June 6, 2011
- in Uncategorized by schooloftrade
Market Sentiment for Day Traders, Identify & Profit with this technique
How do we use Market Sentiment?
Market Sentiment is hard to define with rules/specifics, but its easy to see when it shows up.
We also call this ‘market personality’, ‘Market Bias’, or ‘who’s in control’
Just like your doctor, you need to take the vital signs of the market you’re trading in order to have confidence in the diagnosis of market sentiment.
What are the vital signs that I look for?
– Big Money Orders
– Speed of the Tape (POT)
– Momentum, at the extremes
– Trigger Slope
– Relation to the BMT (higher / lower)
– Swing Highs/Lows
– Big Round Numbers
– Major Price Structure (bull channel, bear wedge, sideways range)
– Possible News & Fundamentals (last night and this morning)
– The Dollar Sentiment will also help give confirmation to other market sentiment.
– PHOD / PLOD (inside vs. Outside)
Now we use this info to determine the market’s sentiment:
– Bullish
– Bearish
– Sideways
How do we make profit with this?
Bullish Sentiment: buying pullbacks, buying with 2step price reversal at support.
Bearish Sentiment: selling retracements, selling at resistance with a price reversal pattern
Sideways Sentiment: buy the lows at support, sell the highs at resistance, and avoid the middle.
