The Price / Volume Relationship

[cnms2 10]

Would you be so kind as to explain how?

I try to build all observable sequences (x2x2y2x) based primarily on volume (not on price), looking for peaks and valleys of the same fractal to be alike in pace.

[Spydertrader 10]

This thread could really go somewhere if we stopped the riddles and provided some clear explanation.

 

As you wish.

 

- Spydertrader

[dkm 10]

I try to build all observable sequences (x2x2y2x) based primarily on volume (not on price), looking for peaks and valleys of the same fractal to be alike in pace.

Thank you for your explanation. My only concern is that pace doesn't seem to be very "binary".

[cnms2 10]

Thank you for your explanation. My only concern is that pace doesn't seem to be very "binary".

Pace is not binary, is affected by the usual distribution during the day and by important news releases. This is why I look for "alike" pace levels. Edited February 18, 2010 by cnms2

[ptunic 10]

NSW:

This is the moving container, that bounds pt 1, pt 2, and pt 3.

 

I think this is very much related to Order of Events (where you are in each Container, eg pt 1 moving to pt 2, etc) / sequence completion, and what that implies for future movement.

 

What rs5 is referring to is frequently when you have a VE, it means you can expect to have what I label as a pt 4 and pt 5 on that same container. Your container will accelerate (steepen) or decelerate ("fan") -- but continue going. The old pt 3 becomes the new pt 1. The pt 4 is the pt 2 of the new NSW. At that point you are trying to form a pt 5 (which is just the pt 3 of the new NSW).

 

I'm not sure in which cases a VE leads to the NSW moving, but it is frequent enough it is one of the first things I try to look for. These situations often lead me to mistakenly jumping fractals though.

 

On a related note, sometimes a container will fan (or even steepen?), and then turn into the next larger container. A Tape can turn into a Traverse for example. I haven't yet differentiated how to tell when this will happen, versus when the NSW enlarges without turning into the next largest container.

[romanus 10]

.... some clear explanation.

IMO the clear explanation doesn't seem to belong to the realm of possibility.

 

In mathematics where the truth is tautologically limited to the domains within which from the man-made sets of axioms and definitions it follows: "IF numbers are appropriately defined and IF the operation of addition is appropriately defined; then 2+2=4."

 

I believe that at this point the operations of drawing the trendlines and what the containers bound by those trendlines must contain in terms of volume in order to draw a gaussian line, have been explained unambiguously and on more then multiple occasions. I think it is safe to refer to them as being appropriately defined. Now, in the example posted by me earlier that Spydertrader was so kind to comment on, two objects constructed in the same manner using the 'appropriately' defined rule set for drawing trendlines and gaussians represent two different things. 2+2=4 in one case and 2+2=5 in another. Because of the context. It logically follows that the context must be included in the set of axioms and definitions one needs to view the market correctly in order to arrive at accurate annotations, and in order for the 2+2=4 to be true for all cases.

 

The problem with 'context', beside being an imperfectly defined explanatory notion commonly used to make a sort of conceptual fog, is that as a concept it is in fact a meta-concept in relationship to other concepts one tries to deal with. Just like a meaning of the word would change depending on the context provided by a specific sentence which contains that word. However the axiomatic rule set for building the sentences (syntax, grammar, etc.) is different from the rule set for building the words (phonetics, etc.). One is meta-concept (syntax, grammar, etc.) in relationship to the other (phonetics, etc.). And one can't use phonetics to explain grammar, because it would violate the logical levels and result in 'shoddy epistemology'.

 

What would one use then to explain the context? Certainly not the context itself.:rofl:

 

Logical fallacies are generally easy to spot, the paradoxes however somewhat more difficult. One of the examples is the Grelling-Nelson paradox. It is possible to divide words into two major categories depending on whether or not they describe the category into which they belong. Those that meet this condition are be called "autologic," and those where this is not the case, "heterologic". The paradox is how to classify the word "heterologic." If it were autologic, it would be heterologic, and vice versa, if it were heterologic, it would be autologic.

 

I realize that this is neither helpful, nor encouraging, and I apologize for it.

[saturo 10]

Those of you making a living from these methods - any thoughts on how you will modify your methods if any of the ironically named FTTs (financial transaction tax) become law?

 

S. 2927: Wall Street Fair Share Act (GovTrack.us)

 

H.R. 1068: Let Wall Street Pay for Wall Street's Bailout Act of 2009 (GovTrack.us)

[Spydertrader 10]

Those of you making a living from these methods - any thoughts on how you will modify your methods if any of the ironically named FTTs (financial transaction tax) become law?

 

I have spent countless hours over the last 2 months contacting various members of The United States House of Representatives, The United States Senate, The President of The United States and various other government officals in an effert to educate people on the pure ridiculousness of such a law being passed. Many other individuals (from all walks of life, and throughout the entire trading industry) have also spent significant time doing the very same (and even more). An entire thread on the subject (and recommendations for individual action) exists over at the Elitetrader.com web site.

