Last week, I talked about how volume can be interpreted in three main ways…
As selling pressure, buying pressure, or as neutral, which is no pressure in either direction.
Now when you’re trading from your computer at home, it’s hard to know exactly what volume is doing without the right tools in place.
But when you’re standing on the floor of a stock exchange, it’s dead obvious.
This is the single biggest advantage floor traders have over Main Street traders like you and me…
They can feel and smell the market.
They can see the flow of buying and selling as huge institutional orders come through…
And they can sense the fear and greed in other traders’ eyes as the action builds to a deafening crescendo.
This is precisely what Nigel Hawkes discovered after standing on the floor of the London Stock Exchange eight hours a day…
For two weeks straight…
Observing the pit traders in action and learning their secrets.
Of course, this was back when the exchange floor was open to visitors.
In those days, the pit was called the “ring,” and it was a seething mass of humanity…
Filled with traders of all shapes and sizes yelling and screaming at each other, signaling trades with their hands.
As he observed the frenzy that would erupt as volume built on the floor, Nigel realized that this was exactly what was missing from his trading…
And he set out to build a system that would replicate what was actually going on at the live edge of the market and underpinning the price action.
Now, it would take years of further research, studying and tinkering before that system would be perfected…
And next time, I’ll tell you how Nigel tracked down the handwritten notes of a legendary stock market genius to learn his secrets and incorporate them into his system.