Stock Market Logic Series #12
TradingView is so awesome that they let you change any piece of the chart .
You can use this chart template for visual clarity.
FYI, all my chart templates, are for visual clarity trading purposes, you can choose anyone that looks good for your eyes.
So in this chapter in the series #12 lets see what we have here.
1 - The trendline is still alive.
2 - On the correction, you can see that there is a high volume on the upside. So it means that the puppet master is buying.
3 - You could see that there are 3 down candles, on increasing volume, but their spread is smaller and smaller. So it means that the puppet master also buying on the downside, also, stops where hit there strongly, and many people stopped out directly into the hands of the puppet master, classic puppet master move.
4 - The biggest volume is on the up side ! since this is the last (recent) piece of information, this is what counts! so currently, the chart is LONG biased.
5 - Crack pattern AWARENESS- if the price will test the low, it will be the crack pattern and then the price can go down up until $105 again. It will also be a break of trendline so it makes sense that there will be a fast SHORT move. But if the price goes to test $135 and then makes $140 push, it will be a failure of the crack pattern, which increases even more dramatically the LONG bias. WHY? Because if it is short... the crack pattern should materialize... since it can't materialize... it means it is not short, so it is LONG.
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I already showed the same exact logic, in AMD, failed crack pattern (in the past posts).
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2 & 3 & 4 Examplify beautifully my concept of FORCE of the puppet master.
Template
Stock Market Logic Series #11If you are not adding the pre-and-after-hours of trading on your chart, you don't actually see the full picture of your trading analysis.
A lot of times, the market makers will push the price on the pre/after-hours times on a light volume, and will define the true low or high of the day, where you could have gotten inside with a much better price and stop placement, so when the trading hours starts, you don't feel lost that you don't have a close risk point to put your stop at.
Also, in those outside-hours, you can clearly see a much more sensible picture where the trendlines are much more clear and it is clear what the price is doing.
Also, I don't even talk about when EARNINGS are happening... and there is a high chance for gap to happen in one direction or the other.
After a gap happens, if you only look on the trading hours, you have only the information of the first 5 min of the day so you have some estimation of what could be the high or low of the day, but looking at the pre-market you could see what are the possible true high or low of the day, which is completely different.
Also, after a gap happens, your indicators are "wrong", since they miss information.
As you go into a higher frame this becomes less important, but still... some crazy huge moves start in the pre/after-hours and the price just never comes back, it just flies to the moon. So why not position yourself at a better price with better stop placement?
The logic behind it, is that if BIG money wants a stock badly... he will buy it whenever it is possible and available before the other BIG money will snatch it from it...
Look how clear price action looks in this chart:
Odds favor the long side on BTC
You can clearly see that there was a volume spike that absorbed the selling of the weak hands, now you see that the volume returns to the direction of the trend up, so people are not willing to sell Bitcoin at a lower price, so the puppet master has to increase his bidding price so he can get filled after Trump WON the election.
Add to it that the price was consolidating for half a year and holding its value near the top.
How to PROTECT your profits while letting them runIn the trading business you need to let your profits run while also managing your risks that means to cut your losses short.
Losses of unrealized profits are real profits that are lost. What if you could save them?
Well, there is a way...
It is not always available but it is one you want to know since if you can save 3 points of wiggle room and pay 1 point or less, over the long run it adds up to HUGE chunk of profit to your bottom line.
The reason I applied this method is because TSLA was doing 3 days in a row a push and gap up, so it seems likely people will want to take profits... but this is TSLA... it can shoot up above 500 and reach who knows where... (she did it before...).
So I want to TAKE MY HUGE profit, while giving it the option to continue to the moon, if it will want to do so...
You can never take the very top anyway, so if you "give back" 1 point of profit it is considered reasonable, but if in case the price falls down sharply or gapped down I can give back maybe 3 points with this strength of volatility, which is undesireable.
So what I did?
I sold the PUT option at strike 470 at a price of $15 (my point was $17) so for me it is even less than a point so it is very attractive deal to me...
