Greetings Boomerang traders,

I hope this meets you well and you are having a nice summer.  One of the most important things for traders to learn as they move forward in their trading career is to recognize how certain times of the year correlate to market activity.

As they say, nothing is written in stone… especially in the markets we trade.  However, there are certain things to look for during certain seasons and learn to just accept that often these conditions repeat.

For example, the established slogan of “Sell in May and Go Away” actually has some validity to it. If you go back and check the May through September period in the US stock markets during those periods you will find some validity to this idea.

But you could also miss some important moves too, which we have seen during this years May through September period. For example the recent strong rally we  have had the last 6 sessions. (6/27-7/6).  This rally baffled some traders while others like myself saw it coming and reported it in the www.mohansmarketforce.com newsletter I publish each day.

Right now it is the middle of the summer and we often get quiet trading periods during this time.  This is not at all unusual and August often is the slowest period.  Expect this and don’t be surprised when it occurs. Consider going on a weeks vacation with friends or family.

Very frequently we see in the last quarter of the year portfolio “window dressing” buying  which often turns into “Santa Claus Rallies” during the December period.  Many institutional traders, portfolio managers (including myself) and other traders are away on vacation during this period. In truth a real trader/portfolio manager never totally gets a vacation.  We use our mobile devices to keep in touch with what is going on and have systems in place to manage volatility.

By now, most of you are familiar with using my Boomerang Scalping System and have read the other reports that I offered here on the Boomerang Blog.  I am pleased to discover recently that there are 3 hedge funds using my Boomerang Scalp Trading System to make some of their trades. These guys can recognize quality when they see it and simply put….Boomerang Scalp trader works.

But no one can change a quiet, range bound market into an active one.  The markets have to make that decision. Our job is to identify when the market is quiet and be able to stand aside and not get cut up trying to trade a dead market.

Today I would like to offer a simple approach I use which you can add to your trading arsenal for keeping an eye on quiet markets.

A simple trading technique is to just create a 1 minute chart with the VOLMA (Volume moving average) along with a regular VOL (volume) indicator.  At the bottom of this report I show you what this looks like.  The idea is you want to shrink it down in the corner of your screen and just glance at it regularly.

I use a 14 period VOLMA on a 1 minute chart.  Go back over 10-20 charts and mark the significant levels where volume slows down on both the VOLMA and the VOL and just become very familiar with how quiet markets show up and act.  Note the market volume extreme levels to see where peaks in volume surge, stop, and reverse. I could show you these levels but I want you to go back over 20 charts and discover it for yourself.  This is a significantly better way to discover these levels. Email me if you have any questions (mohan@daytradersaction.com)

Another excellent tool which is available from the Indicator Warehouse is called the “Buy Sell Volume Pressure” available at this link http://www.indicatorwarehouse.com/Buy-Sell-Volume-Pressure.htm  

Watch the video for more information

Click here to view the video on YouTube.

On this indicator, watch for volume pressure to slow to where the histogram and lead lines are hovering near the Zero line and not causing any thrusts.  These are slow times when you do not want to be looking for Boomerang Scalp Trader signals, but instead just waiting for the quiet period to end….then get back into action!

Some traders may want to just add these indicators to their Boomerang Scalp Trader chart itself.  Certainly that is fine and will keep all of these indicators on one screen. For myself I prefer the volume readings as a separate screen and chart as I treat it as the heartbeat of the markets and “siren call” for entering trades.

Nothing works perfectly or all the time in trading but the more advantages of proven winning ideas you stack up in your favor, the better your trades will go.  Committ to becoming a professional career oriented trader and consider the tools we discussed today to improve your trading.

Have a good trading day and be sure to email me if you have any questions on day trading the futures.

Mohan@daytradersaction.com