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TechniTrader teaches "Options Trading Opportunities in Charts" by Martha Stokes CMT

Options Follow the MetaStock Charts

Options Trading has suddenly become far more popular with professionals, and smaller funds learning to trade options. This means that options retail traders will find more trading volume and opportunities than have been around in nearly 10 years. It is the “Renaissance of Options Trading,” and what professionals want now more than anything is stock chart analysis training for options.

Professionals realize that the secret to successful options trading, has more to do with selecting the right stock to trade than choosing what option strategy to use. Professionals are learning Technical Analysis for the stocks they are considering using in their options trading.

Technical Analysis includes how to interpret the new candlestick patterns that have emerged over the past few years. These patterns are due to the massive Financial Market Structural changes that every market has undergone, including the Options Market.

Now candlestick patterns include new types of sideways action, and stocks move sideways more often nowadays than they did even a decade ago. It is critical to identify early on the type of sideways pattern because it reveals who is in control, the direction the stock is likely to take out of that sideways pattern, and most importantly the volatility AND velocity once the breakout occurs. Volatility and velocity are not the same thing. Volatility is a sideways pattern, and velocity is a sudden huge move out of the sideways pattern.

Determining when the breakout is going to occur and the direction, optimizes many options trading strategies and increases profitability trading options as well as stocks. Identifying the sideways patterns with strong energy building that will have big moves out of the sideways pattern is important.

The chart example below shows a huge gap after a lengthy sideways pattern. The sideways pattern also contains an island gap.

If you study the candlestick chart you can see that the sideways pattern became very consistent, just moving within the range of the prior sideways pattern before the island gap. Often the price barely moved. See the very precise tight consolidation of the seven days prior to the huge gap up. This price pattern reveals a steady controlled bracketed order that is totally controlling price for those seven days. This is one of several footprints of the Buy Side Institutions using Dark Pools. Being able to see this pattern along with confirmation of giant lot indicators reveals that this is an ideal set up, for a velocity or momentum move to the upside.


Quiet accumulation by giant lot investors is obvious in the chart, and the candlestick price patterns show that these are very savvy investors using orders that bracket and control price. Dark Pools have these kinds of orders. When you can trade with the giant lot investors using Dark Pools and you can enter with them prior to High Frequency Traders HFTs gapping price, profits are easier and more consistent.

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Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock

Chartered Market Technician
Instructor and Developer of TechniTrader Stock & Option Markets Courses
This Stock Discussion and Training Lesson is sponsored by a MetaStock® Partner

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