Chapter 4. Working with Intraday Price Spike Charts
Key Concepts
• Option pricing theory can be extended to measure the volatility of a series of price changes over very brief time frames of just a few minutes. Results can be visualized as a series of bars on a histogram chart.
• These histograms are useful tools for identifying several different types of price change behavior: rising instability that often precedes a large change; decreasing volatility near the end of a sharp up or down trend; and sudden up-down or down-up transitions that sometimes precede changes in direction.
• Although these indicators cannot be used to predict the direction that a stock will ultimately take, they can be used as entry points for certain types of trades, ...
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