Thursday, March 16, 2006

Market Internals


If you don't use market internals, you may suffer internal damage to your account. If you trade the index futures or their ETF's, you must master market internals to know the direction of the market and to never trade against it. Next step is tape reading. Next step is knowing where the pivot points or points of support and resistance are and looking for trend line breaks. Then you must incorporate statistical knowledge into your trading by knowing the avg daily range in price. Also you must look at morning gaps that have a high likely hood of being filled. You need to place key pivot points from the previous days trading and also set fib retracements if it looks like you've reached a reversal after a good run.

Do you know what direction to trade when the Trin is 0.5 or 2.0?
Do you know what direction to trade when the Tick just gave a reading of +1000?
Do you know what direction to trade when the put call ratio is 0.6 or 1.0?
Do you know what direction to trade when the up volume is 2x greater than down volume?

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