Open and Free Discussion on Volume

[thalestrader 14]

I'm going outside for a while, so I have the positon bracketed with oco 899.25stop and 891.75 limit. I'll check in a bit later.

[thalestrader 14]

A decisive break of 895.50 should clear the way to a test of the 3.25 point range betwen 891.25-894.50

 

 

This thing is starting to feel like a long term investment for me here.

 

With the break lower, my stop is lowered to 896.50, and my limit is still 891.75

[thalestrader 14]

This thing is starting to feel like a long term investment for me here.

 

With the break lower, my stop is lowered to 896.50, and my limit is still 891.75

 

Stop lowered to 95.50

[thalestrader 14]

Stop lowered to 95.50

 

+2.5 points on 1/2 and +7.25 points on 1/2 = +4 5/8 points/contract traded

[TIKITRADER 10]

+2.5 points on 1/2 and +7.25 points on 1/2 = +4 5/8 points/contract traded

 

It was generous of you to share your live analysis. Nice trade

[thalestrader 14]

+2.5 points on 1/2 and +7.25 points on 1/2 = +4 5/8 points/contract traded

 

 

Checking my trade blotter, my average fill on entry was more than .25 lower than I had thought, so my average profit before commissions is only 4.5 points.contract traded. Sorry about the misinformation, as it was not my intention to mislead anyone.

 

Best Wishes,

 

Thales

[thalestrader 14]

It was generous of you to share your live analysis. Nice trade

 

No problem, I hope you might find even a small part of it useful, and if not, I hope you at least found it somewhat interesting.

 

Best Wishes,

 

Thales

[thalestrader 14]

That's a sly remark. It is not accepted here.

I am putting you on ignore.

Have a nice day.

 

There was nothing sly about my request that the person in question either put up or shut up with respect to showing how his system applies to real time trading decisions.

 

I myself have been too often the victim of the truly sly. I did not judge. I asked that if the parties in question really possessed such a key to profitability, then, please, share it with the rest of us.

 

If I help even one other hopeful trader from falling for more of the same promises and delusions that I fell for, then I will have done well by my fellow humans.

 

You unfairly judged me. I, after all, have no chat room, web site, educational materials, etc. I do not seek to be anyone's mentor. I do not want students, followers or disciples. I have nothing to sell, and little to give. But what I have, I give freely.

 

Only one deserves such disciples, and I try always to remember the lessons of he taught, and in particular, I am reminded of the lesson of Matthew 7:1.

 

In then end, the measure you give will be the measure you get.

 

Best Wishes to all,

 

Thales

 

God Bless America

Edited July 2, 2009 by thalestrader

[thalestrader 14]

So, rather than post my chart complete with notes and annotations from throughout the day, I posted a trade execution report.

 

Good Trading to you.

 

- Spydertrader

 

Rather than sharing your chart reading skills in real time, you chose to leave this thread alone all week.

 

You chose not to share one live example of the method you claim to be "the first step to consistent profitability".

 

Why not post at 9:29 am this morning that you were going to short the market on open? Why not post at any time today that you were looking to cover at the 893.50? Why not share something that would show folks how you apply your method at the"hard right edge of the chart"?

 

I do not think the request unreasonable. Your charts and channels and fractals are not intuitive and readily apparent to the uninitiated with your FTT's and CCC's and HVS's and FBO's etc.

 

You see, other folks may post after the fact charts, with explanations of their aproach, and the explanation is readily apparent and easily understood (it is not too difficult to understand the concept of a MA cross or a trendline break). It wouldn't matter if that person really traded it or not, because one can see how and why such a decision would have been reasonable as price action unfolded.

 

But that is not the case with your method. Why not spend a day or two here or at ET and trade live. Post your trades live. No one expects every trade to be profitable. But if your method is real, then it should be easily communicable and able to be shared in real time.

 

I do not know what you expect of folks. I'm sure you'll respond and say that you don't expect anything. But then why bother? What is the point of your posts here at TL?

 

If you are posting because you wish to help folks, great! Help us! Show us how your method is to be applied in real time. I stand by my words: Anyone can mark up a dead chart after the closing bell and look like a genius.

 

Anyone can claim to possess the key to trading success.

 

I have seen many post mortem charts and I have heard many make such claims.

 

I have not seen any willingly make live trade calls and share the reasoning behind those calls publically (at least not without charging a fee).

