Net Buy Volume Trading Strategy

I learned this trick from "darrelldemello" from the Yahoo message boards. Basically, it seems that ADVFN has a nice system in place which allows you to see the number of shares bought at the ask and the number of shares sold at the ask.

If you can find strong divergences in the net volume and price, it can usually hint at pro-traders accumulating stock. For instance, if on one day 5mil shares are bought at the ask and 3mil shares are sold at the bid, the NBV (net buy volume) is 2mil shares. Naturally, since the NBV is positive, you would expect to see the stock trending up on that day. However, if you see the stock trending down or flat-lining on that day, then you have just spotted a valuable divergence.

This kind of divergence usually occurs when professional traders (who want to accumulate a stock) hammer the bid with sell orders whenever the stock tries to run up. Then, they place buy orders to catch all the shares that nervous retail traders are selling. It never hurts to buy the same stocks as the pros!

To try this system yourself, sign up for a free account at ADVFN. Then log in and click on the "Trades" tab and type in the stock of your interest.  You will then be able to see the buy/sell volume. ADVFN is the only service I know of that has this kind of info.