Pro Trader 2 DAY 3 Flashcards
Why is Broad Market used as an indicator?
shows potential future price movement of stocks
T/FTwo items that ATR can be used for are determining volatility in the stock or market and helping us to understand better when a move is overextended during a day session
T
T/FSome of the uses of Moving Averages include direction and strength of trend, reversion to the mean, and trailing stop exits
T
T/Fif volume is high, prices tend to move sideways
F
T/Fif price is in a downtrend, then we might sell short on a gap into supply
T
indicators are mathematical calculations based on _______ and/or _________
price and or volume
indicators help measure overall _________ of the market/stock
sentiment
indicators are more significant in the _________ timeframes
larger
indicators are a ____________ tool and should be used in the context of our core strategy of SD levels
confirmation
Volume is the total amount of ___________
shares traded during a given period
The different colors in the volume correspond with the _________, not with _________
candlestick, not with more sellers/buyers
ADV
average daily volume adv is the average number of shares traded per day over a given range of days
OTA recommends a min ADV of _______ shares
1 million
volume
volume can often tell us the strength or weakness of a trend
climactic volume
volume spikes can often precede a turn in price
volume is light, then momentum is __________
weak
volume is high, then momentum is __________
strong
_________ volume breakouts followed by ________ volume pullback are good indications price will continue higher.
heavya light
moves without volume support are likely to __________
be retracted
moving averages are calculated by adding the ________ of the security for a number of time periods
closing prices
moving averages smooth the price data to form a ________ following indicator
trend
moving averages _________ predict price direction, but rather define the _________ with a lag
do notcurrent direction
moving average is primarily the summary of ___________
momentum and trend
SMA
SIMPLE MOVING AVERAGE Formed by computing the average closing price of a security over a specific number of periods
EMA
EMA is similar to SMA except that for EMAs, more weight is given to the more recent prices
MA as odds enhancers for supply
when shorting using a MA, when the prices move far away from the MA, and approaches supply, then short.
MA as odds enhancers for Downtrend
MA as odds enhancers for Uptrend
MA as trailing stops
exit when price CLOSES below MA
MA for breakout
enter when price CLOSES below MA
ATR is an indicator that tells us __________
what the range of price has been in the past
why use ATR
as traders, we need an edge that will anticipate price range in the future need to measure the distance between fresh opposing S/D areas greater the distance, the larger the range the smaller the distance, the smaller the range
once price rallied to its ATR, start looking to ________
short
once price has dropped to its ATR, start looking to ________
buy
10 laws of trading
- use protective stop 2. trade with focused discipline 3. do not overtrade 4. do not trade when there are trading emergencies 5. know difference between gambling/trading 6. use a daily limit loss 7. use small position size to start 8. trade only from your trade plan 9. don’t add to a losing trade 10. learn how to not lose money
4 ways to use Net Percent Change from Open to determine good stocks?
A is a ________Gap B is a ________Gap
A. Pro Gap B. Novice Gap
A Pro Gap is a gap in the ________ direction of trend
opposite
A Novice Gap is a gap in the ________ direction of trend
same
If price is in an Uptrend, then I might look to ________ on a gap down into DZ
buy
If price is in an Downtrend, then I might look to ________ on a gap up into SZ
sell short
open gap
when the price has not come back up, or down to trade above or below the gap.always be aware of any open gaps, no matter howfar back, especially when corrective behavior has made itself evident
filling gap
moving into gap
traversing
closed the gap and moved beyond
best timeframe to view gaps
15, 60 min chart
inside gap
gap is still in range of candlesgenerally fill the same day.if gaps into S zone, short. then wait till it fills into D zone. then buy.
outside gap
gap is outside range of candlesgenerally fill days latergenerally have a trending day. wait for it to create a demand zone.let it pull back into d zone, and buy into tradetechnical stop.
what direction of trend do you trade for Pro vs Novice gaps
Pro: trade same direction of trendNovice: trade opposite direction of trend
fact of outside gap regarding s/d zones
outside gaps are stronger supply/d zones
3 gap trading tactics
what does pro gap from correction mean?
if Pro gap from Correction, means the start of the impulse move, so get into trade. should be a great trend throughout day
bollinger bands
find price outside of bands, and inside S/D zonetake profits off when price touches mean
gaps - when to trade opening at 930?
pro gap up/down outside gappro gap up/down coming out of demand/supplyzone and break trendline
