Investing is a process, which is affordable to a bigger number of people than trading. Since active trading takes much time, it is difficult to combine it with other types of activity.
Classically, investing is based on fundamental analysis of company operation and selection of those stocks, which have the highest growth potential. Despite the fact that many books on this subject have been written, the process of search for stocks might seem complex at first sight.
Use volume analysis to simplify the process of investing in stocks.
Advantages of this analysis are in the fact that it focuses on formation of big volumes. It often testifies to activity of major insiders, who accumulate stocks on the basis of fundamental factors, about which a private investor might not know.
That is why, if you correctly interpret the volume, poured into the market, and further price reaction, you can successfully invest in stocks without a deep knowledge of the ‘fundamental’.
Example. Let’s consider such an indicator of the trading and analytical ATAS platform as TPO and Profile… One of the functions of this indicator is to show the volume profile and the maximum horizontal volume level for a certain period of time.
The accumulated volume and the price reaction to this volume accumulation could specify, with a certain degree of probability, a supposed direction of the further price movement.
Let’s see in the chart how the use of TPO and Profile could have been of benefit when investing into the Deutsche Bank stock in 2020 (the bank stock is traded on the NYSE with the DB ticker).