Trading Congestion Action - Stock Trading Course (Part 1) - By: Ted Hearne

Congestion action trading is the topic for today. Congestion action in a market is a market that oscillates back and forth between the confines of congestion , between support and resistance ( or between the block level and dotted line in the terms of Drummond Geometry ). This is action in the market that happens in congestion , and when there is not a trend run. The level that is created by the highest high of the up trend that preceded is the Dotted Line , or the very lowest low that the preceding down trend created. The low of the very first bar that closes on the other side of the Pldot within an uptrend is the first Block Level , or the high of the very first bar on a down trend that closes on the other side of the PLdot.

After you have a working knowledge of congestion action trading theory, patterns, and characteristics , it can be quite lucrative . It's a lot like harvesting a good crop. Congestion action trading can really earn bread and butter .... and even more, you can purchase a table for the bread , and the house to hold the table , and for the house you can buy an estate, and a car, driver, plane, boat, and anything else you want . Basically , congestion action trading holds a lot of potential for you , if you take congestion action trading and learn all you can.

Congestion action trading - what is it ?

One effect of stock trading course with Drummond Geometry is that the definitions are clear . Price is either in a trend run or it is not . When after more than three closes are on the PLdots one side and then it closes on the PLdots other side, this is not a trend run . The market is in congestion if it is not in a trend run . It's all quite simple.

The first bar when there is a close on the trending dot's opposite side is the entrance bar of congestion . We can say that by definition the market is then in congestion . When the market first goes into congestion this creates a dotted line and a block level . This particular block level if the very first block level of this congestion. Thus , congestion action is what this market action is called which begins with a congestion entrance bar and goes on for a time that is indefinite until on one side of the PLdot there are three closes, showing the beginning of a new trend .

Now let's look at the way the limits of congestion are defined with stock trading course, and how they can expand .

Congestion action defines the parameters of congestion , which may be called the confines of congestion. You will remember the confines of congestion get defined by the block level and dotted line, and the first block level gets set up by what is known as the congestion entrance bar. These levels can be expanded upon. If prices goes outside the dotted line, or outside of the block level , while congestion is still in effect (that is, without showing three closes on one side of the PL Dot ), then price redefines the congestion confines and a larger congestion can occur. 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.

About the Author

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 at the stock trading course website.

Article Directory Source: http://www.articlerich.com/profile/Ted-Hearne/70399

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