As the name suggests, whenever there is a surge in volume of stocks, it is anticipated that investors and traders very actively participating in the stock and discounting some materialistic information. When volume in a particular day is more than the average of 5 preceding day’s volume we initiate a position.
The rules are as follows:
- Short top 2 volcano stocks.
- Divide the capital equally among the two stocks.
- Trade only those stocks which can be traded in futures and options.
- Short (sell) the stocks at 9:25 a.m.
- Keep 2% stop loss from your entry.
- Exit the position at 3:15 p.m.