Technical Analysis.

This "Short-Term Trade" was based on our volume indicators.

This week's “best trade of the week”
is a continuation of the previous week’s best trade,
where we left a QQQQ Put position open.
 

NOTE: We discuss our “best trades of the week” here mainly for educational purposes. The trading examples we illustrate are based principally on our volume indicators and market commentaries. Our main intent is to show you how you can apply our volume indicators and to explain the specific correlations that exist between volume spikes and the movement of the indexes. We do not mean to imply that you should follow our exact trades, but rather wish to suggest that you may make use of our volume analytics to develop your own trading style. We also urge you to paper trade before committing your money to the markets.

VMA:

Our Volume Moving Average (VMA) is a key indicator that we use abundantly in our charts and technical analysis. The VMA refers to the volume of a security, commodity or index averaged over a given period of time. The intervals used in calculating a particular VMA can be as short as a few minutes or as long as several years. In calculating the VMA, we use a so-called “simple” moving average, where as the newest value is added, the last variable of the series is simply dropped, but all values are given equal weight. For example, a 5-minute moving average consists of the last 5 volume bars, each representing the volume activity of one minute, that are summed up and then divided by. After the next minute has elapsed, a new value is added to the 5-minute VMA, and the oldest value is dropped from the calculation.

All your trades appear to be based on options, but since I don’t trade options, can I still use your volume indicators?

Yes, absolutely! You can also trade indexes, for example, since we apply our volume indicators to the major U.S. indexes. We do this because indexes best describe the mood of the market as a whole. Regardless of what you trade, a particular index or sub-index, stocks, options, or futures, most trading vehicles tend to move in concert with the broad market. As a rule, the market dictates the direction of a particular security – it is never the other way. It therefore makes sense to get a good grasp on what is happening at the index or stock exchange level, and we have found volume analytics to be an excellent vehicle to make that determination.