Stocks & Commodities V. 35:10 (30–35): An Early Warning System, Part 3 by Mike Slattery

An Early Warning System, Part 3 by Mike Slattery

In this final part of a three-part series, we’ll describe a swing trading system that provides traders with a simple, straightforward set of rules to help anticipate price trends based on significant volume increases.

If you sell me one share of stock and that transaction represents the entire number of trades for that equity for that trading day, then the total volume for that day would be one (1). This would represent little interest and lack of enthusiasm for this stock and its price. This price is unlikely to fluctuate (beyond this one trade’s price change)—it would be impossible to fluctuate, as price cannot change without volume sufficient to create an atmosphere where market dynamics can come into play, allowing for fluctuation of price ...