Volume and Movement

Rule: Avoid low volume stocks.

I find that on the average day after about 11 AM and certainly after 11:30 AM the Stock Market in general starts to become difficult for the day trader, at least for my system. Strange things happen during the lunch hours and beyond I believe mostly due to the low volume compared the first 1 to 2 hours of trading.

Once the volume drops it's two easy for a stock to be manipulated either on purpose or not. The volume amount where this starts to occur varies depending on the price of the stock but generally I don't trade a stock that has under 80k volume per 1 minute candle.

The smaller the price of the stock the more volume it should have. If a $10 stock is only trading at 50k shares per minute, that's only 5,000 shares. This means anyone that buys 5,000 shares or more can significantly move the stocks direction. 5,000 shares on a $10 stock is literally nonconsequential in the stock market. Many traders will buy 20,000 shares or more at a time of a stock in this price range, not to mention Market Makers (large Wall Street Funds) can buy millions of shares.