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TechniTrader Stock Trading Candlestick Charts "Trading the Small Caps" 

Stock Trading Momentum Candlestick Chart Patterns

 The Retail Traders Market Participant Group includes those who have learned to trade the stock market from home. Many of those individuals only trade big cap stocks. This is because they depend mostly on news for finding stocks to trade. It can also be due to relying upon Industry or Sector selections, often missing out on the underlying stocks that are moving with momentum but are not a major index component. 

However with the power of StockCharts.com Scans it is easy for Retail Traders to find stocks, for trading the small caps that are poised to move up with huge momentum gains.

Go watch the How to Use Stock Scans Webinar includes how to create your own, personal criteria to use, finding stock picks fast and easy.

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Why trade small caps? Because the spreads are now 5 cents and that provides more liquidity and momentum, as more Professionals are trading small caps due to the new rules for spreads on small cap stocks. This is a recent change to the internal Market Structure that many Retail Traders have not heard about.

Small caps have such huge sudden momentum runs because they usually have less oustanding shares than a big cap. The chart example below is a small cap stock, in a momentum run.

StockChart showing comparison volume indicators - TechniTrader

The candlestick pattern compressed and then moved up 2 days in a row, while the majority of big cap stocks are still stuck in indecisive consolidations.

The higher the number of outstanding shares, the more buyers are needed to move the stock with momentum. With a small cap under Quiet Accumulation, the limited number of outstanding shares can increase momentum exponentially as demand suddenly rises. It does not take nearly as many buyers to create huge momentum. 

Typically the fastest largest runs are for Swing Trading and are found in small caps. These gains can often be huge during highly speculative runs. This is due to the limited number of shares available to trade.

Go watch the Swing Trading Training Video. Includes precision entries and exits, and how to use leading indicators to enter before price moves.

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Swing Trading Webinar

When supply is limited, demand increases exponentially and momentum runs occur. The additional benefit of wider spreads draws Professional Traders to these stocks. With the new wider spreads on small caps, Professional Traders are more inclined to trade these, as the gains are higher and the action is faster.

Summary

Scans built around criteria that identify giant Institutions Quiet Accumulation and compression Candlestick Patterns, provide excellent stocks to consider for watchlists.

During insipid Market Conditions there are three factors needed for finding and trading the small cap stocks that will move with momentum:

  1.  Percentage of Shares Held by Institutions needs to be high.
  2.  Accumulation by Institutions using Dark Pools needs to be going on.
  3.  Price candlestick patterns that reveal Dark Pool activity.

Go to the TechniTrader Learning Center and watch a wide variety of Training Webinars including Exploit the High Frequency Traders, Momentum Power Trading Explained, the Trade Managment Planner, Candlestick Patterns, improve MACD, Bollinger Bands and more.

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TechniTrader technical analysis using a StockCharts chart, courtesy of StockCharts.com

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