To The Moon

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In my past article sharing my trade, I have mentioned about MAVOL, and how I use them at times to determine entry and exit points, also to see if the trend is bullish or bearish.

So today, I thought of writing about my understanding so that fellow tigers can see if they would like to explore them in their trading plan or strategy.

Introduction

I believe there are many standard definition on MAVOL or some may called it VMA (Volume Moving Average).

MAVOL is actually like any simple moving average, except that it is applied it to volume rather than to price data.

By making any individual surges evenly in the volume activity of the stock, MAVOL allow us to see the general trends and volume patterns of an index.

They are an important tool used in Volume Analytics. By using MAVOL (with different period), it allow us to determine the short-, mid-, and long-term trends of the stock.

I will share about how I often use MAVOL5 and MAVOL10 for short term trade using the Tiger App Chart (5 mins usually).

Relationship between MAVOL5 and MAVOL10

As a short term trader part-time daily, I normally use these 2 periods (5 days and 10 days), The fast volume moving average in this case is over a period of 5 days. The slow volume moving average is usually 10 days.

When I trade, I look at the price movement, then volume because volume can provide into the strength or weakness of a price trend.

Imagine this, if a stock price have risen a lot, but the volume is very pitiful, would you think that investors have take interest in this stock. So normally, how I would look at a stock price and volume, if both must correlate.

Let me use an example to explain how we determine a upward trend of the stock price by looking at the relationship between MAVOL5 and MAVOL10.

I will use UIHC from last night trading, on how other entry point could be detected and how we can detected what kind of trend we could be seeing later in the session

Pre-check before we use MAVOL to determine Entry and Exit Price

1. Price need to be trading near or above VWAP

2. There need to be substantial volume (both BUY and SELL)

3. No sudden huge fluctuation of price (e.g. suspect short squeeze happening)

How to see if upward trend is going to happen next

If MAVOL5 cross MAVOL10 after staying below for past 15 mins, MAVOL5 would stay above MAVOL10 for some time as BUY volume build up.

I would take an entry when the crossing happen. Observe the movement of volume and MAVOL5 and MAVOL10.

How to see if it is time to exit

When the cross between MAVOL10 and MAVOL5 happen, and MAVOL10 stay above MAVOl5, I would normally take it as upward trend ending or it would be going for a bearish trend.

You can further use other indicator to confirm if you need more confidence to plan your exit.

I would use Bull/Bear power to see whether there is strength for any uptrend, or is the strength going to show me a sideway trend later.

I would look out for a reduction of the Bull strength from one of its highest bar, if it keep staying without going above, it mean it is going to trade sideways.

Summary

There is also volume oscillator available which can help you to trade, but I prefer to use MAVOL as it help me to determine it with reference to VWAP.

The oscillator will fluctuates above and below a zero line. The indicator plots positive values above the zero line and negative values below the line.

A positive value will indicate to us that there is enough market support exists to continue driving price activity in the direction of the current trend (uptrend).

On the other hand, a negative value will indicate lack of support, indicating that prices may become stale (meaning trading sideway) or reverse(downtrend).

Appreciate if you could share your thoughts in the comment section on what are your thoughts on using MAVOL to trade, and other indicators to help you to determine the entry price and exit price.

Do like, share and comment on this article if you find this trading thought useful.

@TigerStars appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.