Then... if the price had crushed down it meant for me that I sold my stocks at a price of 470 while paying the hedge cost of the PUT option of 15 so it is equivalent to me that I sold my stock at a price of 455, which is ALMOST the top. Making sure ~90% of the profit stays in my pocket. So I WIN.
If the price would continue to shoot up, then I making SUPER HUGE MONEY, while sleeping like a baby, that I already realized my HUGE profit. So I WIN.
So either way, I WIN !
Since the price did not crushed the next day and hold, and my stop loss advanced, so there was no longer need to my PUT option hedge since if price will fall I will get out with the stop loss with the same profit. So I sold the PUT hedge for a small loss, so the hedge cost me 0.25 a point overall. SUPER WORTH IT !
FYI, this comes from years of experience, but I give you some of my experience, you could do it too.
The moral of the story... when you have HUGE profit, and you feel itchy to take profit, don't ! and try to hedge yourself with options ! this way, if you were wrong and you have GME, AMC on your hand, you don't let them go, and you WIN either way ! Sleeping like a baby.
A stock to watch for... LONG setup or PUMP and DUMP ?
PSQ Holdings, Inc. (PSQH) has recently seen a significant surge in its stock price following the announcement that Donald Trump Jr. will join the company's board of directors. This news has generated substantial investor interest, leading to a more than 270% increase in share price for the session.
The addition of Donald Trump Jr. to the board is a strong positive signal for the company, indicating potential strategic changes and increased credibility. Given the recent surge in stock price and positive analyst ratings, there is a strong case for a continued upward trend.
In addition, his father is the USA president...
And you know what I think of human nature...
So trust human nature... and watch for a LONG setup on this stock.
Obviously, watch it carefully so it will not turn out as a pump and dump, so manage your risk properly.
How I identify the best forex pairs to trade: (2)Here is how I identify the best forex pairs to trade: (Publication #2 / Update)
In the top left panel, the indicator 'Compare Forex' displays the PERFORMANCE of each major currency.
The USD (red line) has been the strongest currency for the past 2 months on H6 charts.
By identifying the strongest currency, all that remains is to trade the USD against all the other currencies since they are weaker.
= Smooth stress-free charts.
I look at my trades 2-3 times a day to see if they are still blue or red. Takes a few minutes.
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DEC 1st UPDATE: Last week, the JPY became the strongest performing currency. The JPY (yellow line) crossed above the USD (red line). When the performance of the USD became weaker than the JPY = The USDJPY PAIR turned down.
Market Going UPWe have been doing a cup and handle pattern for a long time...
The RSP shows you what the general market is doing unweighted and less distorted.
We have been experiencing much downfalls in the previous weeks in the BIG STOCKS,
but the rest of the market was not impacted...
This means...
Someone painted the market red... while buying the whole market...
Volume also seems to confirm more bullish bias than bearish bias.
How to use Trading View - Part 2 - Drawings and AlertsHow to use Trading View - Part 2 - Drawings and Alerts
Remember to assign different colours to different Time Frames as we saw in the last video. www.youtube.com
Also, you can be a bit innovative and use the Trend lines to create alerts not just for the price but time as well.
USDCAD H1 - Stress-Free Clear Charts.Stress-Free Clear Charts. (Required 10 years in R&D.)
In this layout, we see these indicators:
(From top to bottom of the screen)
-Angle: Shows the Angle of the Trend.
-Bear&Bull Powers: Displays who are in Power, the Bulls or the Bears.
-Strength: Shows the Strength of the Trend.
-Template: Always clearly shows the direction and precisely where to open and close (where to flip position). We open at the beginning of the Trend and stay in all the way till the end, stress-free. Turns perfectly.
-Performance: We see where to enter and close, the pullbacks and the performance.
-Odds: Shows the Odds everywhere.
-Probability: Shows the Probability all the way.
-Compare Forex: We see the performance of each currency of the Pair on chart. Each line is one currency. USD in Red. CAD in White. When the USD is above the CAD, the USDCAD pair goes up. And vice versa, when the USD is below the CAD, the USDCAD pair goes down. The background color displays the intensity of the trend.
