Increase Your Trade Accuracy After Learning This Simple Rule
What your about to learn has nothing to do with using a stock screener. If you want to greatly improve your stock trading skills and accuracy, you need to learn this secret.
I was told this secret by a retired institutional trader several years ago. It still works today. It seems to good to be true. Using this secret I have increased my trade accuracy to nearly 80%. Every week I use this secret. I'm going to show you exactly how to duplicate this secret and improve your own trading accuracy.
No doubt you have heard the phrase "two minds can think better than just one". I have a new phrase for you as it applies to this trading secret: "5 Institutional Brains Can Crete What 80,000,000 Unprofessional Minds Can Not"
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.
Weekend Effect: Trading Activity is Lower On Friday and Monday and Returns Are Negative On Monday
Way back in 1988, a genius called Miller proved that returns are usually negative on any given Monday. Miller said that this anomaly might just be the result of small investor trading activity. In another study done two years later, Lakonishok and Maberly (1990) and Abraham and Ikenberry (1994) used odd-lot trading as a measurement for what smaller, non-institutional investors were doing and found evidence that supported the Miller 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.
Trading activity is significantly lower on Monday for large-size trades. Moreover, small-size trades have a higher percentage of sell orders on Monday morning compared to other days of the week. If small-size trades reflect individual investor activity and large-size trades reflect institutional investors then both types of investors play a role in the negative return on Monday. The individual traders directly contribute through their trading and institutional traders indirectly contribute through their withdrawal of liquidity on the proceeding Thursday or Friday. Institutions indirectly contribute by their absence on Friday and Monday, which reduces liquidity.
Your odds of making money on your trades are better on Tuesday through Thursday. You will discover your trading accuracy greatly improves when you go long a stock on Tuesday and sell on Thursday.
Now that you know markets have a habit of dipping on early Monday trading, do not sell your stock too early based on Monday morning trading activity. Remember, Monday's have the greatest number of head fakes to the downside. - 23159
I was told this secret by a retired institutional trader several years ago. It still works today. It seems to good to be true. Using this secret I have increased my trade accuracy to nearly 80%. Every week I use this secret. I'm going to show you exactly how to duplicate this secret and improve your own trading accuracy.
No doubt you have heard the phrase "two minds can think better than just one". I have a new phrase for you as it applies to this trading secret: "5 Institutional Brains Can Crete What 80,000,000 Unprofessional Minds Can Not"
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.
Weekend Effect: Trading Activity is Lower On Friday and Monday and Returns Are Negative On Monday
Way back in 1988, a genius called Miller proved that returns are usually negative on any given Monday. Miller said that this anomaly might just be the result of small investor trading activity. In another study done two years later, Lakonishok and Maberly (1990) and Abraham and Ikenberry (1994) used odd-lot trading as a measurement for what smaller, non-institutional investors were doing and found evidence that supported the Miller 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.
Trading activity is significantly lower on Monday for large-size trades. Moreover, small-size trades have a higher percentage of sell orders on Monday morning compared to other days of the week. If small-size trades reflect individual investor activity and large-size trades reflect institutional investors then both types of investors play a role in the negative return on Monday. The individual traders directly contribute through their trading and institutional traders indirectly contribute through their withdrawal of liquidity on the proceeding Thursday or Friday. Institutions indirectly contribute by their absence on Friday and Monday, which reduces liquidity.
Your odds of making money on your trades are better on Tuesday through Thursday. You will discover your trading accuracy greatly improves when you go long a stock on Tuesday and sell on Thursday.
Now that you know markets have a habit of dipping on early Monday trading, do not sell your stock too early based on Monday morning trading activity. Remember, Monday's have the greatest number of head fakes to the downside. - 23159
About the Author:
Author is Lance Jepsen. I hope your trading accuracy totally improves after reading this article. For more secret stock trading tips see stock screener
posted by X - Men @ 3:07 AM
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