Which Stock Indicators Drive Profits? - Candlestick Patterns Explained by TechniTrader®

Quantity Defines Many Aspects of the Trade

There are massive internal and hidden Market Structure changes going on. Using ALL of the Data available from the markets is imperative for reliable and highly profitable trades. There is often confusion regarding the least-used Data Set for stock indicators, which is QUANTITY.

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Here is a list of what Quantity reveals in Candlestick Chart Analysis:

Who controls price. There are now 12 Stock Market Participant Groups who at any time can seize control of price and dominate price direction, run potential, and the sustainability of the run.
How they are controlling price. There are numerous stock order types that Retail Traders do not have access to, such as Time Weighted Average Price (TWAP) and all of its variable combinations. There are also many routing systems only available to Professional Traders and Accredited Retail Investors using professional platforms.
On which side of the trade is the dominance? In order to fill a large-lot order, numerous smaller lots are often bundled into the same order. That may not be reflected in price. Oftentimes, smaller lots are buying into heavy large-lot selling as Dark Pool Quiet Rotation™ by Giant Funds is well-hidden. This means the Retail Trader is more likely to experience a whipsaw trade.
How price behaves with any Stock Market Participant Group dominance. Retail Traders tend to be highly emotional, and stock prices tend to run on lower quantity levels. This exposes a weakness of the run prior to whipsaws or retracements that can wreak havoc on short-term trades.
Duration of the run. Quantity Data helps reveal whether larger lots are continuing and increasing their buying or selling during the run. This occurs when Professional Traders take control and move price ahead of High Frequency Traders (HFTs) with sufficient stock Volume to trigger the High Frequency Trader algorithm.

It doesn’t matter what Trading Style you use, whether it is Swing, Day, Intraday, Position, or Intermediate-Term. All Trading Styles need to incorporate stock indicators that complete the Data Set for Stock Chart Analysis.

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When Technical Analysis was first developed over 50 years ago, price was considered the most important indicator, and rightly so for that era. However, the markets of today are completely different.

The basic categories of Quantity Data Indicators are:

Pure Stock Volume Indicators. Like pure Price Indicators, these are vital to providing accurate and straightforward analysis of the quantity of shares exchanging hands per your trading time period, aka daily for Swing Trading, 1 or 5 minutes for Day or Intraday Trading, and so on.
Flow of Funds Indicators. These are the least understood and often the most valuable to Position Traders and Momentum Traders.
Large-Lot vs. Small-Lot Indicators reveal which side of the trade is controlled by the Large-Lot Trader or Dark Pools.
Stock Volume Oscillators are different from Price Oscillators in terms of analysis. These reveal Dark Pool Quiet Accumulation vs. Dark Pool Quiet Rotation or Dark Pool Quiet Distribution patterns of Large Lots and Professional Traders.
Short-Term vs. Long-Term Quantity Analysis Stock Indicators. Understanding whether an indicator for quantity analysis data is ideal for short-term trading or long-term investing is critical.

Summary

Most traders who have been trading for a couple of years to more than a decade have a good grasp of Price and Time Indicators. What is lacking in their education and their stock indicator tool set are the Quantity Data Indicators. Without this vital Data Set, HALF of the analysis is missing. This results in whipsaw trades, minimal or breakeven profits after the cost of the trade is calculated, frustration, anxiety, and a lack of confidence in your ability to choose stocks that will be consistently profitable. Using Quantity Indicators takes the guesswork out of choosing the best stock for your Trading Style.

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If you have not yet begun to trade or invest, go to Introduction: Learn How to Trade Stocks – Free Video Lesson to get started.

Learn the steps to trade like a pro with this introductory mini course. You will learn what it takes to create a Professional Trading Plan that can help you achieve your trading goals: How to Create a Professional Trading Plan

Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a StockCharts chart, courtesy of StockCharts.com

Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses