Where's the volume???

[wsam29 10]

Is it me or does there seem to be a lack of threads regarding volume???

 

It took me a while to understand the importance of volume and the meaning of this important indicator.

 

What's everyone's take on volume?

 

besides the text book answer of:

price up, volume up = good

price up, volume lower = caution

etc.

[barrytaylor 10]

Volume, Volume Churn and Volume Climax work across all time frames and securities. I use them trading the Emini all the time. Price alone just doesn't do it.

 

Volume Churn = Volume / Range

 

Volume Climax = Volume x Range

 

BT

Emini Futures Trading Every Day | Emini-Watch.com

[torero 10]

I usually for volume when it nears resistance and support areas to find weakness or strength of the trend. If a stock has been moving up quite a bit and getting near a major resistance fast with high volume. I'd be cautious of this price action despite common sense teaching of high volume price up is good. Chances are it will bounce because increasing volume can be shorts are in or bulls are taking profits furiously at the same time new bulls are buying as well. High volume up price is valid only when it's breaking through the resistance already at least once. If the high volume has been steady then I won't consider this to be the case, only when it noticed in last 2-3 bars that I would consider it a potentially good resistance. Downside is a bit different, high volume going down might pierce it because when the large mass is screaming sell, I'd not step in without clear signs of prices turning up or sideways (stampede can hurt).

 

That's how I interpret it.

[Soultrader 12]

Because I am such a short term trader, I do not even plot a volume histogram in my charts. Instead, I can read volume of the tape. I usually watch for volume or lots at key support and resistance points.

 

If Im long a position, I like to take profits at a climatic candle. The tall green bars with alot of contracts being bought at the ask. To me this indicates a volume spike or a short term euphoric stage. I tend to be a little more careful on the short side... price doenst stall as much during a decline.

[Anonymous 11]

Volume, Volume Churn and Volume Climax work across all time frames and securities. I use them trading the Emini all the time. Price alone just doesn't do it.

 

Volume Churn = Volume / Range

 

Volume Climax = Volume x Range

 

BT

Emini Futures Trading Every Day | Emini-Watch.com

 

Let's talk. As a Volume Spread Analysis user I love to talk volume and price. Volume is the power house that drives the market.

 

Volume Churn= Bill Williams' squat. Short hand definition, according to Bill, a bar with a lesser range than the previous bar and Higher volume than previous bar. This is the definition I use. Actual technical definition is mfi less previous range and volume greater. These are telling bars.

 

Bill's story, however, is not correct. The range is held narrow because the market makers, who can see both sides of the market, see large orders on one side of the market , for example buy orders. They know that these orders are from the Professional operators. Thus their perception of value is higher so they are willing to keep the range narrow as they sell to the herd. The unsuspecting members of the herd think they are getting a good fill on their orders, which they are. But it is because of a large supply of buy orders on the other side; and that large amount of buy orders is coming from the Smart Money-the ones who tend to be buying bottoms and selling tops.

 

Markets move because of imbalances of supply and demand. In particular the supply and demand coming from the professional operator, or Smart Money.

 

BT-nice site. Would love to see some more posts and charts. I have a thread on another site where I do about 99% of the posting, which is why I have not opened a volume/price thread here: I DONT WANT TO BE THE ONLY ONE POSTING. Nothing would make me happier than an interactive thread on all things volume here on the best forum.

[Soultrader 12]

Very interesting post there PivotProfiler. When trading off pivots, I enter far ahead of the crowd. I also noticed that entries are usually at narrow range candles. Is this similar to the narrow range and high volume bars you mentioned?

 

I attached an interesting chart from today. Notice the double top test at the R1 pivot line indicated by the green line. Notice the double top was on less volume. I personally use a TICK chart and read tape but.... a few trading buddies on mine love seeing double, triple tops with less volume. What are your thoughts on this? Thanks

[Anonymous 11]

Very interesting chart here. First, I trade using a duel timeframe set up. The chart on the left is a 30 min and the chart on the right is a 10. Trades are made on the 10 min. Here I have replaced the 30 with another 10 min chart rather than showing a single 10 chart.

 

When one understands price and volume, the message of the markets becomes so much more clear.

