No volume analysis

[Dr Who 10]

I am interested in the most effective anlysis styles not using volume. My understanding is not all are in belief that volume moves price.

 

So without volume and just using price what are some amalysis methods that may provide what volume could help provide?

[Soultrader 12]

In my opinion it would not be wise to excluse volume from your analysis. Volume is the only tool that is not a derivative of price. Therefore the information is pure.

 

Although I do not necessarily plot volume on my intraday charts, I can read volume through the tape. Perhaps you may want to look into divergence signals using delta like Tingull does. You can also trade price patterns, learn market internals to judge strength and weakness, etc... There are so many ways you can base your trading on. Good luck.

[Dr Who 10]

In my opinion it would not be wise to excluse volume from your analysis. Volume is the only tool that is not a derivative of price. Therefore the information is pure.

 

Although I do not necessarily plot volume on my intraday charts, I can read volume through the tape. Perhaps you may want to look into divergence signals using delta like Tingull does. You can also trade price patterns, learn market internals to judge strength and weakness, etc... There are so many ways you can base your trading on. Good luck.

 

Thanks for the reply Soultrader.

[ant 10]

Hi Dr. Who,

 

Not using Volume is steering away from the right path, IMO. Like Soultrader mentioned, I like to focus on market-generated information too. Specifically, Volume tells you about conviction of buyers and sellers, and Price@Volume helps identify value. As a Market Profile trader, I trade value and not simply price. This is one of the drawbacks of traditional technical analysis, i.e. it trades price movement and not value, and places too much importance on the high/low prices of a day's/bar's range where prices are usually rejected. Trading price away from value is a great trade that happens almost every day whether the market is in a trading range or trending (i.e., the price is chasing value or vice versa).

 

As Soultrader said, if you don't use volume, I would look at price patterns (a la Wyckoff) and market internals. You can also identify divergences by looking at price action. For example, you can compare the length of the current price swing to the previous swings to identify weakening or strengthening momentum or use an oscillator, if you'd prefer. My favorite price patterns are pennants and trading ranges for trading breakouts, trading ranges for fading extremes, flags for trading retracements in a trend, and double tops/bottoms with divergence for trading off of support/resistance (i.e., short-term reversals). But again, you are handicapping yourself if you don't use volume, because volume is extremely helpful when trading these price patterns. For example, to trade a flag, you want to see volume increase in the direction of the trend and volume decrease in the retracement (formation of the flag). Same thing with breakouts. In addition, look for these setups on both lower and higher timeframes and increase trade size when you see these setups lining up in both timeframes. Multiple timeframes help increase trade probability. When this happens, be aggressive. Reconsider using Volume and all of the other market-generated information that the markets provide - this is the source of market information. Everything else is a derivative of this data. Hope this helps.

[torero 10]

It depends on what instruments you're talking about. In forex, there is no volume data at all so my only analysis is through price action, fibonacci levels, and session highs/lows, and natual S/R levels. In this case, all players are without this data so it's fair to everyone. In eminis, volume is an added and necessary data so using it is a must since you'll be at a disadvantage when others have access to it to give them an edge. Hope this helps.

[TinGull 10]

Using Tick charts, too, will help you see the volume without having volume bars. As the bars form faster, you know there's more going into the market.

 

For divergences, as Soul was mentioning my with my trading, I look at the number of contracts at the bid versus ask, and use the delta of that to see how much pressure there is as we approach pivot levels, or market profile levels. See some of the pictures under my name on the right under "my photos" to see more of what I'm talking about. It's a very useful tool!

 

best of luck

[Dr Who 10]

It depends on what instruments you're talking about. In forex, there is no volume data at all so my only analysis is through price action, fibonacci levels, and session highs/lows, and natual S/R levels. In this case, all players are without this data so it's fair to everyone. In eminis, volume is an added and necessary data so using it is a must since you'll be at a disadvantage when others have access to it to give them an edge. Hope this helps.

 

Torero,

 

For my case it is Forex. Though I was interested to know if there would be a common technique for all markets.

 

Ant,

 

Thanks for the good reply.

[Dr Who 10]

Using Tick charts, too, will help you see the volume without having volume bars. As the bars form faster, you know there's more going into the market.

 

For divergences, as Soul was mentioning my with my trading, I look at the number of contracts at the bid versus ask, and use the delta of that to see how much pressure there is as we approach pivot levels, or market profile levels. See some of the pictures under my name on the right under "my photos" to see more of what I'm talking about. It's a very useful tool!

 

best of luck

 

TinGull,

I hadn't thought of tick volume.

Interesting your divergence strategy.

Thanks all.

[Guest scalptrader]

Tick charts, time bars, volume bars are all incorrect segmentation (data compressions) to look at volume.

[TinGull 10]

And the correct segmentation would be.....???