Take advantage of price driving changes in volume with the ST Launch Pad Indicator!
What is the Launch Pad Indicator?
The Launch Pad Indicator is a pivotal tool for any trader looking to take advantage of market moves based on volume conviction. What the Launch Pad Indicator looks for is greater than average volume or "volume spikes" which when coupled with price patterns resulting in Squeezes. This can prove to be very powerful. The indicator is based on option volume and can be considered an early warning signal generator. The spikes are indicative of an unusual influx or outflow of volume which will typically directly affect the price action.
How do I read the Launch Pad Indicator?
Once you have the indicator on your chart, you are ready to start monitoring for the high probability setups. This is good because it will not take up a lot of real estate on your chart in the price section. You can simply quickly reference the levels and when you see spikes in volume, you can expect price to rise when this is sustained. The green and red bars will appear when volume is greater than the average volume and there is a Squeeze in play. If there is not a squeeze or recently fired squeeze or if there is not greater than average volume, you will not see green or red bars. The red bars signify greater than average volume during a squeeze and the green bars are showing greater than average volume just after a squeeze has fired.
Notice the Red Bars appearing during the Squeeze on the ORLY chart below.
Also note the color change for Launch Pad bars and now Green Bars appear when the Squeeze has just fired as shown below.
How can I trade with the Launch Pad Indicator?
The way our team uses this indicator is to gain an edge with a quick heads up for greater than expected volume spikes. When the coupling of above average volume takes place around the Squeeze, you can very quickly look at a chart and see higher than average volume around that Squeeze set in order to bolster the move conviction. This is not a buy or sell signal but simply annotating the volume. The greater than average volume is a key factor in understanding how much strength the corresponding squeeze has in the near term. This huge volume can often mean that the institutional traders are loading up or at least participating in the squeeze situation and this is where you can build this tool into your trading plan.
Below you will notice a chart of ORLY with 3 Squeezes displayed. Notice how two of the Squeezes (first and third) fired with positive momentum and were followed by continuous Launch Pad volume bars. These led to greater than expected moves in price. The third (middle) Squeeze however did not have sustained Launch Pad volume bars appear and there was negative momentum on the Squeeze. Price reflected a lack of volume conviction in the move.
Which platforms is the Launch Pad Indicator available for?
It is a lower study available for Thinkorswim and Tradestation. If you would like to find out more about purchasing this indicator check out the link below.