Asc Tri broken out Norway index - so lets go fishing! Bullish case - Analysis of relative strength shows several indexes have demonstrated relative strength. Closer consideration of these indexes for triangle pattern set up and breakout shows the Nordic region.
As the index has broken out of an ascending triangle so its constituents should also show relative strength. As the index still has a little more price room until the traditional bullish target is met.
If this is the case then a quick scan of the index should identify other Asc tri patterns hopefully before they break to the upside supporting their parent index direction.
For a bullish view one may decide to leverage larger position hopefully with a lower amount of risk given the logic of the parent index move
If an asc triangle which has not broken out can be found with in the stocks in the index which is available to be leveraged with a greedy market maker who usually clears out the small retail investor. Before it breaks our with any volatility, a bullish or bearish position could be placed as a limit order thus more likely that the market maker will still honor the trade. Before they stop allowing trades on that instrument due to their potential to lose money.
Difficulties now arise that once a market maker detects a likely price move they cut the instrument.
Difficulties now exist that top tiered traders rated by the market makers as those that make money in their accounts, any positions these traders place are quickly hedged so as to minimise the market makers risk. Also when wining positions need to be closed out, the market maker will look to automatically adjust the price shown indicated to trade for the individual instrument. This is normal practice because the market makers are trading their own book and and as their client you are most likely not ever really taking a position in the stock, equity or index they are offering to you.
This idea allows you to beat the market maker to be early before too much interest has built up in the index constituent and gain a successful position whilst minimising your risk.
Bulls do not bet the bank as the market maker can shake you out of the position, for example they can push the price much lower if you have a bullish long position. When others try to trade at this low point they reprice the order saying out of time new price etc. This normally happens when the account is close to margin calls or a stop is placed which can be taken out by the market makers. Forcing you to rebuy (if bullish) your position so they have made several pips out of you by doing this. As typically 70-90% of retail traders lose money whilst on leverage this is a very good business for the market makers. Unless you have traded for many many years you may not believe me but from my experience this is true. I mean what makes you think as a retail trader who does this part time, believe they can beat a professional trader who is paid to do this. To be in the top 10% or realistically in the top 5% because sometimes you will lose the trade thats just trading. To balance this you must be in the top 5%.
Please if interested search for my next posts to find out which stocks are making Asc Triangles on this index to see if this is fact or fiction! PS I bet there are some I find tomorrow !
Disclaimer: As this is purely theoretical this is not advice. Its just for entertainment purposes only. Positions referred to are bullish or bearish, time will tell.
