Analysis to Trade Options
We use a form of volume-based technical analysis to
anticipate the future movement of the options we trade. This is a very
powerful tool for anyone who wants to predict financial market movements
and successfully trade options.
Technical analysis does not always need to focus on
price. We focus on volume, because price is always a function of volume.
The technical analysis of options volume is not based on the volume of any
particular contract, but centers on an analysis of the volume of ALL
contracts traded for a particular security. This allows us to get an
accurate picture of the market and anticipate its probable future
direction. For this type of options volume analysis we use our JavaVolume
Our trading system is not 100% mechanical , as it involves a certain
degree of subjectivity. The basic technology behind this
trading system is
MarketVolume and its system of volume-based technical analysis.
MarketVolume's JavaVolume charting technology allows our analysts to make
informed, but still somewhat subjective, decisions as to where the market
is likely headed in the mid- and long-term. We then place trades based on
the results of that analysis. In addition, we also incorporate other forms
of technical analysis.
Every options trader and options analyst knows the
importance of consulting index charts and index indicators; however, these
do not provide the whole picture. What sets our analysts and traders apart
from the 'traditional' technical analyst is the fact that they concentrate
on the collective volume of all options. The term 'Fundamental Options
Volume Analysis' would be a good way to describe the type of technical
analysis we use. We analyze the CAUSE of price movements, as opposed to
their results, which is PRICE.
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