Whenever new traders start they're often recommended RSI, MACD, VWAP, these indicators are responsive or lagging aka noise.
The best traders use predictive analysis, please feel free to add or correct me.
- Supply & Demand zones to identify institutional movement.
- Support & Resistance that's most respected made using daily.
- Relative Strength with SPY overlay to not be at the market's mercy.
- Volume.
Find tickers with extreme relative strength or weakness for the day, use SPY's chart to trend & find bottoms, trade those tickers for much bigger upside moves than the market, while protecting against downside movement by receiving smaller move. (Relative strength will boost upside movement and protect against downside movement see example.)
Relative Strength vs SPY EXAMPLE: AVGO had high/rising relative strength today, high RS means it's making more bullish movement than SPY while drawing down less than SPY. It has relative strength vs the market, it's not moving with the market like 75% of stocks for the day. You want independent movers or high RS for the day to escape being at the market's mercy.
At 10am, AVGO started to pull back a little while spy had dumped aggressively, this stock has high relative strength so it's not dumping, SPY found an obvious bottom after such an aggressive dump. Now's time to buy AVGO, SPY recovers 0.8%, AVGO runs 3%. This is using SPY to chart trends & bottoms, trading a ticker with high relative strength to get a big move, while still protecting against downside thanks to high relative strength as well.
CONCLUSION: So imo good traders are predictive, trying to escape being at the market's mercy, riding the coattails of institutional buyers; retail is absolutely not moving the market with these big candlesticks. The goal is to avoid any form of lagging indicators. Instead use predictive modeling. We want to read the market to chart the course, find out who's outpowering the market for the day aka relative strength, then follow those institutional buyers even in candlesticks.
Wow, huh. I kinda surprised myself writing that last line out. So Supply & Demand zones measure institutional zones, relative strength measures institutions buys in for the day which is why the ticker is being an outlier to the market for the day. Literally being a good trader means being the gum on the bottom of institutional buyers shoe. Follow their moves with whatever way possible which is not lagging, actively predicting what institutions could do next or what they're currently doing.
Predictive Analysis vs Responsive – Follow The Institutional Buyers!
byu/breakyourteethnow inoptions
Posted by breakyourteethnow
1 Comment
The Supply & Demand zones gives predictive analysis of where institutional movement could step in, institutional zones should call them lol. The Relative Strength shows what institutional buyers are buying for the day, which is why the ticker is outperforming the market as hedge funds load up not caring about the price for the day.
To be a good trader is to move with institutional buyers, which allows escaping being at the whim of the market, see how AVGO barley dumped today when SPY did even though AVGO normally tracks very closely with SPY, it had such relative strength today.
Even if SPY had dumped more, no bottom then and was wrong about AVGO trade, the loss would’ve been minor because of high relative strength keeping the stock from falling like how market is. It reminds me of the bike riders riding behind other biker riders to take advantage of the wind tunnel, if a good trader can do that behind an institutional buyer the trade’s a breeze.