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How to Day Trade Using Volume Charts - YouTube
Channel: StocksToTrade
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- You often hear volume,
volume, volume in trading,
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it's one of the most important
things you should track.
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Price is always first
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but volume is a close second
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and today I'm gonna
talk about how to use it
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as well as how to spot
these high volume plays.
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(upbeat music)
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Hey everyone, lead training
with StocksToTrade,
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Tim Bohen back with here,
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be sure to subscribe to our channel
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and also ring that bell,
hit the alert bell.
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We do twice weekly videos,
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we also do live videos
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and I really want you to
be notified when those hit
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so you can jump in the q and a
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and you can see the ticker of the day,
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we do a lot of those, where
we break down a ticker,
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just like we've got on
screen in this video.
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So be sure to ring that bell.
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So why is volume so significant?
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We'll start there,
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then how do we use the
tools in StocksToTrade
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to spot these high volume
plays that make the big moves.
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So let's start out with
kind of explaining the why,
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remember volume represents
the amount of buyers,
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the market, the stock
market at the end of the day
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is a supply and demand situation.
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If everybody wants in a stock,
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then the price has no option but to go up
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because everybody's
gonna bid that price up.
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More volume means more demand
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and if there's less supply,
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the price, you know it's
standard economics 101,
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has to go up.
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Now what I want to talk about
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is some of these explosive plays,
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you can see I've got
CETX on my screen today,
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don't necessarily care about the ticker,
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this is just the stock of
the day we're recording
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but it is a low float stock.
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You can see, let me kinda
lay this out for you.
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It is a one million float stock,
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which means that is the freely
tradable shares out there,
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very small float, very
small supply of this stock.
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Next thing you can see
is the 60 day average,
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is 437000 shares a day.
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That tells you that on most days
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this stock isn't even
trading all of the float,
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it's not even trading all
of the available shares.
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It's trading about half
the available shares.
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So that tells us,
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most days there isn't that
much interest in this stock.
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Nobody really cares about CETX
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and you can tell that, this
is the one day one year chart,
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notice nothing has
happened with this stock
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for 11 months, basically
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until they did a recent reverse split
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but this is almost zero volume.
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That's reflected by that 60 day average.
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I could've told you with
a high level confidence
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before we even looked at the year chart.
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If you were like, "Hey I got
a one million float stock
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"that's trading half the float,
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"what do you think it's
done over the last year?"
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I would answer nothing, it hasn't moved.
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So what changed today?
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What changed today, is this stock traded
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over a million shares by the market open,
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so by 9:30 a.m. Eastern,
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this had already traded
twice as many shares
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as it normally trades in the entire day
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all the way to 4:00 p.m. Eastern.
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That tells me this stock
is almost surely in play
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because I know it is doing
what's called float rotating.
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There's only a million shares
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and by 9:35 or 9:34 a.m.
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a million shares had already been bought.
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The only way for this
stock to continue to trade
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is for someone to sell higher,
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that's gonna give that
big, explosive moves.
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And notice, the stock
went from a buck 80 to two
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in pre-market.
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And then at that first opening candle,
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these are five minute
candles on the intraday chart
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we're looking at here,
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that second candle of the
day traded 1.2 million shares
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in one five minute candle,
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the second candle of the day.
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That's more than the float,
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so it's now rotated the float twice.
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Notice the price action goes
from two to, in 30 minutes,
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it went to 4.75.
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Two to 4.75 in 30 minutes,
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that is what float rotation could do,
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that's what can happen
when you explode through
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that 60 day average volume.
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Now they don't all go up,
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you have to have a trade plan
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but think about that,
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the odds are, this
stock continues to spike
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and you can see it's now,
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where we're recording middle of the day,
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live feed here,
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this stock's holding up.
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High percentage it's gonna
spike later in the day
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because of the fact that as of,
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2:00 p.m. Eastern,
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it has traded 22 million shares.
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That's 22 times the average daily volume.
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Look for these high
volume, low float plays
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and the beauty of StocksToTrade,
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and this is why I would love
for you to check out the trial,
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you know you can click the
link below and get the trial,
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fully functioning trial
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and test these things out.
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On my screen, I have a
ridiculously simple screen here
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to show you that I can,
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with two clicks,
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find every stock that
has traded more than 100%
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of the 60 average volume.
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Now that's gonna give
me a basket of stocks,
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it might be 10, it might
be 20, it might be 100,
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but I can add in other criteria
with our custom screener
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to really narrow that down.
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If I drop in the float
and the percent change,
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it will get me down to five stocks.
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So in summary, focus
on the stocks trading,
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what I would jokingly call,
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refer to as much like the Tesla,
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Tesla's ridiculous mode,
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look for stocks that are
trading ridiculous volume,
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and CETX is one of those.
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It's the best way to grow a small account
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because that's the best way
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to catch these multi-dollar moves,
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remember small account
or even a medium account,
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you got a couple hundred shares of CETX
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and you catch a one, or a
two, or a four dollar move,
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that's how you grow your account quickly.
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So do you screen for volume currently?
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Let me know below.
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A lot of people scan for price,
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everybody looks at the biggest
percent gainers of the day
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but I wanna know if you're
scanning for volume too
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and if you're not,
definitely start doing it.
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Thanks a lot, we'll see
you in the next video.
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Thanks for watching our video,
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be sure to comment below with any
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trading related question,
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we love answering your questions.
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Also, like and share it with your friends
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and be sure to subscribe,
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you'll be notified as soon
as our next video hits.
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And if you're looking to
expand your trading knowledge,
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don't forget to check out
all of our other videos
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and be sure to click the trial below.
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Check out StocksToTrade.
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I think it is one of the best,
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most rapidly advancing
software that's out there.
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Be sure to check out our trial.
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(gentle music)
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