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About Options Technical Analysis
Technical analysis based on options volume can
be a
very powerful tool in predicting the future direction of the
market. For anyone who wants to predict financial market movements
and build a successful Options trading system options volume
analysis is a VERY important tool.
Options technical analysis needn't always focus
on price, as price is always a function of volume. Options volume
technical analysis does not center around the volume of any
particular contract, but around the volume for ALL contracts
traded for a particular security. That way we can get an accurate
picture of the market and it's future direction. This type of
options volume analysis is done in the form of a chart and through
the analysis of the chart's behaviour, future directions of the
market can be predicted.
This trading system is not 100% mechanical as it
does have a level of subjectivity. The basic technology behind
this trading system is MarketVolume and its system of volume
technical analysis. MarketVolume's JavaVolume charting technology
allows our analysts to make informed, but still somewhat
subjective, decisions as to where the market is going in the mid
and long-term, and to make a trade based on the results of that
analysis. Also keep mind that this system also incorporated other
forms of technical analysis.
Every Options trader and Options analyst knows
the importance of index charts and index indicators, but that is
not 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 for all options. A good term for
the type of technical analysis behind our Options Trading System is
'Fundamental Options Volume Analysis', whereby we analyze the
CAUSE of the price movements in as opposed to just analyzing the
result, price.
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