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dsalas

High Volume Areas and Low Volume Areas

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Hello guys, there is a saying or a "fact" according to MP users that says that low volume becomes high volume over time, meaning that low volume seen on profiles will be tag and fill later on by the market since market likes High volume places or where two sided trades took place.

 

On the other hand there is also a saying that says that high volume becomes low volume when the market has become balance and a movement starts from that POC or VPOC, meaning that now this high volume price acts as a low volume while the market searches for a new POC or VPOC.

 

WHat doy u guys think about low volume being fill? Do you think that in composite profiles markets do fill low volume areas?

 

Also do you thing that Vpoc and POcs can be like the "map" to follow where the market is going since they like two sided trading?

 

Thanks

Daniel

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Well, I think that it is true that often you see markets "filling in" areas of low volume on a long term profile either MP or VP. Or indeed you see a move originating from a POC/VPOC and hence it will become a low activity area of a defined move. But if you take a look on any profile which includes ALL the data you can get for the instrument you are looking at, if the statement is true then surely you would see a block of volume/TPO's with very similar amount traded/time spent at each price. I would say that you will see areas of low volume and areas of high volume.

 

As for using VPOC/POC prices as a map for your trading, I would suggest you should be careful using this idea. MP/VP are great tools to allow you to better interpret what the markets are doing and why at any particular time and it is true that often you will see markets turning from VPOC/POC prices, but it's also true that you must view everything in context and make a judgement call on each.

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