 

I know that your method has many parts and seems very complicated. But certainly you are the master of it. If anyone has the ability to employ the method in real time and thus to demonstrate its effectiveness at anticipating immediate price trends and movement, it is you.

 

Best Wishes,

 

Thales

[johnjohn1hew 10]

As I have not been showing volume at all, it might be assumed that I would fall under the second option above, along with Brownie. However, I do believe that volume, especially on daily, weekly, and monthly analysis of stock price movements, can be very useful, and provide important information.

 

I have not found it to be useful for intraday day trading.

 

Here is the 5 minute ES with volume. I was hoping that at some point this morning one of the Volumiati would appear and share his or her views on how to trade the ES today based upon volume analysis rather than price action. I'd really rather see and hear the analysis in real time as the action unfolds. Afterall, anyone can mark up a dead chart after the fact and look like a genius.

 

For me, a volume+price action approach is more useful and conclusive when price is at a level of importance. I would like to analyze volume+price when they are at a level of prior resistance or support. Without these levels i would have to say that coming to any accurate conclusion would be quite hard as when price is not at one of these levels, it is either heading to one or is establishing a new one.

[johnjohn1hew 10]

Something i felt like contributing to the thread. I guess this is what someone would call price-discovery.

 

Traders are always searching for trades. If they cannot find these, then price moves (representing this search). When they have found trades, then price will move sideways until traders once again have to search for trades. Example: when price is rising the majority of the sellers are finding prices too cheap and are withholding their selling orders until they find prices to be high enough. Since price is rising, the buyers are obviously agreeing with the sellers that price is too cheap. When price arrives at a suitable level to the sellers, they will start to sell and whatever buyers are left will buy. This will most likely lead to a congestion (representing an area at which a lot of traders are willing to trade with each other), from which price will leave once traders no longer agree on value. The trend is a result of a disagreement and the congestion is the result of agreement.

Edited July 2, 2009 by johnjohn1hew
grammar

[nkhoi 10]

The definition of fractal is not what is the issue here. Rather, it is your assertion about the existence of "sequences of volume" that must "complete."

 

You wil need to provide a much more detailed account of what you are asserting for that assertion to have the character of proof, rather than character of a mysterious scroll that only the initiated may translate.

 

Best Wishes,

 

Thales

"sequences of volume"

[johnjohn1hew 10]

Traders enter the market to make profit. This search for profit causes trends and congestions. The trend is the path and the congestion is the destination, from which a new/old path will eventually be followed. Price moves in a trend-like fashion as the sellers are in a disagreement about value. When one side find prices to be unacceptable, they will hold off until price is at a acceptable level. This is the basic idea of a trend. When both sides find price to be at a acceptable level/zone traders will trade and price will remain at/inside this level/zone. When a balance occurs, traders believe value to be (relatively) at the same level. Price is being supported at this level and (ideally) many trades should be taking place. Price remains in a zone because at the top price is being resisted and at the bottom price is being supported. I.e. at the top sellers are finding prices to be high enough and acceptable, so they sell; and at the bottom buyers buyers are finding price to be low enough and acceptable, so they buy. Normally at these extremes the force driving price towards it will be overcome easily. Generally, at the top and bottom of a value zone, volume should be the lowest and it should be the highest in the middle. When volume is highest in the middle, the majority of the trades are taking place as a result of a compromise by both the buyers and the sellers. Price is not too high and it is not too low. When a zone is no longer acceptable, price will move. But in order for price to move, one side has to find it unacceptable and the other has to be in agreement, or price will go nowhere. Example: Sellers no longer find the range to be acceptable, so they ease off and now the buyers are able to take price higher if they so desire to. If they believe price to be cheap, they will easily drive price upwards. If they believe price to be expensive they will hold off, thus both sides are holding off and the result is little to no trades and price goes nowhere.

 

"Generally, at the top and bottom of a value zone, volume should be the lowest and it should be the highest in the middle." This statement may seem to be contradictory to some, but i believe that a true value area should be confirmed by high volume as then traders are actually expressing their agreement. When volume is low at this point the traders are just lacking - not indicating value, but a withdrawal.I believe value should be a clear indication by the traders and not just a result of a lack of trades. I think i can understand why some believe a balance should be on light volume: It is because the majority have traded and expressed their opinion in the market and the result is an interesting meeting in price of the buyers and sellers. A price at which their remains few traders, because the majority who wanted to express their opinion have and the others are waiting for a sign of a new trend.

