Before we dive into today’s topic, a few headlines that relate to yesterday’s article: “Google employees scramble for answers after layoffs hit long-time workers” and “Spotify cuts 6% of its workforce.”
I’m NOT a doom and gloom kinda guy, but I cannot encourage people enough to do more for themselves — because you never know what someone else’s plans have in store for you.
Anyway, back to the technical topic I want to cover today … VOLUME
In short, the stock market operates like this:
- Volume precedes / drives the price action.
- Price action is then responsive to supply and demand.
That might sound incredibly simple, and in hindsight, it kinda is… but as you’re analyzing the live edge of the market, it’s a slightly harder task.
So today I want to discuss this thought process, particularly the VOLUME aspect of it and why I believe it’s so valuable to understand.
Yesterday morning at 5am I received a phone call. I had a minor pain management procedure scheduled for later in the day and there was a scheduling issue. Needless to say they bumped me super early.
Which was fine — I’d rather get it over with and be home relaxing sooner. So my morning had obviously shifted around due to this.
I like to trade earlier in the day because the market typically follows through a little nicer. However, there’s never a guarantee of anything!
Either way, I went and had my procedure taken care of. I returned home around 11am-ish and had some coffee and some breakfast at my desk.
I was able to quickly see the market had been trading back and forth between supply and demand before I had even left!
The market had been stalling in a supply area that was in conjunction with a channel resistance structure as well.
Still a little groggy from the sedative (Michael Jackson Juice) they had administered at the surgical center, I wanted to wait to be sure that my thought process had a good chance of working out as planned.
That’s when I leaned on my knowledge of how to trade with VOLUME.
On the 11:12 EST 3-Minute candle, we had what we at Hawkeye Traders call a “Red Top”.
Now, Red Tops don’t mean that the market can’t go higher. They just mean in that time period there’s a high selling presence.
Price action then proceeded to SETTLE / CLOSE below the SUPPLY / RESISTANCE area which we refer to as Hawkeye ZONES, that offered the chance to enter and PROFIT.
So that’s exactly what I did. I entered SHORT @ 82.40 – placed my TARGET @ 82.27 = 13 Ticks worth of FAST PACED PROFITS!!!
And when I say FAST PACED, I mean it! From start to finish, this low risk / high probability trade setup lasted LESS THAN 2 WHOLE MINUTES!
The beauty about this trade is; it can be replicated on any ticker, on any timeframe … obviously results will adjust accordingly to each application.
But understanding HOW to “read the market”: Volume, Price Action, Supply and Demand, Moving Averages, Stochastic and Relative Strength.
You’ll see the market from a totally different perspective… one of clarity and confidence that you can interpret what’s likely to happen next…
I keep my group small because I want to know every person I work with on a first name basis. You never know what opportunities the future may hold.
Some folks come in and realize this actually takes work on their part that they’re not willing to put in, while others come in and are willing to see this through for the long haul because they know the potential they have within themselves and the potential the market offers them, too.
Which one of those two you are, I don’t know… but we’ll sure find out!
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