Retired Trader Reveals Stock Trading Secret That Does NOT Use A Stock Screener
What I'm about to show you has nothing to do with a stock screener. This one little secret can totally improve your trading accuracy in any market.
It almost seems to good to be true, but in fact it is true. I learned this secret from a retired institutional trader years ago and it still works today! I have managed to increase my trade accuracy to 80% after learning this simple rule. I directly make money from this secret every week. Not only that, but YOU can duplicate what I have done and make money every week. I will show you exactly what to do in the next 30 seconds.
Have you ever heard the term two minds think better than one? Well... I have actually redefined that term: 5 Professional Institutional Minds Can Produce What 89,697,618 Unprofessional Minds Can't
There are over 80 million Americans who trade in the stock market and yet very few of them, if any, have figured out this secret I'm about to share with you. Are they dumb? No way. It's just that they don't have the same level of access to the market that institutional traders have.
What I'm about to show you is called behind closed doors the "Weekend Effect". The Weekend Effect is basically this: trading activity is less on Friday and Monday with Monday having negative returns.
In 1988, Miller's research showed that returns, on average, are negative on Monday. Miller (1988) suggests that this anomaly could be the result of individual investor trading activity. Lakonishok and Maberly (1990) and Abraham and Ikenberry (1994) use odd-lot trading as a proxy for individual investor trading patterns and find evidence consistent with this hypothesis.
Volume is less on Friday's because institutional traders are not buying as evidenced by the absence of large-size trading activity. In fact, institutional traders will close out their trades on Thursday or the very latest on Friday because they do not like to hold open positions over the weekend.
Monday has lower trading volume than any other day of the week. Small, individual traders have more sell orders on Monday than any other day of the week. If small-size trades show individual investor activity and large-size trades show institutional investors then both types of investors play a key role in Monday being a negative return day. The individual traders contribute through their trading while institutional traders contribute through their withdrawal of liquidity on the proceeding Thursday or Friday. Institutional traders contribute by their absence on Friday and Monday, which reduces liquidity.
You can increase your odds of having a money making trade by going long on Tuesday and taking profits on Thursday.
Now that you know markets often sell off on Monday, you can buy Monday's sell off. At the very least, don't sell your long position on Monday. Early Monday trading has the greatest percentage of downside head fakes.
Article Source: FxTradingStock.com
About the Author
By Lance Jepsen. I hope your trading accuracy totally improves after reading this article. For more Wall Street insider trading tips see stock screener
by: Lance Jepsen
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Word Count: 493
Date: Tue, 18 Aug 2009
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