 

What's your opinion?

[thalestrader 14]

"sequences of volume"

 

Thanks, but until one of you Iterative Refinement folks becomes willing to show me, on a 5 minute es chart, which is, after all, the chart you folks claim to use for trading, 1) an actual trade, 2) an explanation in a shared language for the basis of the trade decision and 3) at what price you entered, I am done with you.

 

I mean really, you would think I was speaking an alien language. Getting one of you folks to name a price is like pulling teeth. The best I can get is here's a "sample of P3 trade on Friday chart#1 is the moment when I enter chart#2 is where I am taking profits....My stop was 2 points." P3? Moment? I don't know how your broker does it, but mine calculates my pnl based on price, not "moments."

 

I don't mean to sound rude, but I just do not have the time to look into an approach that can have no utility so long as you folks seek to conceal more than you are willing to reveal.

 

 

Best Wishes,

 

Thales

[nkhoi 10]

Thanks, but until one of you Iterative Refinement folks becomes willing to show me, on a 5 minute es chart, which is, after all, the chart you folks claim to use for trading, 1) an actual trade, 2) an explanation in a shared language for the basis of the trade decision and 3) at what price you entered, I am done with you.

 

I mean really, you would think I was speaking an alien language. Getting one of you folks to name a price is like pulling teeth. The best I can get is here's a "sample of P3 trade on Friday chart#1 is the moment when I enter chart#2 is where I am taking profits....My stop was 2 points." P3? Moment? I don't know how your broker does it, but mine calculates my pnl based on price, not "moments."

 

I don't mean to sound rude, but I just do not have the time to look into an approach that can have no utility so long as you folks seek to conceal more than you are willing to reveal.

 

 

Best Wishes,

 

Thales

I though you interested in vol seq? my bad. As far as following my call, I don't do that so so sorry!

[BlowFish 10]

For any interested in 'volume' its probably worth taking a look at Studies in Tape Reading by Rollo Tape (a pen name of Wycoff) or Tape reading and market Tactics by Neil. These cover 'volume sequences' but in language that most any market practitioner will understand.

[nkhoi 10]

it's readable and only 10 bucks at amazon

[Dinerotrader 10]

If we could just get more traders in an educational forum like this to post a real time trade with strategy and comments the educational value to all those reading would increase 10 fold. Thalestrader, I applaud you for taking the time to truly demonstrate your method bar by bar without the enormous problems that hindsight analysis provides to all trade analysis. Blowfish, thanks for the suggested reading.

 

Cheers.

[rcossey73 10]

This is me trying to get this thread back on track for the volume curious.

 

 

In short, if prices are rising there is more demand than supply. If price are falling there is more supply than demand. The buyers have to search higher for sellers (D>S) and the sellers have to search lower for buyers (S>D).

 

One will need an understanding of market structure in-order to fully grasp this theory. I learned it by studying the DOM ladder.

 

 

Thanks, I agree with this statement. However this seems to indicate I don't need to look at volume at all. I can determine this by watching price.

[thalestrader 14]

Something i felt like contributing to the thread. I guess this is what someone would call price-discovery.

 

Traders are always searching for trades. If they cannot find these, then price moves (representing this search). When they have found trades, then price will move sideways until traders once again have to search for trades. Example: when price is rising the majority of the sellers are finding prices too cheap and are withholding their selling orders until they find prices to be high enough. Since price is rising, the buyers are obviously agreeing with the sellers that price is too cheap. When price arrives at a suitable level to the sellers, they will start to sell and whatever buyers are left will buy. This will most likely lead to a congestion (representing an area at which a lot of traders are willing to trade with each other), from which price will leave once traders no longer agree on value. The trend is a result of a disagreement and the congestion is the result of agreement.

 

 

First of all, johnjohn, let me say that if anything that follows strikes you as offensive or combative or in any manner an attack on you or your post, please know that such is not my intention. I do appreciate your posts, including the one quoted here.

 

Let us assume that your description of the phenomona is accurate. This still begs the question as to how does one convert this information into action, i.e. how does one use it to place trades?

 

George Lane, who did know a thing or two about auction markets, argued that price rises due to the the activity of "inspired buyers," i.e. short sellers covering, and not because of a search for value by buyers and sellers agreeing that current price is too low.

