j0b0123

I will give my 2c here, as I disagree with the premise of this thread based on years of actual, data driven testing. I have found there is no correlative relationship between volume and price movement. This is after exhaustive testing using many very complex and simple rules for volume, including multiple timeframe analysis and other. There is some minor confirming relationship if there is a very key area (technical) that is broken. On volume it tends to continue into the future, without, not. However, its only like a 65% vs 35% thing, not black and white. For an average move of .5%, 1%, 2%, 3% etc, over ANY length of time, the volume before this move has almost no correlation or predictive value that a move is going to happen. The volume during this move has close to no predictive power over whether this move will continue and how much it might continue. I am sure there are many of you that will show me examples of where this works. And this would be true. I tested the entire subset of US stocks (about 3500 names) over 7 years of data, using many simple and advanced techniques. Over short runs of time, it will lead and or predict, and then just abruptly stop. Over long runs of time, under the same "technical" formation, it provides no use whatsoever. It is easy in hindsight to pick out the areas where it did work, but the brain ignores all the "similar" circumstances that are almost identical, but which nothing or the opposite of what the volume shows happens. Just my 2c here.

Almost every blow up starts from not using stops or not adhering to stops for whatever reason. This is followed by confidence in the position, and adding to a position in a loss. If traders NEVER did this, I would say 80% of them would not blow up. This does not mean they would not lose, but this alone accounts for the majority of the problem. I will give you a story of my blowup. I started trading full time in 1996. The prop shop I opened with had many good traders in the office. I started with about 25k in my account, which was leveraged up to 200k intra-day if I needed it. I started out trading the right way, and built the account up to about 35k in about 2 weeks time, trading 300 or 500 share lots only. At this point, my confidence was growing. I then asked around, and asked what the office record was for a single day of day trading, starting the day with no positions and having an account size of less than 50k. I was told the record was 11k, without being stupid (meaning going all in on a low priced stock etc). I told them I would beat that record the next day. I traded like crazy, and at the end of the day, I had amassed about a 12k profit. I was very proud of myself for doing that. That was also the "peak" of that trading account. I tried to come in the next day and do the same thing, but the markets would not have it. I ended up losing about $4500 that day. The next day, I vowed to make it back, and lost another $2500. You can see where this is headed. In addition to losses, I was racking up massive commissions from over trading the account. Instead of letting the markets show me how aggressive I should be, I was trying to "force" the markets to give me winning trades. Basically 3 months later my account was near 0 and I was done. My early success had doomed me, because I had a severe case of overconfidence. Even though I knew how to pick the good trades, in real time I was somehow "avoiding" the winners and only playing the losers. Years later I realized what had happened to me. Because I started losing, my brain wanted to avoid losing at all costs. So subconsciously I was filtering trades that "looked safe", and avoided ones that did not. All I ended up doing was playing stocks that did not move that much, or were near a support(long) or resistance(short) which eventually broke etc. I would cut winners early, because I did not want them to turn into losers. I learned a lot from that experience, and have not repeated it since.

you have to figure that is "net" 2 cents, not 2 cents target per trade. If you make .40 then lose .36, your "net" is .02 per trade per share, or .04 overall.