Mastering the Stock Market: High Probability Market Timing and Stock Selection Tools

CHAPTER 6

Volume Analysis

Whether you are a beginner or advanced trader, you need to address what goes into the decision-making process for whether to buy, sell, or hold. The decision-making process also includes whether to add to a trade, lighten the position size, adjust stops or hedging strategies (such as selling calls against long stock positions), or implement a collar strategy. Right, wrong, or indifferent, knowing when to get in and when to get out is the critical decision-making point for any trader.

Traders are constantly making important decisions, and making good ones and avoiding terrible ones is not an act of fate. It is a skill that can be learned, polished, and perfected. It is thought the repetition of executing constructive trading plans that one becomes a more successful seasoned trader. There's a fine line between trading smart with high frequency and just constantly trading. On the other side of the coin, some traders state that to be successful, you shouldn't trade often. I believe that to make successful decisions, there are techniques to enhance your effectiveness, and success does come from repetition by making better-educated decisions. Knowing that, perhaps you'll trade with more frequency, but with more purpose. Here is a case in point; do you get better at golf by swinging smarter but not often? If you learned to swim at an early age, this is not a skill at which you would have wanted to apply the methodology “swim smart but not often.” You probably ...