Gap opportunity setup -TSLA
Gaps are opportunity setups for trading purposes, but why?
Because at those times you know for sure that something is happening with the stock so it will move to a certain direction. It gives you a signal of one of the following scenarios:
- Someone is "exploiting" news and creating a shakeout to generate liquidity for himself so he can buy more stocks by inducing FEAR into the hearts of the paper hands.
- Someone urgently wants to get rid of his stock, so he reduces the price until he finds uninformed value investors who can take from him the stocks. Since he is the puppet master who is a giant of industry relative to the ants of uninformed value investors, there will never be more uninformed value investors demand than his supply, so the gap can't be filled.
Note to self:
To create educational idea about this.
Here I just described 2 scenarios out of 8 possible scenario combinations.
You have TrendUP/TrendDown (2)
Multiplied X by
Gap up/Gap Down (2)
Multiplied X by
Filled/ Not Filled (2)
Equals = (8) combinations.
Again, if you don't have the master puppet philosophy of stock market logic, you are always confused. If you look at the market like the master puppet, everything makes sense and you have calm and easy trading.
See my other posts about the puppet master theory and philosophy to know more.
See that there is an upcoming earnings in TSLA very soon, the stock is just begging to move...
If the stock will remain in place, and there will be gap up in earnings, there will be Island pattern so this is clear strong indication to the LONG side...
AUDUSD H1 -AUD Strongest Currency Against USD Weakest=UpTrend(2)This indicates which currencies are GAINING value and which currencies are LOSING value.
As a result, we see which pairs to trade.
By trading the currency gaining the most value against the currency losing the most value = We aspire to ride the strongest trends, obtain the highest performance, be in the safest trades and to avoid the choppy chaotic charts.
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This layout displays the Value, Performance and Pressure behind each currency.
Let's break it down by panel.
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In the top panel: Indicator 'Currencies' / Settings: Performance All 8 Currencies.
We see the performance of all 8 major currencies.
Most recent bars:
AUD (Orange line) is the strongest currency.
USD (Red line) is the weakest currency.
So, we bought the AUDUSD pair because both currencies are going opposite ways (AUD going up / USD going down).
--
In the second panel: Indicator 'Currencies' / Settings: Pair Performance.
We see the Performance of the 2 currencies of the pair on chart.
The AUD (Orange line) and the USD (Red line) + the Pressure of the Pair in the background.
The brighter the color in background = The higher is the performance for the pair on chart.
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In the 3rd panel: Indicator: The 'Template'. (Over 10 years in R&D to paint the chart perfectly.)
Resistance was broken and retested. Resistance became support.
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In the 4th panel: Indicator 'Currencies' / Settings: Pressure.
We see the Pressure behind each currencies of the pair on chart.
The Higher is the line = More Upside pressure.
The Lower is the line = More Downside pressure.
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5th panel: Indicator 'Currencies' / Settings: Value of the Base currency (AUD).
Displays the Value of the AUD + Intensity Background (Up/Down)
6th panel: Indicator 'Currencies' / Settings: Value of the Quote currency (USD).
Displays the Value of the USD + Intensity Background (Up/Down)
Strategy for 5th and 6th panels:
Blue Background (One Currency Gaining Value)
AGAINST
Red Background (One Currency Losing Value)
= Pair Trending.
(If you want to learn more about this, we have recorded a video. Comment 'Video'.)
AUDUSD H1 - AUD Strongest Currency Against USD Weakest = UpTrendThis indicates which currencies are GAINING value and which currencies are LOSING value.
As a result, we see which pairs to trade.
By trading the currency gaining the most value against the currency losing the most value = We aspire to ride the strongest trends, obtain the highest performance, be in the safest trades and to avoid the choppy chaotic charts.
---
This layout displays the Value, Performance and Pressure behind each currency.
Let's break it down by panel.
