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Price is King and Blocks Rule
What does this phrase mean anyway? Price is King, because each candle tells a story. Multiple bullish candles tell us someone is buying. Larger candles, more buyers. You can have all the bells and whistles, multiple proprietary indicators and oscillators, but they are all built on price. No buyer and price goes no where. Conversely, when you have tons of sellers or overhead supply, price will drop until buyers overwhelm the sellers. Demand outstrips supply.. Focus on price, as all of your indicators are based on it, the auction between buyer and seller. Understand this first.
As traders, we need to consider where price action is headed. Simple enough, yet we see so many traders ignoring this concept. If you want to increase your probabilities in a bullish trade, price must be above the 9/20ema. You can use any moving average, just make sure price is above and trending bullish. So, if price is above an ascending 9/20ema we are bullish and look for support on any pullback to the rising moving averages. If price is below a descending 9/20ema, we will have a bearish bias and look for rejection at the overhead moving averages.
We do this everyday via our LIVESTREAM BROADCAST during market hours, so consider joining us as we trade realtime, not in hindsight.
Price is King and Blocks Rule
The latter part of this phrase was added to emphasize that block size trades represent institutions. And, institutions overwhelmingly trade most of the volume on any trading day. If the blocks are few and far between, we say during our broadcast “institutions are lacking conviction today” so be cautious. We saw that yesterday on QQQ, which traded far fewer blocks i the morning session that usual. Tech stocks and many other faded from the opening high. SPY started printing blocks overhead only after doing nothing for more than 90 minutes. By 11:00 AM these blocks started showing up. One of our members, Joel noted the change in tempo and suggested a short. Congrats to Joel for his astute observation.
Note by the end of the day, blocks became numerous. The important thing however, are the blocks that printed after-hours at 276.97. Institutions love hiding their trades. We will open this morning above these levels, that tells you what institutions are doing, in this case, tomorrow. With TICK cumulative in the first chart above cruising higher, its a sign that perhaps they are not done.
So much for “the top is in” that CNBC spent most of the day speculating on. Note: it’s an occupational hazard. Watching what is on CNBC is part of running a trading room unfortunately. I try to filter the noise from the information everyday. Sometimes it gets a little annoying.
Price is King, We Leave Our Opinion aa the Door.
We do what institutions are doing. Period.
Important Note: Successful Traders and Investors Do This First
Start by asking, how much can I lose if I am wrong? Successful traders have a game plan and watch list that accounts for stop losses, targets and observations gleaned from doing their homework ahead of time. Professional traders don’t start by imagining riches and wealth on every trade. On the contrary, most new traders see investing and trading as an ATM. If you’re doing this, break the habit before it becomes a problem.
Finally, consistency comes with using the same strategies and rules everyday. Stops are part of that strategy and so use them judiciously. If you’d like to trade with a professional trader with over 29 years of investing and trading experience and like that we do it LIVE during market hours, give us a shout at TheClosingPrint.
What we discussed above is part our daily workflow.
Happy Trading and good luck, I’ll be LIVE at 9:20 AM.
Disclaimer: Do your Own Research
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We would like to draw your attention to the following important investment warnings. The value of shares and investments and the income derived from them can go down as well as up; Investors may not get back the amount they invested – losing one’s shirt is a real risk; past performance is not a guide to future performance.