Stock day trading and congestion action trading is the topic for today. Congestion action in a market is one that swings back and forth between the confines of congestion, between support and resistance (or, in Drummond Geometry terms, between the dotted line and the block level ). Within congestion this market action occurs, and when no trend run is occurring . The level that is created by the highest high of the up trend that preceded is the Dotted Line , or in a down trend, the lowest low . 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.
Once you have a sufficient understanding 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 what's more , you can purchase a table for the bread , 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 . In short , there is a lot of potential in congestion action trading , if you take time to learn everything you can about it.
What exactly is congestion action trading anyway?
One result of stock day trading in this way with Drummond Geometry is that the definitions are clear . You either have prices in trend runs, or 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 very clear and simple .
The first bar when there is a close on the trending dot's opposite side is known as the congestion entrance bar. Then it can be said that the market is in congestion by definition . When congestion is first entered we know that a block level and dotted line are created . The block level is the congestion's first block level . Thus , the name for this market action is congestion action which starts with a congestion entrance bar and continues for an indefinite period of time until there are three closes on the PLdots one side , which marks the start of a new trend .
Let's take a look at how congestion limits are defined with stock day trading, as well as how expansion can occur .
Congestion action defines the parameters of congestion , which may be called the confines of congestion. Keep in mind that the confines of congestion are defined by the dotted line and the block level , and the congestion entrance bar is what establishes the first block level . There can be an expansion of these levels . If the price ends up going outside the dotted line or block level, while congestion is still in effect (that is, without showing three closes on one side of the PL Dot ), then price is redefining the confines of congestion and we can see a larger congestion area established . This can continue several times until a new trend run appears .
Next time we'll talk more about congestion trading in the stock day trading series.
