Stock Trading on Volume – Following the Market Crowd

The volume confirms a trend or other types of indicators in technical analysis. If you are monitoring a particular stock closely, watch for high volume trades, because they may be telling you a story that you need to hear. It also confirms a particular trend or breakout that you are monitoring.

For example, if you see an indicator telling you that there might be a rally, and then you see high volume, it might be a good stock to invest in or trade in. If there is average volume, you might want to reconsider or try to find another confirming indicator to justify such a move.

High volume might also indicate that a large institutional investor is making a play on the stock. If the stock rallies up, you can infer that they are buying. If they decline, then you can infer that they are selling that stock. You can be sure, that is a market maker or institutional investor is going in or out of a stock, that a flood of other smaller investors and traders are closely to follow.

Stock Trading Strategy with Ranges to Trends

One of the simplest stock market trading strategies is leveraging when a price goes from a range into a trend. It’s still hard to execute and you still have to think about money and risk management. If you are new to stock trading, you might want to learn this first.

The basic idea is this. First you find good stocks that are trading in a tight range for a long time. Get a list of these stocks to watch.

What you are watching for is a breakout on either side, up or down. When you see a stock that breaks out of its tight trading range, keep an eye on it. Wait a couple of days to make sure that it is still rising. This is what we call a confirmation indicator.

Also, look for it to break out on volume. If there is a large volume of trading during the breakout, than you might have a stock that is starting to trend.

Good Stock Investments Right Now

The summer is a crazy time for investors in general. For the savvy ones, it has always been a good time to buy because it’s usually on the low price and volume end. It starts to pick up around the fall when you can take some profits or double down on margin as you see gains. But right now is a confusing time because it’s really hard to say what are good stocks to invest in because of all the things that are happening right now.

Here are some of the things you want to think about as you approach the summer investing season. The Fed’s easy money policy will end soon. That means the US dollar is likely to regain some strength. But it will probably be at the cost of the stock market. So you will want to adjust your investment strategy accordingly.

In addition to that, we are seeing some inflation. This week we will see some very important inflation numbers. If it is still trending up, we are in some trouble. We have already seen some bad economic numbers come out in recent months. It this trend continues, it will not be good for stock investing.

The crisis in the Middle East is also shaking some things up. It seems as if the social unrest in the big oil producing countires like Saudia Arabia and other states aren’t looking so bad. But the unrest is causing still some spikes in oil prices as the world anticipates shortages from countries like Libya. That is one of the causes of inflation.

Another thing you want to think about is how the US will deal with it’s debt problem. If they don’t tackle it soon, investors will likely look elsewhere for their capital. Most likely, they will probably go and find refuge in China.