Daytrading - Big Picture/Volume Analysis

[EMC2Trader 10]

Hello EMC2Trader,

 

thanks for the reply. I was simply amazed by you track record. You do have losing trades, as one can obviously see, but the monthly results mentioned, which hover around 200 points in the ES a month ( from the back of my head) make most other traders' results look quite pale.

Of course, this thread is not supposed to be about your course, as you state, so I don't want to get into this much further.

 

Marsupilani,

 

No problem at all, but yesterday was a great example of why this big picture stuff is so important relative to a trading plan (in my opinion)

 

We had been consolidating for 2 1/2 days. I know I dont trade well in consolidation, so if you can recognize these conditions, there is certainaly a discretionary option to stand aside until futher things develop.

 

Then once balance turns back to imbalance, you can go back to following your trading rules and expect better overall results.

 

So, I guess my big picture point with all this (and maybe most do this already) is that by placing your trading rules, whatever they may be, into a bigger picture context, this can help you to make better trading decisions.

[sevensa 10]

Does anyone have the source code for Volume ratio or even a detailed description on its calculation as it is used here? I'd like to be able to follow along.

 

thanks

 

Here is the code:

 

inputs: 
AvgLength( 14 ), 
UpVolAlertPct( 5 ),                                                              
DnVolAlertPct( -5 ),                                              

ColorNormLength( 14 ),                                                       

UpColor( Yellow ),                                                             

DnColor( Cyan ) ;        
variables:
var0( 0 ), 
var1( 0 ),
var2( 0 ),
var3( 0 ) ;

if BarType <= 1 then                               
begin
var0 = UpTicks + DownTicks ;
if var0 > 0 then
	var1 = 100 * ( UpTicks - DownTicks ) / var0 
else
	var1 = 0 ;
var2 = XAverage( var1, AvgLength ) ; 

Plot1( var2, "VolRatioAvg" ) ;
Plot2( 0, "ZeroLine" ) ;


condition1 = UpColor >= 0 and DnColor >= 0 ;
if condition1 then
	begin
	var3 = NormGradientColor( var2, true, ColorNormLength, UpColor,
	 DnColor ) ;
	SetPlotColor( 1, var3 ) ;
	end ;


condition1  = var2 crosses over UpVolAlertPct ;
if condition1 then
	Alert( "UpVol alert" )
else 
begin 
condition1 = var2 crosses under DnVolAlertPct ;
if condition1 then
	Alert( "DnVol alert" ) ;
end;
end ;

[BlowFish 10]

3. If price works its way to a prior volume extreme area on low volume, price will move strongly away form this area, either up or down..

4. Volume extremes inside lengthy consolidation areas represent the anxious, not patient participants, and send a high probability clue as to where price is likely to go next.

.

 

EMC2 Hope you are still around. With 3 I presume you allow price to confirm which direction it wants to move in and the enter on a pullback? In the case of 4 are you sayin the breakout will tend to be in the posited direction to the extreme? i.e against the anxious participants?

 

Thanks.

[EMC2Trader 10]

Blowfish,

 

HI..Im still around but Ive moved my running commentary of how all this appplies to the ES market to my E=MC2 BLog to another website.

 

To answer your questions, whenever I see volume dry up in an area, the anticipation is that price will move strongly away from this area up or down.

 

For instance if it turns into a double top, price will move much lower, but if you are in a trend day up, price will move much higher.......

 

So how do you know what to do...You watch price and volume on the next move...If a pullback cannot bring in higher volume to the downside, the stay long. If higher volume comes in on the pullback, I still dont go short just then (could just be balance entering the market), so I watch for another pullback to see if its time to reverse positions or not.

 

Finally, if volume dries up in an area for a long time (Obvious trading range), then you can often tell which way the range will break later on as volume increases inside the range....This is the one condition where volume extremes represent anxious participants and not the ususal patient partiicpants.

 

It is always the patient participants that determine where price will go.

 

So if you have a trading range in place , and then heavy volume comes in at the top, price is likley to go higher because this represents anxious buyers and not the patient sellers, who now sit way above...

Edited August 11, 2008 by MC
Removed the other sites name

[BlowFish 10]

Thanks,

 

I have to say Its a very interesting way of looking at things. I haven't completely got my head around it as it does seem to look at things from 'the other end'.

 

A tangential (and perhaps irrelevant) question:- do you think S/R attracts price or repels price? Markets move to seek out liquidity right? So price will tend to move towards sizeable patient participants (is it important that they are patient and sizeable or both?)

