Stock Volume As Reverse Indicator - How To Trade Penny Stocks
How To Use Stock Volume
Stock volume indicators are one of the best and easiest ways to predict short or long term reversal, remember the stock market and price per share is always determined by supply and demand. When there are less shares available and a large demand for the shares the price goes up, when there is lower demand and more shares available the share price reacts be decreasing. By keeping this in mind you can use stock volume to point the direction of profits.
By keeping this simple rule in mind it is easy to determine which direction a stock could potentially be going based on the stock volume and whether they are increasing or decreasing. The best way to make significant profits is to enter a stock just as the investor confidence starts and the stock volume is increasing therefor reflecting in the pps and chart going up.
Typically when looking at a stock chart you will see patterns that tend to re occur multiple times and therefor giving you an easy identifying tool as to whether or not a similar or like situation is ready to unfold. In the stock market timing is everything, using indicators such as stock volume trends can give you a clear buy idea of whether the investors in the stock are gaining or losing confidence based on what is going on with the company at that current time.
When using this to determine the supply and demand factor try not to get too caught up in the intense incoming volume. If there is not a long term catalyst the chances are that the stock will be coming back down at some point. It is always easier to sell into volume, then to wait for it to dry up and then have to sell as the price is going down. Force equals two opposing factors and the volume indicator when used correctly always follows these laws. Make sure that you always have a position that is opposite to the volume for example. If people are buying, you should be selling. If people are buying, you should be selling. Of course as an addition to this rule do not jump the gun, make sure that you are buying at what you think is the bottom or selling at what you think is the top.
Always keep an eye on whether the stock volume is increasing or the stock volume is decreasing. When you use the stock volume in conjunction with other indicators you will be sure to have nicely timed entrys and exits.
Use The Stock Volume Bars As Indicators When Trading!
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