Posted by forex at 5:55 AM
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1. Sell shares, or at least avoid buying into the stock market if the 'Tick' is at a positive extreme. Most trading platforms provide the 'Tick,' which is intraday data distributed by the New York Stock Exchange. This indicator shows the net number of stocks currently rising or declining in price. A positive Tick indicates that most stocks are rising at that moment. If the Tick reaches a positive extreme, it usually indicates that stocks are unlikely to rise any further at that moment, and may instead decline.
2. Buy shares, or at least avoid selling into the market if the Tick is at a negative extreme. When this occurs, the overall market is unlikely to drop any further over the next few minutes, and this may provide the short-term opportunity necessary to profit from a quick intraday trade.
3. Watch the Dow Transportation Index (TRAN) throughout the trading day. Like the more popular Dow Industrial Average, this indicator averages only the stocks of companies in the transportation sector. Traders often observe that the TRAN leads the rest of the market. If the Dow is falling but the TRAN is rising, this could indicate that a reversal is imminent.
4. Monitor the volume weighted average price (VWAP) of the stock or index you are trading. The VWAP indicates what the average market participant paid for shares during the intraday session. Brokers and institutional market players often use the VWAP for entry signals. If a stock is positive for the day, then entering when it reaches its VWAP is a good price to pay. Thus the market often bounces off its VWAP as investors find increased demand for shares at this price point. Day traders can use the VWAP to quickly profit from these bounces.