Successful Stock Signals for Traders and Portfolio Managers: Integrating Technical Analysis with Fundamentals to Improve Performance, + Website

CHAPTER 18

Traders Need Stocks to Trade

Using Candlesticks, Volume, 10-Minute Chart, Stochastic, MACD, and RSI, with Gamestop, Green Mountain Coffee, and JCPenney Exhibits

Traders need the fastest signals available to beat out other traders in front-running stock price movements. The professionals have to beat the day-trading amateurs. To have an edge over all the other traders, they need to use something that is not yet showing up on everybody's screen. Price and volume are real time and all the calculated technical signals are slightly delayed. The challenge for the trader is to convert the raw data of price and volume, and beat the computers calculating the standard technical analysis signals. Before technical analysis signals of today, the old timers just read the tape and manually made notes of significant volume and price changes. Some people have a talent for reading columns of numbers instead of reading charts to determine supply and demand.

The professional trader needs to see the order flow and trade when the very short-term move tops out or bottoms out. To do that, he needs to know when the sellers are done or when the buyers are done for the time being. Since there is no signal for this, the professional trader, like the professional portfolio manager, has to sell before the top becomes apparent and buy before the bottom becomes apparent (in a contrarian manner). This increases risk and profits. Waiting for signals decreases risk and profits in trading, which is probably ...