Stocks move from low volatility periods to high volatility periods

Stocks move from low volatility periods to high volatility periods

Stocks spend time in low volatility periods during which time they have orderly consolidation or pullback. Such low volatility periods are characterised by cluster of small daily up or down moves on relative low volume .

Let us look at recent example of PH trade

Stock formed a cluster of compact moves. The highest %  move in 56 days was .21%. On upside and -0.15% on down side.

Such volatility compression periods are followed by range expansion in direction of the move most of the time.

This allows us to put buy stop just near or slightly above the cluster of moves high. Stop can be very close.

Because stop is so close to entry you can put in lot of capital on a trade like this  making it a good risk reward trade.

The low volatility cluster takes some days to form, so you can plan this trade in advance

How can you find setups like these

In order to find setups like these you need to scan for stocks having cluster of small moves in last 3 plus days.

The Anticipation scan which I have shared multiple times in recent videos will show you how to find this.

The Anticipation scan which I shared is more broad based but if you want to go deeper and narrow it down to less than 3 to 5 extremely high probability setups then you need to modify it to find cluster of moves like in above PH example.

You can modify the scan for finding these kind of setups without going through 800 stock charts by looking for only half of 1% move. The modified scan will give you 75 candidates to look at.

Let us look at PNR as a stock I am watching today which is similar to PH

Now in this case a buy stop just few cents above recent volatility compression can get us into a good breakout trade with very close stop.

Some more setups like this for today :

DHI might need few more days to setup even better.

Do you want to find and trade setups like these

All that you need to do to find setups like these is to scan daily for them on stocks with established momentum and spend less than 10 minutes to find 3 to 5 good ideas.

Once you find good idea create a buy stop order or enter on price alert. Stops go near low of entry day or low of consolidation.

It is a planned trade so no emotions involved.

If you are serious about making money swing trading develop a bunch  setup ideas like these which offer you extremely low risk profit making opportunities with a planned trade ahead of time.