--
In the top panel: Indicator 'Currencies' / Settings: Performance All 8 Currencies.
We see the performance of all 8 major currencies.
Most recent bars:
AUD (Orange line) is the strongest currency.
USD (Red line) is the weakest currency.
So, we bought the AUDUSD pair because both currencies are going opposite ways (AUD going up / USD going down).
--
In the second panel: Indicator 'Currencies' / Settings: Pair Performance.
We see the Performance of the 2 currencies of the pair on chart.
The AUD (Orange line) and the USD (Red line) + the Pressure of the Pair in the background.
The brighter the color in background = The higher is the performance for the pair on chart.
--
In the 3rd panel: Indicator: The 'Template'. (Over 10 years in R&D to paint the chart perfectly.)
Resistance was broken and retested. Resistance became support.
--
In the 4th panel: Indicator 'Currencies' / Settings: Pressure.
We see the Pressure behind each currencies of the pair on chart.
The Higher is the line = More Upside pressure.
The Lower is the line = More Downside pressure.
--
5th panel: Indicator 'Currencies' / Settings: Value of the Base currency (AUD).
Displays the Value of the AUD + Intensity Background (Up/Down)
6th panel: Indicator 'Currencies' / Settings: Value of the Quote currency (USD).
Displays the Value of the USD + Intensity Background (Up/Down)
Strategy for 5th and 6th panels:
Blue Background (One Currency Gaining Value)
AGAINST
Red Background (One Currency Losing Value)
= Pair Trending.
(If you want to learn more about this, we have recorded a video. Comment 'Video'.)
AUDUSD H1 - AUD Strongest Currency Against USD Weakest = UpTrendThis indicates which currencies are GAINING value and which currencies are LOSING value.
As a result, we see which pairs to trade.
By trading the currency gaining the most value against the currency losing the most value = We aspire to ride the strongest trends, obtain the highest performance, be in the safest trades and to avoid the choppy chaotic charts.
---
This layout displays the Value, Performance and Pressure behind each currency.
Let's break it down by panel.
--
In the top panel: Indicator 'Currencies' / Settings: Performance All 8 Currencies.
We see the performance of all 8 major currencies.
Most recent bars:
AUD (Orange line) is the strongest currency.
USD (Red line) is the weakest currency.
So, we bought the AUDUSD pair because both currencies are going opposite ways (AUD going up / USD going down).
--
In the second panel: Indicator 'Currencies' / Settings: Pair Performance.
We see the Performance of the 2 currencies of the pair on chart.
The AUD (Orange line) and the USD (Red line) + the Pressure of the Pair in the background.
The brighter the color in background = The higher is the performance for the pair on chart.
--
In the 3rd panel: Indicator: The 'Template'. (Over 10 years in R&D to paint the chart perfectly.)
Resistance was broken and retested. Resistance became support.
--
In the 4th panel: Indicator 'Currencies' / Settings: Pressure.
We see the Pressure behind each currencies of the pair on chart.
The Higher is the line = More Upside pressure.
The Lower is the line = More Downside pressure.
--
5th panel: Indicator 'Currencies' / Settings: Value of the Base currency (AUD).
Displays the Value of the AUD + Intensity Background (Up/Down)
6th panel: Indicator 'Currencies' / Settings: Value of the Quote currency (USD).
Displays the Value of the USD + Intensity Background (Up/Down)
Strategy for 5th and 6th panels:
Blue Background (One Currency Gaining Value)
AGAINST
Red Background (One Currency Losing Value)
= Pair Trending.
(If you want to learn more about this, we have recorded a video. Comment 'Video'.)
What are Volume Candles and how to use themVolume Candles are a great chart type you can use to integrate volume analysis into your trading. TradingView is a superb platform that offers this chart type in real-time, so you can immediately get a completely different feel of what the market is actually doing.
As an experienced trader, understanding volume candles is crucial in getting a deeper insight into market dynamics. Unlike standard candlestick charts, which focus primarily on price movement, volume candles combine price action with the strength of trading activity (volume). This offers a unique perspective that can give you an edge in reading market sentiment and momentum.