 

Bottom Line: This insane idea doesn't pass. However, should The U.S. Government choose to commit financial suicide by forcing into law any sort of 'Robin Hood' Tax, rest assurd, a market will exist in some country (with sane leadership) who has chosen not to err on the side of lunacy.

 

I (along with a host of others) will simply trade that market.

 

Any market. Any timeframe - provided sufficient liquidity exists (and liquidity will never be a problem for any market which does not institute a 'Robin Hood' tax).

 

- Spydertrader

[rs5 10]

Thursday 18 February 2010

Edited February 18, 2010 by rs5

[Spydertrader 10]

Perhaps the confusing talk is intentional....

 

Right ......

 

I'm not entirely clear on what compels you to post in a thread where you have repeatedly indicated little value exists.

 

However, allow me to (once again) make things very easy for you (and any other human on the planet who happens to read something I have written).

 

If you believe my posts contain nothing worthwhile, if you believe that I cannot trade profitably, if you believe that I strive to post 'riddles' in a vane attempt to gather 'followers' as I strive for some mythical title of 'Interent Trading Guru, if you believe I am full of shit; then simply, stop reading my posts.

 

Easy as that. No argument. No Debate.

 

- Spydertrader

[Ezzy 10]

I try to build all observable sequences (x2x2y2x) based primarily on volume (not on price), looking for peaks and valleys of the same fractal to be alike in pace.

 

This may be difficult but could you elaborate a bit more, especially on the pace. Larger pace changes make things more obvious. But during low volume when there are several fractal levels down, it seems it would be difficult if only using volume. So I would imagine there are a few not so obvious volume observations that you are using?

 

Think Spyder said once he would take pace lines off his chart if he could. Obviously he can, but "probably" meant they aren't necessary.

 

So the lines being a crutch to the rest of us, there has to be certain characteristics independent of the lines/pace levels that are clues (volume inc/dec and accel/decel vs. pace line level jumps).

 

Trying to look deeper here to see what you're seeing and find what other information might be being overlooked.

 

Regards,

 

EZ

[saturo 10]

However, should The U.S. Government choose to commit financial suicide by forcing into law any sort of 'Robin Hood' Tax, rest assurd, a market will exist in some country (with sane leadership) who has chosen not to err on the side of lunacy.

 

We agree.

 

There is also the concept of jumping through whatever hoops one must jump through to be exempt - like creating a mutual fund. But even that is a non-starter if the volume disappears.

 

<<back to your regularly scheduled programming>>

[ptunic 10]

Thursday, Feb 18, 2010.

[cnms2 10]

This may be difficult but could you elaborate a bit more, especially on the pace. ...

I was simply saying that I use:

- the relative amplitude of the volume peaks to differentiate among nested fractals

- and their absolute value to identify fractals' hierarchy.

 

As I mentioned in the past, I find useful to practice annotating volume without looking at price.

[cnms2 10]

IMO the clear explanation doesn't seem to belong to the realm of possibility. ...

To me the "context" is something on these lines (as per Jack):

1. Where is the market in the cycle (pattern)?

2. What is next in the pattern? and

3. How fast is the pattern changing?

applied to the three fractals: my trading fractal, one above, and one bellow.

 

As an example, getting back to your recent post regarding two apparently similar chart snippets, to compare their contexts I would try to identify the answers to the above three questions for the three fractals. I would look at V and P, both independently and interdependently.

 

A quick glance at the charts you posted seem to show that one is an up retrace in a down trend, versus an up dominant of a faster fractal. I notice the difference in pace too.

[rs5 10]

Thank you all for your input

 

I'm not sure in which cases a VE leads to the NSW moving

 

I watch the VE bar's movement. If close is in the gap (between old LTL and new LTL) and we appear to be close to end of a sequence then it tells me that something is not complete and NSW is moving.

[romanus 10]

To me the "context" is something on these lines (as per Jack):

1. Where is the market in the cycle (pattern)?

2. What is next in the pattern? and

3. How fast is the pattern changing?

applied to the three fractals: my trading fractal, one above, and one bellow.

 

As an example, getting back to your recent post regarding two apparently similar chart snippets, to compare their contexts I would try to identify the answers to the above three questions for the three fractals. I would look at V and P, both independently and interdependently.

Thank you for your post. I truly appreciate your insight. However, it seems to me that your line of reasoning here is somewhat circular, much like the Cartesian circle. In other words the missing variable can not be substituted by manipulating the same data set multiplied by unknown factor for what you refer to as 'one above, and one bellow of one's trading fractal'. Today, between 1240 and end of day there were 15 volume troughs, but only a few of them proved to be valid for terminating one set of gaussians and starting a new one. At least four b2b2r's with ensuing tape breaks were built during the same period. But, the market has provided something different.

 

 

 

 

A quick glance at the charts you posted seem to show that one is an up retrace in a down trend, versus an up dominant of a faster fractal. I notice the difference in pace too.

I believe both sequences represent retrace in the down trend.

[rs5 10]

Friday 19 February 2010

[ramora 10]

Something that has been very helpful to me is to 'differentiate' volume into 'velocity' and ''pace'.

