I was almost going to title this post:  One Key Difference Between Intra-Day Trading and Investing

 

In my own intra-day trading I use Auction market principles along with volume profile and market profile and other things including market internals and order-flow.  I also apply it, minus the order-flow part, to my longer term investments as well. Generally, volume profiling and MP works well with more liquid instruments. Usually the more liquid the better it works. 

 

I typically don’t publicly comment about my trading for several reasons (the reasons why will be in another blog post). And what I’m writing about here are not trades, but investments.

 

Like a lot of people, I’ve been watching two stocks FB and YHOO that I’ve owned for a while and continue to hold (one entry in FB around 20.5 and my YHOO cost basis is also around 20). But it’s been a little different for me as I happen to have an emotional connection to both stocks. My wife worked for YHOO in the past and almost took a job at FB. 

 

I anticipated that YHOO would run into some supply and slow down around 28ish and that FB would hit supply and slow down around 38-42. If you put up a long term volume profile for YHOO you’ll see it was pretty thick around the 27-29 area and we all know the 38-42 area for FB was a big area.

 

When a market blows through an area like these two stocks did, when supply-demand or support-resistance levels or value areas break easily and price continues its march, its often a sign that larger and  longer term players are  entering the picture. This is a great example of the drawback of using over-bought or over-sold oscillators or indicators in investing.

 

Part of what inspired this post today was seeing the cover design for the first time for an upcoming (2014) Behavioral Finance book that I’m a contributing author in, “Investor Behavior: The Psychology of Financial Planning and Investing” (Wiley Finance Series) H. Kent Baker & Victor Ricciardi editors.

 

 

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