Stock Market Survival Tips: Avoiding Institutional Traders
Unleashed on the individual trader for the first time...if you keep getting sniped by false breakouts in the stock market and are losing money, this article could change your stock trading forever...
I am going to tell you a stock trading secret that is so powerful, it will save you thousands of dollars. I should know, that is how much it saved me.
You are about to discover the unfair trading tactics that institutional and professional traders use against you in the stock market.
After reading this article, these dirty tricks might make you angry.
You may even want to forget you ever read this...
But you need to know what they are doing...
And I promise you you'll be glad you did.
Because after you are done reading this article, you will have new insight into how to spot and avoid false breakouts...
We need to look at what support and resistance lines are and they what false breakouts are.
Knowing WHY support and resistance lines work will help you protect yourself against false breakouts.
When investors buy or sell, they form an emotional attachment to the trade. It is emotions that keep a market going higher or sent it into a downtrend.
When a stock falls, some traders jump out and book profits, some traders jump out and take losses, and some traders hold on.
A chart is really nothing more than the result of emotions coming from the crowd of people in that particular stock.
Pain Is the #1 Reason Why Support and Resistance Lines Form
If a trader is still holding on to the stock when the price claws back to his cost basis, he's likely going to sell. He has painful memories of being in this stock and wants to get out as quickly as possible. This selling will temporarily stop a rally. These painful memories are the reason why areas of support and resistance form.
For example, suppose a stocks falls from $30 down to $25 where it trades for a couple of weeks. The longer the $25 level holds, the more that believe $25 is support. Suddenly, after a couple of weeks of trading at $25, the stock falls down to $20. Smart traders will sell quickly and get out at $24 or $23. Amateur traders will hold on and sit through the entire painful decline. Some amateur traders will get out at $20. Other amateur traders who haven't given up at $20 will be the first to sell when the stock gets back up to $25. They will happily jump at the chance to "get out even." Their selling will temporarily stop a rally and form a resistance level.
Support and Resistance Lines Are Caused By Regret
Traders who come across a stock that has spiked up feel as if they have "missed the train." If the stock drops back to a certain level, these traders who feel regret for missing the first move will jump at a chance for a second move. Their buying forms a support level.
Take your stock chart and draw resistance and support lines at recent tops and bottoms. You should anticipate the trend to slow down at these levels. Use these support lines and resistance lines to either buy (at support) or to take profits (at resistance).
Warning: False Breakouts Are Caused By Institutional Traders
When the market rises about resistance and pulls in new buyers and then suddenly reverses and falls back below that resistance, this is called a false breakout.
A false downside breakout happens when a stock falls below support. The bears jump in and short the stock. Suddenly the stock reverses and heads back up retaking the broken support level.
Any stock chart can form false breakouts but be especially careful of any stock that has a high percentage of institutional ownership.
Institutional traders love causing false breakouts because this is where they make the most of their money.
All limit orders are displayed on the screens of Institutional traders. They have the exact number of buy orders above a given resistance level.
Institutional traders engage in what is called "running the stops". False breakouts happen when Institutional traders organize hunting parties to run stops.
Take the following example: when a stock is just under resistance at $20, the buy limit orders come flowing in near $18.50. The institutions calculate the liquidity ratio which measures how much the stock will go up if all buy limit orders are executed at $18.50. They calculate that the stock will run to $21 if all the buy limit orders at $18.50 are executed. They short the stock at $20 to push it down to $18.50. At $18.50 they cover their short position and go long as the wave of buy orders are automatically executed pushing the stock up to $21. If greedy traders start piling in, the institutional trader will stay long the trade. As soon as the buy orders start drying up, they sell short and the price falls back below $20. A false upside breakout will show on your chart.
If you are knocked out of a trade because of a false breakout, do not be afraid to get back into the stock. Amateurs usually make a single run at a stock and stay out if they are stopped out. Professional traders will make several runs at a stock before nailing down the trade they want. - 23310
I am going to tell you a stock trading secret that is so powerful, it will save you thousands of dollars. I should know, that is how much it saved me.
You are about to discover the unfair trading tactics that institutional and professional traders use against you in the stock market.
After reading this article, these dirty tricks might make you angry.
You may even want to forget you ever read this...
But you need to know what they are doing...
And I promise you you'll be glad you did.
Because after you are done reading this article, you will have new insight into how to spot and avoid false breakouts...
We need to look at what support and resistance lines are and they what false breakouts are.
Knowing WHY support and resistance lines work will help you protect yourself against false breakouts.
When investors buy or sell, they form an emotional attachment to the trade. It is emotions that keep a market going higher or sent it into a downtrend.
When a stock falls, some traders jump out and book profits, some traders jump out and take losses, and some traders hold on.
A chart is really nothing more than the result of emotions coming from the crowd of people in that particular stock.
Pain Is the #1 Reason Why Support and Resistance Lines Form
If a trader is still holding on to the stock when the price claws back to his cost basis, he's likely going to sell. He has painful memories of being in this stock and wants to get out as quickly as possible. This selling will temporarily stop a rally. These painful memories are the reason why areas of support and resistance form.
For example, suppose a stocks falls from $30 down to $25 where it trades for a couple of weeks. The longer the $25 level holds, the more that believe $25 is support. Suddenly, after a couple of weeks of trading at $25, the stock falls down to $20. Smart traders will sell quickly and get out at $24 or $23. Amateur traders will hold on and sit through the entire painful decline. Some amateur traders will get out at $20. Other amateur traders who haven't given up at $20 will be the first to sell when the stock gets back up to $25. They will happily jump at the chance to "get out even." Their selling will temporarily stop a rally and form a resistance level.
Support and Resistance Lines Are Caused By Regret
Traders who come across a stock that has spiked up feel as if they have "missed the train." If the stock drops back to a certain level, these traders who feel regret for missing the first move will jump at a chance for a second move. Their buying forms a support level.
Take your stock chart and draw resistance and support lines at recent tops and bottoms. You should anticipate the trend to slow down at these levels. Use these support lines and resistance lines to either buy (at support) or to take profits (at resistance).
Warning: False Breakouts Are Caused By Institutional Traders
When the market rises about resistance and pulls in new buyers and then suddenly reverses and falls back below that resistance, this is called a false breakout.
A false downside breakout happens when a stock falls below support. The bears jump in and short the stock. Suddenly the stock reverses and heads back up retaking the broken support level.
Any stock chart can form false breakouts but be especially careful of any stock that has a high percentage of institutional ownership.
Institutional traders love causing false breakouts because this is where they make the most of their money.
All limit orders are displayed on the screens of Institutional traders. They have the exact number of buy orders above a given resistance level.
Institutional traders engage in what is called "running the stops". False breakouts happen when Institutional traders organize hunting parties to run stops.
Take the following example: when a stock is just under resistance at $20, the buy limit orders come flowing in near $18.50. The institutions calculate the liquidity ratio which measures how much the stock will go up if all buy limit orders are executed at $18.50. They calculate that the stock will run to $21 if all the buy limit orders at $18.50 are executed. They short the stock at $20 to push it down to $18.50. At $18.50 they cover their short position and go long as the wave of buy orders are automatically executed pushing the stock up to $21. If greedy traders start piling in, the institutional trader will stay long the trade. As soon as the buy orders start drying up, they sell short and the price falls back below $20. A false upside breakout will show on your chart.
If you are knocked out of a trade because of a false breakout, do not be afraid to get back into the stock. Amateurs usually make a single run at a stock and stay out if they are stopped out. Professional traders will make several runs at a stock before nailing down the trade they want. - 23310
posted by Mr. Forex at
12:23 AM
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