One of the easiest ways for new investors to find stocks is through the most active stocks or the biggest gainers. Think this is the easiest way to find profitable trades, as the stocks on these lists are very active during the day and we always think a lot of people are buying the stocks on the most active lists.

In fact, this practice is exactly the same as buying on the news. Big boys get publicity in the market and are able to grab the attention of retail investors. Why do big boys need your attention? Just like Tesla and Apple, ads need to be created to attract more customers to buy their products to generate profits. In the stock market, their products are stocks.

Top active, top gainers, & news are a great platform for them to gain retail investors' attention to buy their shares.

That's why we find that most of the stocks we pick from these lists are often trapped at high prices. Because the big boys succeeded in attracting enough investors to queue up to buy at a lower buying price. This is where they cancel their buy orders at the market depth and sell them to investors who parked buy orders at lower prices. Retail investors, on the other hand, thought they bought the shares on the cheap.

Therefore, we need to be very careful in selecting stocks on the active list, not all stocks will show higher prices. Most of the gainers on the most active list are here to entice us to buy big boy stocks. Especially those stocks that have technical buy signals.

We have a different way of analysis when selecting stocks from the top active list. 

Those price and volume movements that show the big boys are creating activity to attract buyers won't have the potential to rise in the next few days. This trading pattern suggests that they have enough investors lining up with lower bid prices for them to profit by selling them shares.

There are some stocks that offer trading opportunities, but we prefer to day trade these stocks. Because these stocks on the most active list usually trade at their peak, in other words, the big boys are ready to dump these stocks on the market. It is not wise to invest in these stocks for the medium or long term. Now that you know that the big guys are going to sell it, why do you still hold it?

Let's take a look at some of the examples below to determine which price and volume movements indicate that the big boys have no intention of increasing prices after the stock was placed on the top active list. Then we'll look at price and volume movements that have trading opportunities.

Creating false buying activity

What we see in the stock market may not be true. Humans usually choose the easiest way to make a decision. When you want retail investors to buy your stocks, you need to make them easier for them to see. This information must have direct implications for investors to make purchasing decisions. For example, the daily buy percentage for a stock is the total number of buy trades completed in a single day. Many investors will assume that a higher buy percentage means more demand or more bullishness. Because a lot of people buy it.

This is not always the case, a purchase transaction can be created by buying from the left and then buying back from the left with the right. When we say "change hands", we mean that the purchase transaction was created by the same group of people.

Another reason this isn't a good indicator of high demand flowing into stocks is that it's just data that tells us what happened before, but it doesn't tell us what's going to happen later.

When the big boys jack up prices, buying pressure can arise. When enough investors get into these stocks, the price will peak. The big boys will start to sell the stock and drop to a lower price, then increase the selling percentage.

This is why many traders and investors are confused about the analysis they apply to KLSE, especially traditional technical analysis. Because data collected for an indicator or resistance line from previous price highs or lows only shows what happened at that time. But that doesn't tell us what the big boy's next move is. This has caused many traders and investors to get caught up in technical entry signals.

False buying activity in 5 mins chart

By understanding the intention of every price trend of the big boys, you can know the next price trend. Why do they increase the price? Why doesn't the price go up when the quantity is large?

The basic laws of stock market prices and quantities are:

- High volume, high prices = bullish
- High volume and generally falling prices = bearish

Everyone knows this basic price and quantity very well, but we need to analyze more details to find out where the quantity is created. To know this, we need to look at the 5-minute chart to see when the volume is coming.

In the 5-minute chart, when the volume is large and the price increase is not large, it means that the big boys have no plans to increase the price. That's because they attract enough buyers to wait for the stock at the lower bid price.

There is no need to push prices higher, but they need to create an impulse for investors, which is FOMO [Fear-Of-Missing-Out]. Convince them that there seems to be a lot of buying flowing into the stock. But the price won't be higher.

This price action tells us that the big boys are not going to push the price further and it is not going to stay high the next day. The next day will be when they start harvesting or realize a profit by dumping the stock to buyers who park at a lower price.

When you are fully aware of these price and volume movements, you can avoid stocks entering peak trading periods. This will help you reduce trading mistakes and avoid losing trades. Then we look at how to profit from the stock market by following the big boys.

True price up

The opportunity we seize is when the bigwigs want to increase their prices to attract buyers with high prices.

This usually happens when the big boys find that not many buyers are lining up on lower-pay orders. Then they'll start raising prices to draw investors' attention to the stocks they're in.

Before they increase their price, we need to understand how the big boys work and how the price and movement are going. So we can prepare to get in when they start pumping up the price, and when they're going to sell, we can get out.

You can find out more about the new technical analysis to find trading opportunity stocks on KLSE's most active list in the blog post link below:

https://bit.ly/3dblIRg

Upcoming Webinar:

Trade in KLSE: New Technical Analysis that Track the Big Boys' Next Move

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Malaysia's stock market is a unique market; hence it requires a customized trading approach to tackle & swerve. Many existing traders in Malaysia apply a plug-and-play strategy from the overseas stock market, but it is not necessarily the best strategy to trade in KLSE. This is due to the difference in local and overseas stock market regulation and the size of market participants of institutional funds & retail investors.

“True traders react to the market.” is the backbone of our trading method. Our findings and strategies are developed through years of trading experience and observance of the operating style in Malaysia’s stock market.

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This blog is for sharing our point of view about the market movement and stocks only. The opinions and information herein are based on available data believed to be reliable and shall not be construed as an offer, invitation or solicitation to buy or sell any securities. Round & Surge and/or its associated persons do not warrant, represent, and/or guarantee the accuracy of any opinions and information herein in any manner whatsoever. No reliance upon any parts thereof by anyone shall give rise to any claim whatsoever against Round & Surge. It is not advice or recommendation to buy or sell any financial instrument. Viewers and readers are responsible for your own trading decision. The author of this blog is not liable for any losses incurred from any investment or trading.