Learning About Trading Congestion Action with Stock Trading Course Part 1
Written by: deon.battig.technicalanalysistechnicalan
Date: Thu, 4 Mar 2010
Congestion action trading is the topic for today. A market that is in congestion action is one that goes back and forth between congestion confines , between resistance and support (or, in Drummond Geometry terms, between the dotted line and the block level ). Within congestion this market action occurs, and when there is no trend run . The level that was created by the preceding up trend's highest high is what is referred to as the Dotted Line, or the lowest low created by the preceding down trend . The first Block Level is the low of the first bar that closes on the opposite side of the PLdot in a uptrend , or the high of the first bar that closes on the other side of the PL Dot in a down trend .
After you have a working knowledge of congestion action trading theory, patterns, and characteristics , you can make a lot of money in this type of market . It's a lot like harvesting a good crop. Congestion action trading can be real bread-and-butter trading .... and even more, a table to hold the bread can be bought, and for the table you can buy a house, and the estate to hold the house , and the car, the driver, and the boat, and the plane, and all the other toys or essentials you may or may not desire . Basically , there is a lot of potential in congestion action trading , if you take time to learn everything you can about it .
What is congestion action trading ?
One effect of stock trading course with Drummond Geometry is that you get definitions that are very clear. There is a trend run for prices or there isn't . A trend run is not in effect when there are three or more closes on the same side of the Pldot and then there is a close on the other side of that PLdot. When the market is not in a trend run, then it is in congestion . It's very clear and simple .
That first bar when price closes on the opposite side of the trending dot is known as the congestion entrance bar. Then, but definition, there is congestion in the market. When congestion is first entered we know that a block level and dotted line are created . This particular block level if the very first block level of this congestion. Thus , congestion action is what this market action is called which gets started with the congestion entrance bar and goes on for a time that is not defined until there are three closes on the PLdots one side , showing the beginning of a new trend .
Let's take a look at how congestion limits are defined with stock trading course, and how these limits can be expanded.
The parameters of congestion are defined by congestion action , which may be called the confines of congestion. Remember that the confines of congestion are defined by the dotted line and the block level , and the first block level gets set up by what is known as the congestion entrance bar. These levels can be expanded upon. If the price goes outside of the block level or dotted line , while still in congestion ( without three closes being on the PLdot's one side ), then price is redefining the confines of congestion and we can see a larger congestion area established . Before a new trend run occurs, this can happen various times.
This discussion of congestion trading will be continued in the technical analysis explained series.
Author:
Ted Hearne is a Forex and bond trader who has written extensively about trading and has co-authored a "stock trading course" called "Drummond Geometry". His biography and further information about his work can be found by following this link http://www.squidoo.com/stock_trading_course
About the Author
Ted Hearne
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