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In Part I of our stock option trading series on Will the trend continue or stop we talked about how two tools are needed to measure a trend's strength, while helps you decide whether a trend is going to continue or stop. The first on was setting targets the proper way according to support and resistance's structure .

The second tool to use is momentum tools. These tools should be used to make appropriate judgements and apply these tools to a timeframe that is smaller than that of which you are trading… basically if you're trading on a daily chart, trying to pick either the low of the day or the high when trading, then you would look at half hour or hourly charts for trading day decision support intraday.

Momentum tools – what are they? A moving average in the short term is a great one; in a channel system use three moving averages and you'll have a matrix created, which you can use to measure the strength of the trend against . A variety of channel systems are out there but one of the best is the Drummond Geometry system ( you should have heard about this system in a stock option trading) which uses as its center line a short-term moving average of the average of the high, low, and close of the last three completed bars , projected to a future bar. To this two channel bands are added based on similarly managed averages of the last three pivot points . Very effective judgments of market strength can be made by monitoring where sequential closes occur in relationship to this channel system .

You need to establish the flow of the market by taking measurements using different price strength aspects, such as how close to the high or low the close of the bar is , the distance between close and open , the measurement of the range of the bar , and the progress that the bar is making through the matrix of resistance and support you have.

Yet another tip to remember: Since every time frame has a support and resistance system , watch how easily or with how much difficulty the lowest monitored timeframe breaks support or resistance in a trend . The more easily this occurs , the more robust the underlying trend is likely to be . In an uptrend , support that is close to the bar's low will hold , and resistance nearby is more likely to break easily. Lower time-period support holding, and resistance breaking – this is a very reliable sign of the strength of a trend .

With these tips, your stock trading strategy should become a winner consistently as you learn how to know when trends are running out of stream and the trends that will go on for a long time. A quality course on technical analysis training can save you a lot of time and money by providing you with the tools needed to make these distinctions, which are so important .

Tags: day trading futures, day trading options, emini futures, stock option trading