 

On the left side. Here we see price as the market trades on Sunday into Monday. The black arrows point to Squat bars (volume churn). The small green arrows underneath some bars are No Supply bars. The red arrow points to a No Demand bar. Okay, let's tell a story:

 

The market is trading below the narrow Value Area (t). As price trades lower it is meet with Demand (buying) at certain points. What is happening, is that there is Accumulation going on. The Professional Money is slowly, and quietly soaking up the supply in the market. This leads prices to rise up a bit to the middle of the Value Area (t). However, when price gets there we see No Demand. At that time, the Pros are still not interested in higher prices. (as we are only looking at the 10 min, we can not see that there have been NO signs of either supply or demand on the 30. Hence there is not the background strength that seems to be on the 10).

 

Notice that price falls back down after the No demand bar. Price falls back under the Value Area(t), which is actually a cluster pivot zone in this example. Now note that price does not fall as low as it had just recently been. At the low, we get a No Supply bar. There are no sellers underneath this price. The Smart Money has soaked up the supply at these levels. With no supply in the market, price starts to head upwards.

 

Note that the range of the bars starts to widen and volume picks up as price makes an attempt to get above the cluster zone. Price gets above it. Now we see our first red dot. This is a squat (volume churn) bar. Some of the Professional operators are selling (taking profits) at this level. But what is more likely, is that some retail traders that bought on Friday are trying to sell back at break even today. Check out the time, we are now into the open of the London session, so more players of all sizes are in the market.

 

The bar that can barely be seen on the left, is the first bar on the right hand chart. So price does fall but finds support at the cluster zone. Resistance becomes support. The first red dot shows that there was more supply (selling) entering the market in this bar. Many people would see this up bar on higher volume as bullish. But it is not. If it were bullish, then the next bar would not be down. So this new supply cause price to fall. Price falls all the way to under the cluster zone. THIS IS THE FIRST KEY BAR: price falls but we see a No Supply bar. Note that this bar does not go as low as price traded previously. If those previous bars did indeed represent Professional Money soaking up supply, then price should not return to those levels. All the selling at those levels should be done.

 

Price heads right back over the Pivot Area. Now we see a couple more signs of supply entering the market. However, Price responds be moving sideways more so than down. Again, we are seeing Accumulation by the Smart Money. Stealthily, they are buying into any selling by the retail traders. The two green x's are there because there are actually signs of buying (green dots ) on these bars but they are slightly obscured by the cluster zone. So we can see some of the Professional demand at these levels.

 

At this point on the 30, we get our fist signal of Professional activity in the form of buying.

 

THE BAR WITH THE GREEN ARROW IS THE SECOND KEY. This is a 'test'. The Pros are testing for supply underneath the market. Again note that the low is at the same level as the previous No Supply bar and not as low as price traded in the earlier hours (left side). This bar trades lower, closes on or near its highs and has volume less than the previous two bars. The low volume tells us that they did not find any supply(sellers) there. Now prices are poised to go up. On the 30, 10 minutes later, we get a Shake-out. The Pros take prices down, before closing near the high in an attempt to bring in late shorts and take out early longs.

 

The dark green line shows the first bar after we get the Shake-out on the higher timeframe. Note that there was some supply entering on the previous bar. However, this bar is narrow and the volume has dried up-less than the previous two and less than the moving average. Coupled with what we know about the 30 min chart, we now have background strength on both timeframes. We enter on the open of the next bar.

[torero 10]

Great explanation on your work PP, what do the green x's mean?

[Anonymous 11]

Great explanation on your work PP, what do the green x's mean?

 

 

Thank you. They are there because the two bars above them do show demand in the market as denoted by either a green dot or green arrow. Since the cluster zone is where it is at, it is covering up the signs.

 

The truth is one needs to read the bars and the volume. The "signs of strength/weakness" are not really necessary. I keep telling myself and others to remember that the end-game is reading the chart "blind".

[torero 10]

I just realized that you have volume on eurusd chart. Is this from tick charts or where are you getting this data?

[Anonymous 11]

Volume is activity. Therefore tick volume is a useable replacement for actual volume. I use VT from CMS because they offer tick volume in forex. I could not trade without it. Trading without volume is like buying a car without a gas tank. How can one judge EFFORT (volume)? And without effort, how can you measure RESULT(range)?

 

While it is true that there is no centralized exchange in forex, it is not true that volume is not available. Years ago I used to believe that volume figures where hidden because certain people or institutions did not want to have their positions known. I did not realize the implications of this. YES certain people and institutions are keeping truths about where they believe the market will go. More exactly, where they are taking the market.

 

Volume is the major indicator of the Professional trader. It is keep from the retail trader not because it is not necessary for the understanding of market dynamics, but because it is.

[torero 10]

I see what you mean. TS provide tick charts, so I can use that to measure volume, best we can do I suppose.