Wednesday, October 18, 2006

Importance of volume

While looking at stocks on my research list I noticed a nice move in BBW in its daily chart. The stock broke out of resistance at 24.44 on high volume and made a move to 27.85. This would have been a nice swing trade.

I am not a swing trader but I do see the significance of volume in the intraday charts also. I have a intraday chart of PJC. You can clearly see how volume gives clues to the impending move.

When you look at the charts, these trades will look very easy. When you are actually trading it is not easy to see the move when it forms. Trading is a probability game. Using volume as an indicator will help increase your odds but there is still a chance for loss. That is were the stop loss comes into play.

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About Me

I have been trading for 5 years. It took close to a year before I became profitable. I find that I am improving gradually each year. My method of choice is scalping. My edge lies in tape reading NYSE stocks and staying on the side of the specialist. That is the method I learned when I started. As I build up my capital I will try new styles and trade new markets. In late 2006 my trading hit a rough patch after the introduction of the NYSE Hybrid system. For most of 2007, I have been on a search for new strategies that would help me adapt to the market.