Momentum Trading: Dumpers, Gainers, News Stories and Publication Stocks

Growing up, my daughter loved the The Wizard of Oz. She watched it over and over again. And every time, she shrieked with delight when she discovered that the Wizard was just a small nervous man behind the curtain.

I think of the man behind the curtain every time I look at an intraday chart or a time sales chart scrolling tick by tick across the screen. It doesn't look mechanical or impersonal to me, as it does to most traders. I realize that there are thousands of anxious people behind each and every trade the market makes.

The key to high-percentage trading is learning how the people behind these trades, under certain circumstances, react predictably to certain types of events, numbers or patterns. Now I'm not saying a background in psychology will increase your winning percentages substantially, but if you understand this approach you can predict the patterns a good percentage of the time. ...