Stock Trading

CHAPTER 5: Volumes and Their Significance Page 1 AS the whole object of these studies is to learn to read what the tape says, I will now explain a point which should be known and understood before we proceed, otherwise the explanations cannot be made clear. First of all, we must recognize that the market for any stock - at whatever level it may be - is composed of two sides, represented by the bid and the asking price. Remember that the "last sale" is something entirely different from the "market price." If Steel has just sold at 50, this figure represents what has happened. It's history. The market price of Steel is either 49 1/8@50 or 50@50 1/8. The bid and asked prices combined form the market price. This market price is like a pair of scales, and the volume of stock thrown out by sellers and reached for by purchasers, shows toward which side the preponderance of weight has momentarily shifted. For example, when the tape shows the market price is 50 1/8, and the large volumes are on the up side. US 500 @ 50 1000 @ 50 1/8 200 @ 50 1500 @ 50 1/8 (Continued after the box of related articles.) Related Articles: Fibonacci - Who Was He And How Could He Improve My Stock Trading Profits? The word Fibonacci means a lot of things to a lot of different people For mathematicians, Fibonacci is an important number sequence ... Author: Chris Towland Do You Know What Is The Single Most Critical Mistake In Trading The Stock Market…? Well maybe that's overstating it a little, but it's certainly one of the most important It is…(drum roll please)… “the need to be right” ... Author: David Chandler What The Stock Trading Seminars Don’t Tell You! Imagine yourself sitting in the local Stock Trading Seminar You are anxious and ready to learn ... Author: Ezzone Trading Risk And Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career. You know the old joke: "How do you make a million in the stock market Start with two million ... Author: David Jenyns Trading Expert Discovers Ways To Beat Stock Market Odds With Money Management The first point to mastering money management is that you have to understand when you’re trading on the stock market is that you are playing the odds – but unlike many forms of gambling, you can make money ... Author: David Jenyns In these four transactions there are 700 shares sold at 50 versus 2500 bought at 50 1/8, proving that at the moment the buying is more effective than the selling. The deduction to be made from this is that Steel will probably sell at 50 1/4 before 49 7/8. There is no certainty, because supply and demand is changing with every second, not only in Steel but in every other stock on the list. Here is one advantage in trading only the leaders: The influence of demand or pressure is first evidenced in the principal stocks. The hand of the dominant power, whether it be an insider, an outside manipulator or the public, is shown in these volumes. The reason is simple. The big fellows cannot put their stocks up or down without trading in large amounts. In an advancing market they are obliged to reach up for or bid up their stocks, as, for example: US 1000 @ 182 1/8 200 @182 1500 @ 182 1/8 200 @ 182 1/4 3500 @ 182 3/8 2000 @ 182 1/2 Take some opening trades and subsequent transactions like the following: 200... 47 1/4 100... 45 7/8 100... 45 7/8 1900... 46 3/4 100... 46 1/8 100... 46 100... 46 5/8 100... 46 600... 45 7/8 100... 46 1/2 200... 46 1/4 500... 45 3/4 100... 46 3/8 100... 46 3/8 200... 45 5/8 600... 46 1/4 11 A. M. 100... 45 1/2 100... 46 1/8 300... 46 3/8 100... 45 5/8 600... 46 100... 46 1/8 400... 45 7/8 100... 45 7/8 100... 46 100... 45 3/4 200... 45 3/4 100... 45 7/8 400... 45 5/8 100... 46 100... 46 100... 45 3/4 >>> Page 2