Determine Stock Market Participant Groups Buying or Selling Stock
The TechniTrader Flow of Funds (TTFF) indicator was designed for MetaStock Users and to help Retail Traders and Individual Investors see when giant Buy Side Institutions are moving into or out of a stock. There are currently over 12,000 Institution Funds trading stocks, and many of them have billions of dollars to place. Their presence in the Stock Market is dominant with over 80% of all order activity being some sort of Fund buying or selling.
In chart example #1 below, the TT Flow of Funds indicator is the blue line in the bottom chart window. The red line is a Subordinate Indicator that helps make the TT Flow of Funds indicator easier to read.
How to read the TechniTrader Flow of Funds indicator:
- First of all, the TechniTrader Flow of Funds indicator should be trending upward with steady and relatively consistent upward action as price moves up.
- Secondly, by keeping an eye on the Subordinate Indicator, which is a Linear Regression Indicator, we can watch for crossover patterns. During Sideways Candlestick Patterns, the TechniTrader Flow of Funds indicator will oscillate, but during Trending Patterns, it will step upward as the stock moves up. When Flow of Funds ebb or wane, it will be flat with the Subordinate Indicator hovering tightly.
- As it moves up, a sharp Stairstep Candlestick Pattern emerges, which is the signal that a heavy Flow of Funds occurred, as we see in the chart example. See where the blue line looks like a step.
Two areas to watch closely for when learning how to read the TechniTrader Flow of Funds indicator are the extreme high range and the extreme low range. These areas are early Topping and Bottoming warnings.
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 & Option Courses
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