right.
we can never predict how high the price will go.
So important to hold on to some lots and hold it for quite sometime till there is price exhaustion pattern.
The Pinch Journal
- Thread starter .sigma
- Start date
right.
we can never predict how high the price will go.
So important to hold on to some lots and hold it for quite sometime till there is price exhaustion pattern.
I am a firm believer in diagonal price trends.
Look at any chart, its most likely oscillating around some central tendency (mean/median) price while exhibiting price extremes on the top and bottom. Price can be sideways, or trending in an upward/downward fashion and its always the same song and dance.
So when I see a potential pinch and its also sitting on the bottom diagonal trend line in its range it confirms the pinch even moreso.
Look at any chart, its most likely oscillating around some central tendency (mean/median) price while exhibiting price extremes on the top and bottom. Price can be sideways, or trending in an upward/downward fashion and its always the same song and dance.
So when I see a potential pinch and its also sitting on the bottom diagonal trend line in its range it confirms the pinch even moreso.
I want to get discussions going on the importance of price and volume.. and volatility. I need you guys to jump in and give your views on this subject and how it applies to your trading.
For me volume is a great indicator... NOT of a directional indicator.. but an indicator telling me where value is being determined. When I say "value" i'm using this term loosely, and most likely what I mean is short term value.
Now volume in and of itself is a vague term and doesn't mean much. I use volume by price and volume by time, and both are equally as important.
Volume by Price tells me the price levels where participants love to create liquidity. Whenever a price level gets hit where a lot of volume is traded, you'll see price gravitate to that value time and time again.
Volume by Time tells me the activity for a particular day. If the avg vol is 1 mill and I'm watching a stock for a potential pinch set up and the pinch is getting tight and one day a massive vol influx occurs then that's giving me a bullish signal, its telling me somebody is either selling/buying at this price (usually buying) since the price is so low and has been battered for some time. This is a great indication to pay more attention to the stock and get ready to enter when the opportunity presents itself.
I got stats class in a bit so I'll continue this laterz bros
For me volume is a great indicator... NOT of a directional indicator.. but an indicator telling me where value is being determined. When I say "value" i'm using this term loosely, and most likely what I mean is short term value.
Now volume in and of itself is a vague term and doesn't mean much. I use volume by price and volume by time, and both are equally as important.
Volume by Price tells me the price levels where participants love to create liquidity. Whenever a price level gets hit where a lot of volume is traded, you'll see price gravitate to that value time and time again.
Volume by Time tells me the activity for a particular day. If the avg vol is 1 mill and I'm watching a stock for a potential pinch set up and the pinch is getting tight and one day a massive vol influx occurs then that's giving me a bullish signal, its telling me somebody is either selling/buying at this price (usually buying) since the price is so low and has been battered for some time. This is a great indication to pay more attention to the stock and get ready to enter when the opportunity presents itself.
I got stats class in a bit so I'll continue this laterz bros
This is crucial. The amount of cash I've left on the table makes me want to puke.
So instead of completely liquidating I'll leave a certain # of shares/contracts on and let em run until price corrects.
RMBL weekly chart looks tempting. As you can see this is a relatively new issue and just has enough data to plot the PPO/ADX..
Also I want you to notice, if you choose to use RSI which is one of the better indicators if you use any. Of course you'd want to see RSI negative which represents oversold stock.
Also I want you to notice, if you choose to use RSI which is one of the better indicators if you use any. Of course you'd want to see RSI negative which represents oversold stock.
I am not a technician so take the below with a grain of salt. I'm writing this just to get some ideas flowing.
I have taken a look at your charts. Those big volume days on most of your charts are earnings dates. What else would you expect there? An earnings event with average volume and a small move?
I see the idea - trying to ride the short squeeze. But I think you need to get into the mind of the short traders a bit more. Do you really think they will cover their shorts just because there is a rise in the stock price after a decline? The shorts will mostly likely cover when they know they are wrong. I would imagine binary events would cause the biggest short covering: lawsuits, earnings, coming out of bankruptcy, FDA approval etc... You would also want to find stocks where shorts would have a hard time covering (can shorts buy calls to hedge? How much liquidity is there in the stock? etc..). Lastly, you would want to find out who is short. For example the TSLA short by Einhorn/Green Light. Einhorn was in it for the long run and owned GM to hedge some of his short TSLA exposure. He was not getting squeezed out anytime soon. Same with Ackman in the Herbalife example.
IMO chart reading is not going to help you figure out when there will be a short covering. Instead you should be researching whats driving the short interest and whats going to cause weak hands to cover.