What Are Volume Candles?
Volume candles are modified candlestick charts where the width of the candle is proportional to the trading volume during the corresponding time period. The typical candlestick elements—open, high, low, and close prices—are still present, but the volume aspect adds an additional layer of information, enhancing the clarity of price action.
Key Features of Volume Candles:
Height: Represents price movement (just like in regular candlesticks).
Width: Indicates the volume of trades within that period.
Unique Information You Can Extract from Volume Candles:
1. Volume-Driven Price Action Volume candles show how much trading interest exists at various price levels. When you observe a large volume candle, it tells you that a lot of market participants were active at that price. Conversely, a thin candle signals lower activity. This helps you:
A. Identify levels where strong participation occurs (institutional players what I call the puppet master).
B. Spot consolidation zones where volume is low, which often precedes significant price moves.
2. Momentum Confirmation High-volume candles that align with price trends suggest strong momentum.
Wide Bullish Candles: If you see a wide up candle during an uptrend, it indicates that the buying pressure is backed by solid volume. This gives more credibility to the uptrend and hints at a continued move upward.
Wide Bearish Candles: Similarly, a wide down candle during a downtrend signals strong selling pressure.
Volume Candle Chart can also be used for day trading purposes where you need to act FAST.
This TradingView chart type is extremely good so you don't need to compare the traditional volume bars on the bottom of the chart.
IMPORTANT: You must understand the puppet master mentality, which gives you context.
*** EXTRA: You can use this theme color.
Stock Market Logic Series #10Do you think the above is a coincidence?
There are no coincidences in life - only cause and effect.
You are where you are because of a cause that is bound to physical and natural laws.
The same pressure of physics that works on the airplane wing, or the balloon that wants to push its way up when pressed into water (pool), also works in the stock market.
You just have to KNOW how to SEE it. follow my explanation.
If you follow the price action, you can see clearly where the high-pressure volume comes in, you can't miss it. It is obviously seen.
Then you need to wait for the correction, and you want to see that the correction is demonstrating a low-volume pressure behavior.
When you see this low volume pressure behavior, the stock has DRIED UP.
This DRYING-UP effect is a key indicator of a probable future LIFT and stock movement.
You want to ask yourself the question:
Why the stock is not falling down anymore?
The question of "WHY" is searching for the cause BEHIND the stock movement.
The stock movement is only the effect!
In previous posts, I explained the other LOGIC behind this pattern, and explained why the price should not fall down and with a high probability of going up.
If you read any of the books of Jesse Livermore, he clearly states that you need to "KNOW" that the stock will move your way, first let the market "SHOW YOU" exactly what will happen, and only then you put in a trade.
The KEY CONCEPT in this idea is the DRYING UP OF VOLUME.
When you understand the WHY behind the stock movement, buying and selling are emotionless.
The focus should be only a trading setups that you "KNOW" it is highly probable to move in your expected trade direction. You "KNOW" because you have stock market LOGIC to back it up.
If you want a specific post about Jesse Livermore's trading rules, let me know in the comments.
It is always important to make sure that you have the correct perspective on the stock market, otherwise, you get confused. There is only at every given time only ONE side to the market as Jesse Livermore said, "The RIGHT SIDE". This goes back to my idea, that at every given time the puppet master ONLY buys or sells but NOT BOTH.
Two Daggers potential Future trade - watch for itThis stock has the potential to become the two daggers buy signal.
See the educational post attached to understand this pattern.
Currently, it is just a potential to watch and not a realization.
Obviously, if the stock corrects immediately up so you get only one dagger so the setup has not come to fruition.
Stock Market Logic Series #8The natural psychological expectation is that after a stock goes up,
it will continue to shoot up and go to the moon.
But the truth is, that most of the time, the above does NOT happen immediately.
WHY?
Put yourself in the shoes of the BIG SHARK, the Puppet master...
You want to buy the stock so you increase the price to lure people to sell to you.
