Saturday, May 9, 2009

Think Like A Market Maker

Hi guys,

Many of you who know my style of trading for a while know that sometimes i like to use "Think Outside The Box" trading strategies or techniques. So here's one more to put into your arsenal. A lot times, i like to spot stocks that are in strong intra day uptrends(and this works for any timeframe by the way). As many of you know that market makers are notorious for taking out stops. How many times have you/we been in a stock, set the stop too tight, we get taken out only to see the stock reverse later and tack on more gains without you?? hahaha! happens all the DAMN TIME. Well, here'a good little techinque to take advatage of this kind event.

You spot the a strong intra day uptrend and you just wait..wait.. and wait. Until, BAM! there goes the stop loss gunning excersise(usually lasts several minutes) the market makers taking out some other traders' stops and it appears as if the pattern/uptrend has been destroyed. NOT SO FAST. If volume is very low as the stock "breaks down" intra day then it might be time to Think Like Market Maker and look to go long!
Check out the attached chart as a perfect example> i was gonna shoot out an alert on friday but we already had 3 longs at that time and thought it was enough otherwise i would have definitely taken the trade.

happy trading!

1 comment:

Paul D said...

Thanks for the post...while i do not subscribe to your alerts service, i think these posts are really valuable and I appreciate the time you put into teaching others.

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