Hi jim,
I used to get hung up when I saw really high volume traded, and would check up and see if all the volume traded on market - or not (I would check the 'course of sales' myself if I saw it the same day, or ask someone with IRESS market data, if it was some days later). And you can still do this pretty easily.
You can also search the net for a stock announcement, or news item.
I don't day trade stocks at all anymore, or trade really short term. I generally swing trade (long) over weeks and months (so long as the broader market and/or sector also looks positive, and is trading in harmony).
So I just watch for the response to the volume in question on the next bar (and the sometimes the couple of bars after that).
The response will almost always tell you what happened - eg- if there is no expected response to an obvious volume input, it was almost certainly an off market transfer, which was reported that day.....and if price responds how you would expect to high volume like that, then it was most likely traded on market in response to an announcement or news item (and that can easily be searched for on the net to confirm).
So for me, the response will tell me the story, and answer my question, and I don't get too concerned about it (I used to, I don't anymore).
The response will usually tell you everything.
Trading a chart is a personal thing.
Actual trading should usually be a mechanical thing, with certain rules to follow (that have usually been tested to show potential success).
I have developed my own style which suits me, and my personality, it would not suit everyone.
I like to buy on down bars, after I have seen something which suggests strength, in particular I like to see decent accumulation in the background.
I am looking to ride on the coat tails of professional 'active' traders - so I like to see them involved.
I usually buy into larger small caps and smaller midcap stocks, which also pay me a dividend, and are fairly liquid.
I will sometimes buy small and micro caps, and large caps, when it seems right, but not so often.
I generally like to dip my toe in (often, but not always during an accumulation phase) with a modest position.
And then scale up further if everything continues to develop as I hope and expect, especially once price has broken out.
Remember that the accumulation phase holds increased risk, and the mark up phase holds less risk.
I usually build an over weight position considering my portfolio size (sometimes massively overweight - temporarily), then if price does what I expected, I start lightening my position a little (my risk) on strong upbars, until I have a more manageable position size. Then I allow it to run until I see obvious weakness of some kind. Then plan for an exit - usually either 50% or in full, depending on what the stock was bought for in the first place, and in what account.
You really need to experience different types of trading, and see what suits you, and your personality.
It takes some time to work where you are best suited in the market. The big trick is to get through this learning phase with a decent account size remaining (eg- don't lose all your money, while you are learning where you fit in). So once you get good at trading, you have enough money to benefit form your knowledge.
Personally, I find that shorter term trading is more enjoyable, but is more intense, time consuming and difficult.
Longer term and swing trading is much less intense, it is easier (for me), and leaves me with much more time to live life how I like.
Stock selection is very important.
Sometimes I go for periods where I don't have any new 'good ideas' to trade, or the ones I do have are not ready for whatever reason.
I have learned over time, that 'less is more' for me, so I don't over trade, I don't chase trades, and I don't force trades.
When the time is right, I just seem to know, and I jump in with an initial position, and then build the position over time depending on my confidence level - so long as what I see continues to make sense over time, and the parent index (or sector index) is also trading in harmony, I become more confident.
I find trading larger caps stocks much more consistent and easier to read (the chart is easier to read), and with less risk, although profit percentages are less rewarding (so there is a tradeoff).
Whereas small and microcaps trade more inconsistently, carry more risk, and when you get them right, make more profit.
Personally I found for me, that my winning percentages were much higher on large and mid caps, when compared to small and micro caps, which balanced the profit percentages, and made it less of a an issue (for me).
I prefer the easier, more consistent route, so I stick with that - even though it can sometimes be a little more dull and boring, especially when it seems like everyone else is trading and winning, and I am just watching existing trades, or waiting for a set up to unfold.
Luckily I have developed patience as I have grown older, so I don't get to upset or worried about it anymore.
Hope that helps
cheers
PS - in the two examples you showed, I would enter on the first one for sure. I like to enter on downbars after strength. I almost never enter on upbars, and if the entry doesn't come, I wait and see what happens. I don't have to buy, if I miss out, I know another entry will appear on this (or another stock) soon after.
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