[brownsfan019 17]

Blowfish,

 

HI..Im still around but Ive moved my running commentary of how all this appplies to the ES market to my E=MC2 BLog at the lookingforsuckers website.

 

Oh yes, the vendor that has supposedly made 278.75 pts in the last 30 days, but is willing to sell the key for $495.

 

Hmmmmm....

 

278.75 x 50 = $13,937.50 PER CONTRACT TRADED

 

Do people really believe this?

 

Buyer beware. Why would any person sell something for $495 that was making so much $$$? It's actually not fair to the vendor to sell this for so little.

 

:rofl:

[Marsupilami 10]

Like I mentioned earlier in this thread...with those kind of results, EMC2 should be in control of the ES...if not the entire US stock market. No need to come to both ET and Traders Lab and try to start a discussion on "BIG Picture Volume Analysis" or what it's called, because if you can get those results, you have really cracked the code of the markets, there isn't left anything more to discuss, period.

 

Now, if EMC2 comes on here and posts his trades in the chat room in real time for two weeks at minimum and continues to achieve those kind of results, I'm a buyer . My guess is though that he will not even show up for one single day. :o

[MC 10]

It's ashame the blog isn't here...I really like the approach and hoped to learn more from the op.

 

I removed the name of the blog since it's tied to a paid site.

[EMC2Trader 10]

Thanks,

 

I have to say Its a very interesting way of looking at things. I haven't completely got my head around it as it does seem to look at things from 'the other end'.

 

A tangential (and perhaps irrelevant) question:- do you think S/R attracts price or repels price? Markets move to seek out liquidity right? So price will tend to move towards sizeable patient participants (is it important that they are patient and sizeable or both?)

 

 

Blowfish,

 

First , I appreciate you attempting to have a reasonable discussion on this, and I have no problem if you agree with some of these premises or not..and I am not here to convince anyone that this viewpoint is "right vs. wrong." I know how I use the information, and I obviously think its valuable in the way you can apply it to a trading plan.

 

You first have to accept the premise that in the end price movement is the result of which patient participant (buyer and seller) wins the ongoing tug of war. In other words, if the sellers remain patient, price is going to go higher until they either dry up, or the buyers become patient.

 

Then you have to accpet the premise that there is a way to measure this in an accurate enough way to tie it into a trading plan.

 

BUt just focusing on S/R....My belief is S/R is ultimately formed by the larger patient participant orders, and then (and this may be controversial) I have no way to tell if S/R will hold or not and I dont base any of my trading decsions on this, but instead make high probabality assumptions as u watch price reacts to S/R levels.

 

For instance, the classic double top is often an area first established by a patient sellers......Then, the double top occurs on very low volume because low volume means price is swiftly rejected in an area... These are often the tails you see on Candle charts, or the swing pullbacks points in a strong trend.

 

BUt lets say you have a resistance high from two days ago that price is now approaching from the strength of patient Sellers.. HOw can you know what will happen at this reisistance point? In other words, I have no idea if price is attrcated to it, or repeled by it because to me the current buy sell/battle is all that matters.

 

I do know if price breaks through S/R, it can often lead to continued anxiety on the other side, but this is already reflected in the condtion of the market leading up to S/R.

 

Also, if S/R will hold, I happen to not to enter in the other direction at this point....I want to see if the opposite side can gain control, and if so, can they hold control first...

 

The only thing I know is what happens after the fact, and like I said I base my entire trading plan around this fact, rather than ever predicting what will happen at obvious S/R points.

 

Therefore, I am very comfortable entering just ahead of key S/R points if structure confirms, and I will wait for price to head the other way if S/R holds.

(Buts thats simply one way of doing it--again, not right or wrong)

 

I feel the patient orders are the sizeable orders, which makes intuitive sense to me to begin with, and because I use Volume Ratio to measure this, it confrims my belief in the sense that when I see a market moving strongly higher it is often on heavy volume on the ask side....So the up volume of the ratio tilts strongly higher over the down volume, which falls in line with the way I look to put the indicator to use to identify pateint and anxious participants..

 

But in the end, I feel S/R is the result of volume activity after price advertises in an area, and I have found it simply easier for me to go with the flow of what is developing, rather than ever trying to predict what will happen at an S/R level.

[BlowFish 10]

Oh yes, the vendor that has supposedly made 278.75 pts in the last 30 days, but is willing to sell the key for $495.

