Quality indicators reveal the durability, strength, and reliability of price action. Quality indicators tell traders if the price action is likely to continue or if the price action is a one day pattern. Quality indicators help traders avoid whipsaws and poor entries.

The most common (and least understood) is volume. Unfortunately, for most traders, volume remains the most underused and ignored indicator and it shows in traders who constantly enter a stock at the end of a run.

Of all the indicators available today (some 200+), volume is by far, the most important. Yet most traders simply don’t know how to use volume to their advantage. Volume exposes many things about price action.  For instance: a fading volume pattern exposes a potential downtrend during a consolidation or sideways pattern.

Quality indicators are leading indicators and are essentials for all traders’ toolkits.