Volume and Price Setups

[Soultrader 12]

Wanted to post a few trades I did for March 14, 2007. The first chart is the opening play. Notice the first opening 5 min bar that occurs on decent volume. Price lifts quickly for 25+ points. However, notice the second bar. Volume diminishes indicating a lack of demand. This was my first signal. The third bar is the most interesting bar. Notice the rise in volume with price decline? This indicates a clear supply. The fourth bar was my short trigger when it moved below the close of the third bar.

 

The second chart shows a failed test of the previous opening high on low volume. Notice after price makes a swing low and rallies, the volume diminishes. This is a powerful signal that I love to watch for.

 

The third chart shows the same exact concept as the second chart. Weak volume on a rally and instand rollover. Also notice the resistance at the 12100 level.

[dr3wfish 10]

Hi Soul,

 

Are you back to using 5min charts as opposed to tick charts?

[Robert2617 10]

I notice you have arrows pointing to the volume bars. It looks very confusing to me because on some red candles that you have marked there are high vol spikes and some are low vol spikes. I can see somewhat of a trend in the volume, almost mirror image of the price but it appears very difficult to read. What in the volume spikes tells you what should happen next with price?

 

And not to get off topic too much but I was wondering why so many appear to prefer short trades as opposed to long?

[Soultrader 12]

Hi Robert,

 

The arrows on the volume panel is showing the low volume rallies followed by high volume sell offs. Good volume on a red bar indicates alot of contracts exchanging hands. Do not mistaken this with a reversal. The markets can still decline even after a volume spike. The key is to watch for the next bar after the volume spike. If the next sell bar occurs on lower volume, this indicates supply getting cut off. Hence you can expect to see a reversal.

 

The basics of volume teach us that volume should increase in the direction of the trend and decrease on the pullbacks/retracement. You can see this in action through the attached charts. We have high volume selling followed by lower volume pullbacks. This indicates big boys are not interested yet and have more to sell.

 

I also tend to play the short side around 70% of the time. Why? Not sure but money tends to be made faster on the decline than the rally.

[Soultrader 12]

Hi Soul,

 

Are you back to using 5min charts as opposed to tick charts?

 

Started using 5min and 1500v charts. Im trying to capture a bigger move using a slightly higher timeframe.

[Nick1984 10]

Lingo refreshment here. 1500v what is that? Is that just a volume bar which marks 1500 contracts worth of turnover?

[Soultrader 12]

Lingo refreshment here. 1500v what is that? Is that just a volume bar which marks 1500 contracts worth of turnover?

 

 

Yep.. 1500 contracts per bar.

[bomberone1 10]

DO oyu have indicator that tell us when there is a lack of volume in bid or ask?