Types of Trading or Market States - Stock Trading Course

The market moves in steps that are definite, and these steps can be isolated and studied , one at a time . You'll also find , these steps progress in a sequence , and you can definite and analyze this sequence , piece by piece .

If the type of trading is understood that the market is manifesting at any given moment , we can find techniques and even tools that are most effective for that particular kind of market activity . Furthermore , if you know the type of previous trading , that which is happening now, and the following trading, we will have a leg up on most other traders . We'll be able to choose the top tools, and we'll be prepared for the future . Sometimes that's half the battle in trading .

Hard earned experience and a quality stock trading course has shown that our definitions of types of trading must be totally clear , otherwise our analysis quickly gets muddy and loses value . We want definitions that can be applied to any market , within any time-frame. We need definitions that are both simple and robust .

In this stock trading course series types of trading will be discussed in future articles, and we will find that simple definitions combined with careful observations can take us a long, long way toward trading success .

The starting point will be an overview that is simple, so you'll be able to get the big picture. Then we'll discuss a market that is showing a trend run. After looking at trends , we'll look at how the time period analysis and Drummond Geometry tools combined will enable us to find out where the origination of the trend will be, and where it is likely to terminate . The monitoring tools will also be observed, both the envelope and 1-1 zones, fit in with the collection that is growing of observations that are practical and theory. Then we'll show you some trading rules that can be helpful as you develop your own trading plan .

Let's get our start ....

We divide all market activity into two major divisions : trending markets and markets in congestion . We can divide up congestion further into congestion action, congestion entrance, and congestion exit. We add trend reversal as a final market condition , making five "types of trading" in all .

The definition of a trend is definitely attached to the close of the bar position called the Pldot. To the trend definition there isn't another element , while there is much to say about trends and their own characteristics. Trends are always defined by one rule: If there are three closes on one side of the Pldot , it is a trend . This is the three-close rule , and there is no kind of trend that can exist without this three-close-on-one-side-of-the-PLdot rule . Never . Next in our series on Stock Trading Course we'll discuss Congestion Entrance.

Author:
Ted Hearne is a Forex and bond trader who has written extensively about trading and has co-authored a "stock trading course" called "Drummond Geometry". His biography and further information about his work can be found at the www.drummondgeometry.com website.