When you reach this point of selling, you know this is a price people are willing to sell...
So what do you do?
You stop buying and start ABSORBING all the selling from the weak hands.
Not all weak hands are the same.
Some people will want to sell at the new high or resistance.
Some people will fear and want to sell at support.
But what truly matters, is that when the BIG SHARK discovered where the ACCUMULATION zone,
he has zero motivation to mark the price up further. And before the next run-up,
he will stop force buying and start to let others sell into him (whipsaw motion).
This is the WHY, price will not move further up IMMEDIATELY.
And you will usually see a flag pattern or a triangle pattern before the next run-up.
So always remember to keep in mind, that the LONG SIDE needs a RUNWAY before takeoff.
I am talking here about being consistent and having extremely more confidence in your trading.
Once you understand the LOGIC behind the patterns, you are much more likely to trade them correctly.
It is much more bullish to wait for the RUNWAY to form than just buying a new high.
In this post, I explained the logic of why so many new highs are "fails" and do not take off...
How we have been trading EURUSD D1How we have been trading EURUSD D1 (Daily chart) with our indicators + hand-drawn trend lines.
After 10 years of R&D (we have been testing different indicators every day for a decade), we have developed our own Suite of 26 indicators. Here are just a few of them.
Indicators names (from top to bottom):
- Strength
Shows the strength of the market, the direction, pullbacks, equilibrium, and flats.
- Bear&Bull Powers
Shows the battle between the bears and the bulls.
- Angle
Indicates the direction and angle of the trend and the pullbacks.
- Template
Our main central indicator simplifying charts and bringing clarity.
- Steepness
Displays how steep the trend is and comments:
Going Up/Down | Trending | Strong/Weak | Pulling Back | Retracement | Flat | 75% Blue Background | ...
- Odds
11 indicators calculating the odds.
- Probability
75 indicators calculating the probabilities.
How we have been trading Bitcoin D1How we have been trading Bitcoin (Daily chart) with our indicators + hand-drawn trend lines.
After 10 years of R&D (we have been testing different indicators every day for a decade), we have developed our own Suite of 26 indicators. Here are just a few of them.
Indicators names (from top to bottom):
- Strength
Shows the strength of the market, the direction, pullbacks, equilibrium, and flats.
- Bear&Bull Powers
Shows the battle between the bears and the bulls.
- Angle
Indicates the direction and angle of the trend and the pullbacks.
- Template
Our main central indicator simplifying charts and bringing clarity.
- Steepness
Displays how steep the trend is and comments:
Going Up/Down | Trending | Strong/Weak | Pulling Back | Retracement | Flat | 75% Blue Background | ...
- Odds
11 indicators calculating the odds.
- Probability
75 indicators calculating the probabilities.
Stock Market Logic Series #6Use earnings reports to your advantage.
As I discussed in previous ideas, the big money at any given time will be entering the market or getting out of the market. Never both.
When the earnings report is good, and the stock falls down => big money used it as a good advertisement to get out.
When the earnings report is bad, and the stock goes up => big money used it as a bad advertisement to scare other people to sell him their shares, thus he gets it.
This is the logic, and this is what you would have done if you had a lot of shares to buy and sell.
Trading is a business and as such it has the same functions as regular business.
The beautiful thing about the earning of the BIG CAP stocks, is that they give you a very high probability of direction to the market indexes. This is a situation where you "know" the market is going to move a certain way. Most of the stocks will follow the index direction.
This gives you a very very good day trade opportunity.
TSLA is a big cap, so any move of her, will directly effect the indexes.
This is why it is important to be aware of the BIG CAP earnings reports.
If you monitor those earnings you will see that you can gauge with very good accuracy and confidence what the market will do on a specific day. And milk the market using a day trade technique.
I attach to you how the earnings report of TSLA which created a gap down.
Pulled all the other stocks down also.
This is not a coincidence...
Your thought process is:
- earnings report of BIG cap is out
- This will pull the market to certain direction and bias
- I "know" the bias with confidence
- Odds are in my favor this day :)
- Day trade
See the strong DOWN bias of all the stocks...