 

Hmmmmm....

 

278.75 x 50 = $13,937.50 PER CONTRACT TRADED

 

Do people really believe this?

 

Buyer beware. Why would any person sell something for $495 that was making so much $$$? It's actually not fair to the vendor to sell this for so little.

 

:rofl:

 

What I believe is that you have mis-representing what the figures are. Anyway they are academic as far as I am concerned as what interests me is the paradigm.

 

I do understand your (and many others) inherent distrust of 'vendors'. However I find it amusing that you where the first to thank Joe Ross for his last post, someone who has a considerable business marketing trading related material (Courses, books, seminars, newsletters, mentoring and systems). (btw I am not passing any judgement on Joe, his trading or the value of his products but he is certainly a Vendor with a capital V)

 

The long and the short of it if people are playing nice and offering information that is novel without hyping their wares does it matter if they are a vendor? For example I would hate to see DB hounded out just because he has a book for sale :) ET is a much better place to burn witches anyway! It's always a tough call but it does not seem like EMC2 is a typical snake oil salesman.

 

EMC2 I am sure you understand the scepticism, more often than not it is justified but I do hope you continue to post regardless.

[EMC2Trader 10]

Like I mentioned earlier in this thread...with those kind of results, EMC2 should be in control of the ES...if not the entire US stock market. No need to come to both ET and Traders Lab and try to start a discussion on "BIG Picture Volume Analysis" or what it's called, because if you can get those results, you have really cracked the code of the markets, there isn't left anything more to discuss, period.:o

 

 

Marsup....As you may have noted, I only show up here to discuss views on the market that some may find of interest, and Im not here claiming to "control the ES" ..and Im not here claiming to have cracked the code of the ES...." Where have I ever mentioned or implied that. and why do you assume thats the case?

 

I also truly have no problem if you doubt everything I am saying here, or find this information meaningless for you--Im sure youve head me say that everyone has a right to view anything however they like, but since you and others are manking many assumptions I do have one thing I am curious about:

 

If I list a track record of trades every day (the exact time, the entry and exit, for each trade etc.)which includes as many losers as winners, that falls in place mechanically the same way everyday from 8:30-3:15 according to the same set of rules over and over again, do you think Im just making these trades up out of thin air?

 

I guess Im just really curious if thats the perception? Do you think Im making them up after the fact, and that you could never take any of these trades in real time?

 

I guess I wonder if a specific listing of every single trade holds any more value than the host of all these fancy videos I see that highlight a trade of the day, or how all the indicators line up beautifully for a trade here and there, etc.....

 

If not, then at least I have a better uderstanding of the way people think...

 

And for the record, to answer another poster, I totally agree that everyone should do their due dilengence for everythng out there, and beware.

 

I really dont see anything Ive done to generate some of the sarcastic comments generated here, as Ive tried to respect that this is a place to discuss unique market ideas that may be of interest.....

[brownsfan019 17]

What I believe is that you have mis-representing what the figures are. Anyway they are academic as far as I am concerned as what interests me is the paradigm.

 

You tell me BF:

 

 

 

Straight from the site in question, so please let me know how it's being "mis-represented".

 

Oh yeah, in the 5 1/2 months of "tracking" this vendor is up 1044.75 pts.

 

That equates to $52,237.50 PER CONTRACT for less than 6 months of trading.

 

And it's all yours for under 500 bucks.

 

What a joke.

 

Seriously? Do you believe that?

 

My point is if this person is willing to post such ridiculous claims, why even bother to try to learn from them? They obviously cannot trade, so they are selling their wares for 500 dollars, when the system has made over 50 grand in 6 months.

 

Any red flags yet?

 

If not, let's look at it like this - trade 1 contract and in under 6 mo's you have made as much as many make in an entire year at a job. Trade 2 whole contracts and you've made over $100k in under 6 months and can take rest of the year off. And if you really believe in the system trade 10 whole contracts and you are up over $500,000.

 

But no... it's easier to sell it for 500 bucks a pop...

 

Yeah... ok...

 

:\

[Guest forsearch]

What I believe is that you have mis-representing what the figures are. Anyway they are academic as far as I am concerned as what interests me is the paradigm.

