By using Bollinger Bands which are a line above and below the Candlesticks on the chart, compression patterns are easier to see so that a Retail Trader can prepare in advance for the breakout move. 

A breakout move is when price suddenly moves out of the tight sideways pattern, and runs up or down many points. Bollinger Bands are the best channel indicators to use due to their unique way that the bands expand and contract with price. When the Bollinger Bands become narrow, this is indicative of a compression of price with the potential for a big price move. The tighter the Bollinger Bands are the more momentum is likely to occur.

Bollinger Bands can be placed on Price charts, Candlesticks, Volume Bars, and other line indicators. When using Bollinger Bands do not also use Moving Average or Regression Line Indicators on the chart, as this will make it harder to read and identify the Bollinger Band compression patterns.

Bollinger Bands is a wonderful channel indicator. However the bands cannot tell the Retail Trader which direction price is going to move. Therefore traders should use additional indicators such as Volume, Dark Pool Large Lot, Hybrid, and Quiet Accumulation/Distribution Indicators as well. These will reveal whether the price is going to break to the upside or the downside. By incorporating other directional indicators, Bollinger Bands analysis improves success for most Trading Styles.

Keep in mind that Bollinger Bands, are designed for sideways Market Conditions. There are 6 primary Market Conditions in the automated marketplace, and Bollinger Bands works best for Platforming, Consolidating, Bottoming or Topping, and Moderately Trending Conditions. Bollinger Bands are not ideal during Velocity or Trading Range Market Conditions as the price action distorts them resulting in patterns that are extreme, and the bands do not react properly to the price fluctuations.

Bollinger Bands are becoming a popular indicator for many types of traders who depend on breakout patterns to trade. Keep in mind that during certain Market Conditions Bollinger Bands will stay close to the highs of Price or the lows of Price, but that is not an exit signal. This happens when the bands are defining the momentum energy during a Moderately Trending Condition.

Summary

Retail Traders who struggle to read Price and Trend on charts will find Bollinger Bands useful and helpful. Some traders however find the bands distracting. Using Bollinger Bandwidth as an alternative to Bollinger Bands on Price, is a good option for many Retail Traders who do not like their Price and Candlesticks cluttered with lines.

Learn more about Bollinger Bands on my TechniTrader.com website HERE.

Sign Up for full access to the Learning Center.

Followers of this blog may request a specific article topic by emailing: info@technitrader.com

Trade Wisely,

Martha Stokes CMT

www.TechniTrader.com
Chartered Market Technician
Instructor and Developer of TechniTrader Stock & Option Market Courses
 

Copyright©2016 Decisions Unlimited, Inc. dba TechniTrader.  All Rights Reserved.
TechniTrader is also a registered trademark of Decisions Unlimited, Inc. 

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor; it is strictly an educational service.

Posted on August 27, 2016 by Registered CommenterMartha Stokes CMT | Comments Off | EmailEmail | PrintPrint
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