Keene on the Market: Trade to Win Using Unusual Options Activity, Volatility, and Earnings

CHAPTER 6

Technical Trading

Security Timing Tactics

Technical analysis examines the supply-and-demand data as explained by variables. Technical analysis can be used for forecasting, and if included in conjunction with fundamental analysis, you can have an especially rewarding day-trading enterprise. The big investment traders draw on both of these methods of stock selection, often called the top-down approach. When you are looking at the bigger concept and making use of fundamentals, you are operating with a security-selection approach. When you make use of stock charts, you are applying a security-timing strategy. When I was on the trading floor, I never really looked at technicals or fundamentals; I just traded on implied volatility, paper order flow, and the supply-versus-demand curve for these options. I recently realized how valuable this tool can be and I have combined this with my OCRRBTT and HIMCRRBTT Trading Plans in order to make myself the best trader possible. I've had three proprietary trading plans in my arsenal for 11 years; I've been consistently tweaking them to improve their efficiency and keep them up-to-date.

The chart of a stock and its option represents an image of the securities price as well as volume over time. The most useful graph is the bar chart. You can probably find a securities bar graph on your current day-trading software or even at any of the commercially available sites on the Internet.

Some trading programs allow you to request price charts ...