 

I do understand your (and many others) inherent distrust of 'vendors'. However I find it amusing that you where the first to thank Joe Ross for his last post, someone who has a considerable business marketing trading related material (Courses, books, seminars, newsletters, mentoring and systems). (btw I am not passing any judgement on Joe, his trading or the value of his products but he is certainly a Vendor with a capital V)

 

The long and the short of it if people are playing nice and offering information that is novel without hyping their wares does it matter if they are a vendor? For example I would hate to see DB hounded out just because he has a book for sale :) ET is a much better place to burn witches anyway! It's always a tough call but it does not seem like EMC2 is a typical snake oil salesman.

 

EMC2 I am sure you understand the scepticism, more often than not it is justified but I do hope you continue to post regardless.

 

Yeah, I believe Walter was hounded out for shameless huckerism of his $500 course. Of course, if he was really doing well with it, he could have simply paid James to become a TL partner and advertiser....

[EMC2Trader 10]

You tell me BF:

 

 

Straight from the site in question, so please let me know how it's being "mis-represented".:\

 

 

BF,

 

You are misrepresenting a few things. First, youve drawn the conclusion that everyone will take every trade listed, and Ive gone into great detail about taking the listed track record and showing how to formulate realistic trading expectations, with the understanding that the track record enables you to exceed expectations as opposed to having to trade perfectly, which is a flaw for many trading programs out there.

 

Why wouldn't you execute every trade exactly listed in the track record? Perhaps you dont have time to trade all day. Perhaps after taking three small losses in a row, you lose confidence to pull the trigger on the next trade...etc...

 

So it is clear your only intention is to rip something down without even bothering to understand what it is all about, and on top of that not even to present all the facts as listed.

 

Second, I have no problem with your skepticism, but please dont extrapolate that to assume you know how I trade, or how others using this appraoch trade. You have no idea!

 

A valid criticism of the trading approach would come from someone who has tried the approach, and would tell you first hand that it isnt useful.

 

Fortuntely, I have only received the opposite feedback

 

So frankly, other than your advice to check everything out as closely as possible ahead of time, your other criticisms are entirely baseless, especially because I go out of my way to present the realistic side of trading when it comes to performance, track records, discipline, following a trading plan, trading goals, etc. which of course you convienently choose not to recognize.

 

Finally, heres what I find interesting...I noticed you wrote the following in an earlier post about someone who had a trading approach:

 

"So maybe if this new person would like to contribute to the forum and talk about what they've learned, how they use it, etc. etc. it might hold something."

 

So here I am doing just that, discussing the importance I place on the bigger picture and volume, and you still find the need to critcize, so theres obviously a lot more hypocracy on your end, than on mine....

 

But Im not here to argue any more about this. If you feel the need to continue to attack then fine, just so long as Ive made it clear you are doing so without any facts whatsoever...

[BlowFish 10]

I've already said that what interests me is the anxious/patient paradigm, and how it fits in with a more traditional supply/demand picture. It seems like a novel twist and by no means mutually exclusive.This is what the thread is about so its probably not helpful to talk about xxx website here. Unless its just an underhand trick to get the thread shut down :hmmmm: hehe.

 

Having said that I do suggest that you look at the trade by trade results, the faq, and the guarantee. This left me under no illusion that "the vendor has supposedly made 278.75 pts in the last 30 days". That was your claim not his and hence the comment about misrepresentation. What about the rest of my post? Is ole JR OK cause his results are more modest? Or is it all right because he charges a more substantial amount?

 

So in a nutshell If some one (even an evil vendor) contributes and obeys the forums guidelines that's OK right?

[atto 20]

I've already said that what interests me is the anxious/patient paradigm, and how it fits in with a more traditional supply/demand picture. It seems like a novel twist and by no means mutually exclusive.

Exactly. I like the idea, so let's keep discussion kosher. I'd like to see more live examples if you could, EMC2, as well.

 

Also, feel free to stop by the TL chat room (link is above) during market hours. I'd love to hear what you're seeing real time.

[EMC2Trader 10]

Exactly. I like the idea, so let's keep discussion kosher. I'd like to see more live examples if you could, EMC2, as well.

 

Also, feel free to stop by the TL chat room (link is above) during market hours. I'd love to hear what you're seeing real time.

 

Atto----Ill drop by the chat room, and see whats its all about, and be happy to tell you the way I look at things in real time, etc...

[DbPhoenix 42]

While I see no reason not to discuss this "paradigm" (even though there's nothing particularly new here), I do wish that mention of "trade results" and "track record" would stop. There is no "track record", at least not in the generally-accepted sense of the term. Nor are there any "trade results". There may not even be any trades (i.e., actual trades that a real person took), which may help to explain why the "course" is being marketed and sold.

