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Stock Trading Strategies During Accumulation PhaseDuring accumulation phase, the stock prices are normally remain flat. After a share has been in a downtrend it will eventually begin to trade sideways.
Volume dries up as those shareholders with a bearish view towards the company have sold their holdings. Investors with a stronger view of the good prospects of the company begin to take an interest and volume increases whilst prices remain in a trading range. These bulls are accumulating the stocks. This phase can last for months and you must take care not to enter too early. Ideally I would look for a minimum period of four weeks before we enter. Often, they last a lot longer. The longer the base, the stronger any breakout is likely to be. When the breakout occurs, you are looking for a change of market stage to an uptrend. I suspect that an uptrend may have begun when a stock exceeds the trading range high after making a higher low point. Common chart patterns associated in this phase are:
Stock Trading Strategies If there is sufficient room between support and resistance in the trading range I will trade within the range from the low to the high. Often, I am able to repeat the trades too. You can do so until the stock enters a new phase. Trend indicators are of little practical use in market stage. An alternative is to stay out of the market during these periods of consolidation. The problem is that, these may last a long time.
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