Many may wonder: What is the Buy Zone?
This is one of many Relational Technical Analysis patterns that you need to learn to be successful in todays stock market. The Buy Zone is where Dark Pool Hidden Accumulation occurs.
Identifying these Buy Zones helps with:
Finding the most profitable stocks to trade for day or swing trading.
Trading with the professional traders who identify and use the Dark Pool Buy Zones for their accumulation setups that trigger huge HFT gaps or runs.
Recognizing when it is time to stop selling short in a stressed market condition. Oftentimes, traders are unaware that they are attempting to sell short within a Dark Pool Buy Zone.
Recognizing early when a bottom has started. This is way before a bottoming shape is visible on a stock chart.
Identifying, before a bottom completes, the price level at which the stock will breakout to the upside with a strong momentum run or several. Momentum runs are typically created by the consistent hidden accumulation of millions of shares of a stock over an extended period of time, often 3 months or longer.
All of the above will help traders enter a stock before the price moves suddenly, without any obvious reason or retail news, which is always old news that the professionals have already acted upon.
99% of all day and swing traders get in a stock run late OR just as the HFTs and professionals are starting to take profits. Being late to the entry of a stock is the primary reason why retail day traders continually have losses that erode their capital base and their confidence while creating bad trading habits like overreacting, blaming the market makers (most Market Making is automated and has been that way for a couple of decades). Many times, traders who lose money chronically rush around trying to find the holy grail of stock trading.
There isnt any.
The factor that separates those traders who regularly lose money to those who regularly have high profits is the SKILL of trading. Technical Trading Skills include being able to read a stock chart to quickly identify WHO is in control of price.
Professional Traders: charts clearly show professional trader setups if you know what their patterns look like on the stock chart. The key element is the fact that pro traders are not driving price up or down. Professional traders are nudging other market participants to buy or sell.
Is the price action Dark Pools hidden within a specific price range? Then the candlesticks will reveal where their buying begins and ends. This is important for near term breakouts.
Is it Sell Short Institutions making the market by selling short and then buying to cover? Penny spreads and millisecond transactions are hidden from view but this accounts for much of the large-lot activity.
Is it retail day traders? Trading with the whipsaw action of scared money is a disaster for any new or novice trader who doesnt understand how this type of price action creates whipsaw trades, or why a stock that was running up suddenly runs down, or why a stock that is in the news is moving down not up, or vice versa.
Is it small funds buying or selling? This is a rather large group, but their knowledge base for stock trading is minimal. Most are using their clients money to speculate, so speculative random price action with lots of whipsaw action occurs since they use VWAP to trigger their trade entries or exits, which gets them in AFTER HFTs, usually at the wrong time, just as the stocks price is about to reverse.
Technical Analysis is the beginning of your training. However, if you want to make consistently higher income in the stock market with fewer losses, then learning Relational Technical Analysis and developing this SKILL of analysis in-depth is mandatory.
Just technical analysis by itself is no longer enough. The ability to recognize who controls price at any given second, minute, hour, day, week, etc. is an imperative. Otherwise, profits will be hit or miss, like tossing darts blindfolded.
Stock Chart created with TC2000 software by TechniTrader to show Dark Pool Buy Zones.
Trading the Buy Zone provides the easiest, most reliable way to choose stocks to trade for any trading style. The Buy Zone varies from stock chart to stock chart, depending on the price, the Percentage of Shares Held by the Giant Buy Side Institutions who trade in Dark Pools, and their intent for the accumulation or distribution.
When you are able to read a stock chart to quickly recognize the various patterns, then choosing a stock that is poised to run with momentum either intraday or swing-style for several days becomes simple and fun.
Take the work and guessing out of your trading. Take your trading beyond basic technical analysis to achieve consistency in your trading.
Martha Stokes, CMT
TechniTrader has been teaching traders and investors a complete process for trading or investing in the stock market and other financial markets since 1998. We have helped over 500,000 traders and investors achieve their financial goals. Our courses provide a complete, comprehensive training program based on a college-style curriculum that uses a tri-level approach to analyzing assets or derivatives to trade.
This post contains sponsored content. This content is for informational purposes only and not intended to be investing advice.
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