 

In my opinion, the concept, "value," is itself devoid of value to the speculator; and volume, as an indicator of future price movement on any time frame shorter than one composed of daily data, has so little value as to warrant the speculator's dilligent inattention.

 

Only one person has articulated a trading strategy in this thread that actually uses volume information to support trading decisions: Blowfish and his use of volume on 15 second charts looking for potential reversals to scalp. And, if I am not mistaken, price, specifically price action around support and resistance actually trigger and guide Blowfish's trades.

 

If volume leads price, always, as has been asserted here, then someone should be able and willing to demonstrate how volume caused them to buy or sell, price be damned. Thus far, no one has even come close.

 

 

 

Respectfully,

 

Thales

[ehorn 10]

 

Volume leads Price.

 

Always.

 

- Spydertrader

 

Might make a catchy title for a new thread...

Edited July 4, 2009 by ehorn

[johnjohn1hew 10]

George Lane, who did know a thing or two about auction markets, argued that price rises due to the the activity of "inspired buyers," i.e. short sellers covering, and not because of a search for value by buyers and sellers agreeing that current price is too low.

 

A trader is not a dedicated bear or bull. A trader is a person who goes with his/her opinion of the movements of price (+volume). If the traders who believe price to be unacceptable overcome the traders who believe price to be acceptable, price would not stay in a range, price would vacate this range and start trending. In a range, traders find the top to be expensive and they express this belief by selling; and at the bottom they believe these prices to be cheap, so they express their belief by buying. They believe the top to be expensive because of a lack of buyers, or because of previous levels, or because of whatever. They believe the bottom to be cheap because of a lack of sellers, or because of previous levels, or because of whatever. They are selling at the top because they find price to be acceptable and they are buying at the bottom because they find price to be acceptable. If this continually happens, then a range of acceptable prices is the result. When the levels inside the range are no longer acceptable, price may move in the direction in which acceptable prices reside. By saying that "price may move in the direction in which acceptable prices reside" i mean that in order for prices to move, a force has to be driving them. If traders are unwilling to exert a force, then price will not move. On the way to the top, buying is taking place because of short-covering and/or because of new longs. The short-covering traders have found price to be unacceptable, so they take their profits. The new longs have found prices to be acceptable so they establish their long positions. Eventually both types of buying will cease. The short-covering will cease when their are no more traders their/willing to cover. The long buying will cease when prices are at a level that is unacceptable. When the long traders decide to sell, it will be at a level of unacceptable prices, as they no longer want to hold their positions. At this level, new shorts will also enter as they find price to be at an acceptable level. This action will take price down to a level of unacceptable/acceptable prices.

 

In my opinion, the concept, "value," is itself devoid of value to the speculator; and volume, as an indicator of future price movement on any time frame shorter than one composed of daily data, has so little value as to warrant the speculator's diligent inattention.

 

Value is an occurrence of an acceptable/unacceptable range in price. The buyers, at the bottom, believe price to be more inclined to go up and the sellers, at the top, believe price more inclined to go down. This type of analysis is not a methodology built on top of what occurs in the markets, it is what occurs in the markets. Value is just what happens as a result of traders trading.

 

If volume leads price, always, as has been asserted here, then someone should be able and willing to demonstrate how volume caused them to buy or sell, price be damned. Thus far, no one has even come close.

 

I stated that i do not believe this idea to be accurate. Here was my post on the subject.

 

What volume is, is not up to an individual's discretion. Volume is the quantity of contracts (or other vehicles) traded. PERIOD. Volume and price are instantly plotted at the same time as volume can not be plotted without a result in price and price can not be plotted without an appearance in volume. Traders make volume and volume is plotted at the same time price is created. Price is the price at which traders have traded. Price does not lead volume and volume does not lead price. Ideas of movements (which are opinions of the future direction of price) lead volume and price (i.e. traders' actions lead price, which are represented on the chart as volume and price). So one could say volume and price leads volume and price. When Wyckoff (or whoever stated it first) said that volume is the effort and price is the result, he was not pulling this out of his ass, he was stating the obvious. If you submit a market order to buy one contract you are adding 1 unit of volume to the volume bar and one point in price to the chart AT THE EXACT SAME TIME.

 

Wyckoff, Livermore and the other price action (+volume) gurus realized the obvious and traded accordingly.

