Volume Tutorial:
Concurrent Volume Signals
Here is an example of how much people can profit from our service within a
single month of trading. MarketVolume employs an institutional investor to
make use of our volume signals, and make trading decisions based upon
them. Below is a table of how well he did just in the last month.
|
Security |
Return |
| Options (SPX Feb) |
-69% |
| Options (SPX Mar)
|
240% |
You can see more details about the above table in the Chart
School section of our site under 'Chart of the Week'.
We often get questions from our
customers about why some peaks in the volume moving average (VMA) are
taken into consideration and some are not. Due to the number of customers
whom have asked this question, we feel it appropriate to explain to
everyone in more detail about how our indicators work for different
types of trading and situations.
With the chart below we try to
explain how short-term and mid-term traders can make profitable trades using
our indicators.
Example for mid-term traders playing
long.
(They are looking for VMA surges on a declining
index)
In the past week there have been many
points at which there was a large increase in the VMA, but the index did
not substantially change direction. This is the formation of what we call
'concurrent volume signals' where the buildup of large amounts of
supporting volume are signaling the formation of a longer term support
level for the index. In this situation it is most always profitable to buy
on the surges of the VMA and average out the price of your contracts in
anticipation of the market's upcoming reversal.
Example for Short-Term traders playing
long.
(They are looking for VMA surges on a declining
index)
On each new volume moving average (VMA) surge we
increased the quantity of contracts in order to lower the average purchase
price of all the contracts.
Players who purchased long-position contracts at any
point where the index was declining and there was a large surge in the VMA
are now in a profitable position.
You may ask who was able to predict the lowest points in
this example. These are the institutional investors who know where a great
many stop-loss orders were placed, and if they drove the index to that
point they would be able to purchase those shares from the people whose
stop-loss orders were executed. Some of these people were forced to sell
their positions at this point because they were under the pressure of
their margin accounts.
We hope that the examples have helped you gain a
better understanding of how to use our indicators.
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