 

It may be that EMC is as sincere as Valentine's Day. Or it may be that this is one of the more clever marketing schemes I've encountered over the past twenty years. Either way, I again strongly suggest that discussion be limited to ideas and that the hindsight and possibly fictitious trades be recognized for what they are.

[EMC2Trader 10]

While I see no reason not to discuss this "paradigm" (even though there's nothing particularly new here), I do wish that mention of "trade results" and "track record" would stop. There is no "track record", at least not in the generally-accepted sense of the term. Nor are there any "trade results". There may not even be any trades (i.e., actual trades that a real person took), which may help to explain why the "course" is being marketed and sold.

 

It may be that EMC is as sincere as Valentine's Day. Or it may be that this is one of the more clever marketing schemes I've encountered over the past twenty years. Either way, I again strongly suggest that discussion be limited to ideas and that the hindsight and possibly fictitious trades be recognized for what they are.

 

Db

 

Thank you...Very fair post.

 

I will go to the chat room to discuss anyting to do with actual trades, and then then anyone who is interested can see that any trades that develop, win or lose,will match up to listed track record. Maybe this will help show if Im "sincere" or not.

 

And here, I will be happy to further discuss some other items that may be of interest to some, and ignored by others who think it is nothing new and/or meaningful....

[DbPhoenix 42]

Db

 

Thank you...Very fair post.

 

I will go to the chat room to discuss anyting to do with actual trades, and then then anyone who is interested can see that any trades that develop, win or lose,will match up to listed track record. Maybe this will help show if Im "sincere" or not.

 

 

Again, the "track record" is not a track record, listed or otherwise. It is nothing more than a series of potential trades that are alledgedly prompted by your approach. If you continue to insist that what you provide is a genuine track record, then this thread will more likely focus on your marketing skills than on the ideas which you're advancing.

[EMC2Trader 10]

... than a series of potential trades that are alledgedly prompted by your approach.

 

I agree....I have no desire to use this forum to discuss the series of potential trades that are alledgedly prompted by my approach....

[BlowFish 10]

While I see no reason not to discuss this "paradigm" (even though there's nothing particularly new here), I do wish that mention of "trade results" and "track record" would stop. There is no "track record", at least not in the generally-accepted sense of the term. Nor are there any "trade results". There may not even be any trades (i.e., actual trades that a real person took), which may help to explain why the "course" is being marketed and sold.

 

It may be that EMC is as sincere as Valentine's Day. Or it may be that this is one of the more clever marketing schemes I've encountered over the past twenty years. Either way, I again strongly suggest that discussion be limited to ideas and that the hindsight and possibly fictitious trades be recognized for what they are.

 

Quite - this would be plain to anyone that had looked beyond the home page, and that was my point. If EMC2 is willing I would ask that a moderator delete all this BS about "track records" other wise the place will end up looking like ET (which incidentaly, is a perfect place for a witch hunt!)

[BlowFish 10]

While I see no reason not to discuss this "paradigm" (even though there's nothing particularly new here),......

 

I am inclined to agree. Mind you supply and demand pre-dates the oldest profession right?

 

Apart from the 'paradigm' one of the particular things that interests me is the use of a 'buying pressure'/'selling pressure' type indicator. i.e attempting to split volume into upticks/downticks or volume@bid/volume@ask. It is something I have looked at numerous times over the years. I should add on the whole unsuccessfully. It seems as a divergence type indicator it might have some value but I don't really want that level of abstraction in my trading. I still can't help feeling that the problem is me (i.e. how I am looking at the information) rather than the information itself. So for the time being I remain open minded to the possibility that looking at volume in this way might provide an extra clue as to who is in control of the market at the present time.

[DbPhoenix 42]

Quite - this would be plain to anyone that had looked beyond the home page, and that was my point.

 

Actually, it wouldn't, and that's my point. This sort of calculated misrepresentation has no place on TL, and discussion of the volume indicator can go on without any reference to it.

[brownsfan019 17]

Yeah, I believe Walter was hounded out for shameless huckerism of his $500 course. Of course, if he was really doing well with it, he could have simply paid James to become a TL partner and advertiser....

 

It really is THAT SIMPLE.

 

Here we have a vendor that may or may not take all of his own trades (good luck w/ that) and is selling the entire map for 500 bucks.