 

Also, i focus on the relationship between volume and price. I can make no deductions based on volume alone. Deductions can be made on price alone, but i choose to use both, as i believe volume to enable me to more accurately guess the reasons why price is moving the way it is.

[johnjohn1hew 10]

Might make a catchy title for a new thread...

 

I see volume and i see price. Both of these elements are plotted at the same time. People base their actions on the movements of price (+volume). Price and volume lead price and volume. This is what makes sense. This is not some random theory based on nothing, this is what happens. If you watch a real-time, 1 volume bar chart you will see that for every one unit of volume a price is plotted.

[thalestrader 14]

Might make a catchy title for a new thread...

 

 

So the idea is that if you folks say it enough times the masses will start to believe it?

 

Looking at Thursday's price action with volume data one could more easily conclude that volume follows price. For example, when price finally broke below the line in which it traded for most of the day, volume increased. Volume was timid and indecisive until price signaled its direction out of the line.

 

After all, are we to believe that bulk of the volume trade during the 15:25 EDT bar (based on Ninjatrader's time stamp) occurred prior to the price break, and price dropped in response to that increase in volume? Or did price break, and volume swelled as price continued to move down from the now broken support?

 

In the end, the real question is how do you trade it? See my charts attached here: If I were not already in a short position, I would have traded that break with a sell stop at 896 and a stop loss at 899.25. I would have had a profit target somewhere just above 891.25 support. Anyone, including my nine year old daughter, can look at the chart, read my explanation as to how I would have traded that break, and duplicate it in the future. This is emphatically not the case with the contributions made by you and your friends to this thread.

 

I've attached my charts - one with volume one without. If one looks at the volume bars, it seems to me that volume follows price, and not the other way around. Volume, in addition to simple number of contracts, represents the level of activity by people. The history of the world shows that people are many followers and few leaders. People are always looking for someone or something to follow.

 

As I said before, anyone can put "I sold here" and "I covered here" on a dead chart 72 hours after the closing bell and look, or I should say, try to look like a genius.

 

This is not to say that there cannot be usefulness in such annotations on a dead chart, so long as explanations are clear, and all relevant and necessary information is provided.

 

However, yet again, here is another proponent of a view, to wit, the view that "volume leads price, always," who claims to have made a wonderfully profitable trade, selling at almost the HOD and covering at the LOD, but without any explanation of 1) why he entered, 2) at what price he entered, 3) was entry a market, limit, or stop order and why?

 

I do believe that it is possible to sell the HOD and buy the LOD occasionally. But to make such claims and not detail how the feat was accomplished has a bad odor to it. Many folks on July 2 no doubt sold market on open, and their doing so had nothing whatsoever to do with any thing other than that price itself was pointing to lower prices. But that is not given as the reason in your post or that of your friends. I am not even doubting you and your friends made the trade. But no one here could look at what you did and duplicate the trade in the future on the basis upon which you claim to have made it, because there has been no basis given.

 

I really do not believe I am being unreasonable. If you folks are for real, then why not share the minimum required for intelligent and respectful human communication?

 

I participate here at TL because it has always seemed, for the most part, like a forum of seriously interested folks, with very little of the guru speak and fraud that one sees over at other forums, most notoriously notable, ET. I have apparently stirred the nest and we have attracted the the attention of the minions of a few gurus who have a near cult-like following (see how many who have rushed to defend the manifesto are new to TL, and who have a mere handful or even fewer posts here). In the interest of preserving the character of TL, and hoping that this contagion maybe contained, rather than spread throughout the forum, I will no longer participate in this thread.

 

And I reiterate: People are always looking for someone or something to follow.

 

Best Wishes,

 

Thales

[thalestrader 14]

A trader is not a dedicated bear or bull. A trader is a person who goes with his/her opinion of the movements of price (+volume). If the traders who believe price to be unacceptable overcome the traders who believe price to be acceptable ...

 

Though I am no longer going to particpate in the discussion on this thread, I feel that I owe you an explanation of my prior port to which you have repsonded.

 

I was only trying to make a point about the usefulness or lack of usefulness to trading of various abstract concepts. I appreciate your comments, and in the end your account may very well be correct.

 

But to me, such accounts are far too academic and abstract and removed from the reality of trading to have any practical application.

 

 

Respectfully,

 

Thales