Moral of the story: You should be AWARE to the BIG CAP earnings report. It makes or breaks your day...
Stock Market Logic Series #5We are going to discuss the concept of FAIR price and how it is related to momentum.
This is also a missing piece of the puzzle related to the guppy moving averages. Which never explains the logic of fair price behind the moving averages. Just saying "traders are selling" or "investors are buying" without giving you the psychology behind the buying and selling.
The psychology behind buying and selling:
When you want something, you are willing to pay a premium on it, just to get it.
When you don't want something, you are willing to give a discount on it, just to get rid of it.
The Significance of Moving Averages in Stock Market Trading
In stock market trading, moving averages play a significant role in determining the fair price of a stock. Fast moving averages represent the short-term fair price, while slow moving averages indicate the long-term fair price. These moving averages serve as important indicators for traders, helping them understand the price trends and make informed decisions.
Trading Above the Fair Price: Strong Buyer Interest
When trading is above the fair price, it signifies that buyers are highly interested in acquiring the stock, even if it means paying above the fair price. This increased buying pressure drives the price up, as individuals value the stock and are willing to pay a premium to secure it. This scenario presents an opportunity for traders to benefit from price appreciation. Go with momentum.
Buying Opportunities: Trading Below the Moving Average
Conversely, when the price of a stock falls below the moving average, it indicates a potential opportunity for investor buyers. In this situation, the previous owner of the stock may become anxious to sell and is willing to do so at a price below the fair value. This creates a favorable buying opportunity for investors, as the stock can be acquired at a discount or fair price.
Trading Below the Fair Price: Anxious Sellers and Discounted Stocks
Trading below the fair price implies that the old buyer is motivated to sell the stock quickly. They may be eager to get rid of their position, leading them to offer the stock at a price lower than its fair value. For trading purposes, this means momentum is down, and you should look for an opportunity to sell. If the price is dramatically traded below the fair price (away from MA) this could FLAG you that a trend reversal may just happens. Remember the psychology of buying and selling. Ask yourself, if someone wants it, how come this price is so cheap?
Unfair Prices in a Downtrend: Waiting for Confirmation of a Decline
Moreover, when you are in a downtrend, when the price is above the moving average, it indicates that the stock is trading at an unfair price. However, if you have insights or analysis suggesting that the price will decline in the future, it may be wise to wait for the short-term trend to shift. By observing the stock's movement and waiting for the price to fall below the yellow fair price (moving average), traders can confirm that selling is indeed happening before making their move. Getting in too early, with the wrong trading technique, will get you hurt.
Assessing Market Conditions: Understanding Fair Prices and Moving Averages
By understanding the dynamics of fair prices and their relationship with moving averages, traders can better assess market conditions. They can identify when prices deviate from their fair value and use this knowledge to their advantage. This insight allows traders to make informed decisions based on price trends, helping them maximize potential profits and minimize risks.
Comprehensive Research: Beyond Fair Prices and Moving Averages
If you could couple of other factors that support your view of FAIR price. You can consider various factors such as company fundamentals, industry trends, and market sentiment to complement your understanding of fair prices and moving averages.
Enhancing Trading Strategies: Incorporating Technical Indicators
In addition to fair prices and moving averages, traders should also consider other technical indicators and tools to enhance their trading strategies. These may include volume analysis, trend lines, support and resistance levels, and oscillators. By incorporating multiple indicators, you can gain deeper insights into market movements and improve your ability to identify profitable opportunities.
Adapting to Market Dynamics: Continuous Learning in Stock Market Trading
Understanding the concept of fair prices in relation to moving averages is just one piece of the puzzle. Successful traders continually adapt and refine their strategies based on market conditions, new information, and evolving trends. By staying informed, conducting a thorough analysis, and employing sound trading principles, you can increase your chances of success in the stock market.
Hope this helps you, follow for more. Like this post to save it to your ideas for future reference, so you will not forget this principle.