The concepts behind this system are not difficult.
It is a breakout system for small-cap stocks, where the presumed price/volume relationship works. You score a basket of low-float high-momentum, fast-growing stocks (identified through the stocktables.com site just because they have an easy to use ranker to get these stocks - you could of course make your own) just to know where the stock is in the cycle identified by Hershey. You want volatile stocks that move in cycles of more than 20% from trough to peak and which exhibit the dry-up phenemona.
When volume is in dry-up, price is also (but not always) supposed to be in a trough. It scores better if it is.
When volume goes above a certain average of the previous dry-up periods early in the day it should be a signal a break-out is underway. There are a variety of ways out. Stop loss, profit target, or waiting for volume to start to decline. Usually you want to exit at peak rising volume, that is volume that is as large or larger than it has been in the past during rallies.
If you want to know the intricacies of the P/V formula, or the ranking system, best read the Hershey posts.
It is an analytical framework more than a system. It seems Hershey traded with a lot of personal discretion. Personally I am scared out of my wits of FBOs and avoid stuff up too much even with volume. FBOs are a consequence of trading relatively thin markets. They will become more of a threat as this method catches on.
It is a breakout system for small-cap stocks, where the presumed price/volume relationship works. You score a basket of low-float high-momentum, fast-growing stocks (identified through the stocktables.com site just because they have an easy to use ranker to get these stocks - you could of course make your own) just to know where the stock is in the cycle identified by Hershey. You want volatile stocks that move in cycles of more than 20% from trough to peak and which exhibit the dry-up phenemona.
When volume is in dry-up, price is also (but not always) supposed to be in a trough. It scores better if it is.
When volume goes above a certain average of the previous dry-up periods early in the day it should be a signal a break-out is underway. There are a variety of ways out. Stop loss, profit target, or waiting for volume to start to decline. Usually you want to exit at peak rising volume, that is volume that is as large or larger than it has been in the past during rallies.
If you want to know the intricacies of the P/V formula, or the ranking system, best read the Hershey posts.
It is an analytical framework more than a system. It seems Hershey traded with a lot of personal discretion. Personally I am scared out of my wits of FBOs and avoid stuff up too much even with volume. FBOs are a consequence of trading relatively thin markets. They will become more of a threat as this method catches on.