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How To Make A Full-Time Income Trading Less Than Part Time

Big Dogs Exposed

Sound familiar? You have spent years surfing the 'Net, and studying books and charts in search of commodity trading rules, a currency trading strategy, stock market successful trading strategies, or information on how to use commitments of traders data. All you really want is the 'Holy Grail' of entry techniques. You usually end up adding one indicator on top of another, switching from one guru to the next, until you are so confused and unsure of your entry system that you are unable to make entry decisions and stay organized. You get so distracted and frustrated that you quit watching the markets all together!

Shows you how FAST you can make money when the BIG DOGS make their move - by shamelessly copying this winning group . Even I am STILL surprised by how much power they have over ALL markets - not just commodities futures, currencies, and stocks.G

Newsletter: When is volume really volume?

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When is volume really volume?:

Technicians are always tracking trends and trolling for spikes in volume. Such activity may presage earnings surprises, earnings warnings, takeovers, or any other corporate news events.

You have to compare today’s option volume with the average daily volume for a particular stock to actually identify any of these situations. You might just be onto something if today’s volume is at least twice the average volume, and if there were at least 1,000 total contracts traded.

You should look at the trading volume in call and put options on the same stock to fine-tune it even further. In other words, if the heavy volume is in the calls, you would obviously buy the stock or the calls. Likewise, if the heavy volume is mostly in the puts, you would want to sell the stock or buy puts.

But, when is volume really volume – i.e., when is a spike really worthy of notice? An increase in volume could just be the market maker accommodating a large institutional order. Or, it could simply be a large institution writing covered calls against its portfolio. The way to deal with this “noise” is to look for changes in the option’s implied volatility.

Noise is defined as a large spike in option volume on a particular stock that is not accompanied by an increase or decrease in implied volatility. But, where we have heavy buying with an associated increase in implied volatility, we may have caught the “smart money” in the act. What this probably means is we are witnessing traders with inside information buying lots of options and, in the process, bidding up the price (i.e., increasing the volatility being implied by the option contracts). In such a situation, you probably have the makings of a good trade.

The thing to watch for is the stock moving up in tandem with these traders aggressively buying the call options. Ordinarily, you would expect price action to break through resistance levels in this scenario. If not, then you should perhaps pass on the trade.

To complicate matters, enter market participants like hedge funds, or other significant institutions with considerable buying power. They may very well be into a particular stock that they want to unload – hence, pumping up the stock would do this for them. They could bring attention to the stock by creating option activity, and trading in such a way that other traders got wind of it. As soon as these “fools rush in,” the sneaky devils cut and run. “Pump and dump” I believe they call it.

The same holds true for put buyers. Here, the hedge fund or institution brings notice to a position it is short in by buying puts. Their trading activity invariably attracts the attention of other short sellers, and so the downside momentum begins.

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How To Make A Full-Time Income Trading Less Than Part Time

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