 

Velocity = price * distance.

Pace (or tempo) = price * time.

 

In many discussions such as the Jokari Window discussion that describes Prive and Volume there is no room for the importance of pace.

 

At 'end points' either the LTL (Left Trend Line) or RTL (Right Trend Line) I want to see both Velocity and Pace slow or stop and then an increase in both Velocity and Pace before I can tell what the market is going to do.

 

As Velocity and Pace approach zero your odds decrease to 50:50. Then the market will telegraphy a 'continuation' or 'change' message by increasing both velocity and pace at the same time.

 

Low Pace/Low Velocity = undecided market and high risk.

 

Low Pace/High Velocity = Bulls are Bears are standing aside and price is moving to S/R where it will be stopped. Might be a trade depending on how far away S/R (probably LTR or RTR) from your possible entry it is. Best to leave it alone and trade at the RTR.

 

High Pace/Low Velocity = bulls and bears are fighting so stay away until the battle is decided one way or the other. Extremely high risk.

 

High Pace/High Velocity = market has selected direction and losers are trapped and covering their position, new players entering quickly. Depending on container completion and context a possible trade.

 

Volume by itself is not very helpful (IMHO) without knowing what effect the volume of contracts has on pace (or tempo).

 

Use ProRata volume to help identify pace. Avoid trades where pace is less than X number of contracts per minute, or less than a moving average of volume.

 

When the market slows to a halt and pace and velocity both seem to slow to a stop: get ready.

 

In a thread discussing "Price Volume Relationship" I thought adding pace/tempo would be helpful. Just some thoughts on a lazy Saturday morning.

 

Good trading! Enjoy the weekend as next week is going to be amazing.

 

ramora

Edited February 20, 2010 by ramora

[ptunic 10]

Friday, Feb 19, 2010

[NYCMB 10]

 

Hi ramora,

 

1) As Velocity and Pace approach zero your odds decrease to 50:50.

---In order to make sure that I comprehended the above statement from you, may I translate your sentence to ->

 

As volume of barX approaches Dry up and Pro-Rata of barX is not growing, your odds decrease to 50:50.

 

2) Might be a trade depending on how far away S/R (probably LTR or RTR) from your possible entry it is. Best to leave it alone and trade at the RTR.

---What do LTR and RTR stand for respectively?

 

3) Use ProRata volume to help identify pace.....

3a) Avoid trades where pace is less than X number of contracts per minute,

--- How do you decide the pace figure for the X number of contracts per minute?

3b) or less than a moving average of volume.

--- Do you use 20SMA (5Minutes per period) for volume?

 

 

4) as next week is going to be amazing.

 

Is this related to S&P500 and MACD; or, Greek Debt Drama?

 

TIA

[ramora 10]

 

Hi ramora,

 

1)As volume of barX approaches Dry up and Pro-Rata of barX is not growing, your odds decrease to 50:50.

 

2) ---What do LTR and RTR stand for respectively?

 

3) How do you decide the pace figure for the X number of contracts per minute?

4) as next week is going to be amazing.

 

TIA

1. Yes, that would be correct.

2. Very sorry, should be Left Trend Line and Right Trend Line. I will be more careful.

3. Watch time and sales. If you time the number of contracts over 30 seconds you can get a sense of the tempo. I also plot a 9 bar EMA of volume so that I can see is volume is increasing or decreasing.

4. Looking at the major indexes we are at a turning point. I have no idea if the major indexes will break upward or down but the opportunity for short term trading will be excellent.

 

Good Trading.

[ramora 10]

Something that has been very helpful to me is to 'differentiate' volume into 'velocity' and ''pace'.

 

Velocity = price * distance.

Pace (or tempo) = price * time.

 

ramora

Tams suggests that Pace/tempo should be "number of contracts traded * time" instead of "price * time".

 

He is correct.

 

Thank you Tams!

[NYCMB 10]

 

Hi ramora

 

If you don't mind, i have two more questions for you in the peaceful and joyful Sunday morning.

 

1) I want to see Time&Sales happy ticking off trades with sizes > 2,

 

---I assumed "sizes" means "volume". Based on that assumption, there are two scenarios presented (please see the attachment):

a) You entered a "short" trade ->the trade got filled and you saw "2" in the T&S window -> you exited because volume isn't > 2.

 

b) You entered a "short" trade -> the trade got filled and you saw "3" in the T&S window -> you stayed in the trade and you saw 10 ->double "1s" shown after 10 ->Did you get out or stay? I don't think my little brain will catch up with the lighting speed alike volume changing in the T&S window.

 

2) Depth Of Market with pending orders above and below the last trade,

---There are ALWAYS 5 levels of pending orders above and below each trade. I'm not sure what you meant by that. Could you elaborate your points? TIA

[dkm 10]

Velocity = price * distance.

Pace (or tempo) = price * time.

ramora

 

Those definitions look very odd. I would expect:

 

velocity = price change / time

 

pace = no. of contracts traded / time