Current Trade

Thursday, December 2, 2010

Distribution

In the most simplest terms is when a price vaults to a new higher position on huge volume and reaches an apex where the majority of the volume smothers the price rise, and beats it back (At that point, it is safe to say, the market (traders... most likely institutional, are selling, or distributing the higher share price to retail investors).... If you are watching Level II you can see the real time action in the levels of bids and asks.    If you have a real time chart, you can see price react to the effect of the distribution by the peak of the price graph as it tops and recedes or spins (envision a candle with a long toppy tail as the result of said price action) at a certain level.

Distribution can also be seen in continuation moves where the supply is washed in surges.



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