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TinGull

[Volume Based Candles] and how to profit

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Brownsfan019, that is absolutely correct.

 

R.W. Arms explained the core idea behind Equivolume and his analysis heavily relied on volume and supply/demand level; illustrations show only boxes to simplify methodology. His plan is to divide market not by minutes but shares.

 

The implementation of volume into the candle will provide an excellent visual advantage for pattern confirmation.

ev.jpg.3c6748f2eb6bf11ca2b886ae7296066c.jpg

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Guys, I struggled with Equivolume over 15 years ago. Never quite worked for me. Then came volume bars from eSignal. Changed the world. Metastock was the main equivolume package. Ensign now has a good version. But for me, nothing beats the Volume candles because it visually tells a story, word by word.

 

I add a 35 XMA and a 105 XMA and its a language I can understand.

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Hammers are important because they show shifts in supply and demand. But not every hammer line (candle) is worth a trade trigger. Hence whether it is an inverted hammer or shooting star, means little if the price action is not appropriate for a specific candle pattern. In this is case inverted hammer with the sub-group being reversal.

 

I agree, there's no point getting hung up on the names of candles. Different people give different names to different candles. The important thing is to be able to recognise a reversal. A engulfing pattern on a 1000V chart may look the same as a hammer on a 2000V chart. The important thing is not the minute details of each individual candle but whether there's volume coming in to support a reversal. If you see a reversal candle (or more) followed by a new trend quickly forming then the chances are you're witnessing a high volume reversal.

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Another idea here re: Volume Based Candles - they help 'smooth' out the entire market times, including overnight and premarket times. You will normally see less candles being printed during these times, but your chart will get smoother. This in turn can make other indicators/tools a little more reliable, esp in the AM around the open.

 

That was another frustrating thing with candles on a minute chart - you would see doji after doji in the premarket and then boom, off we go at 9:30am. Well, if you are trading candles in traditional fashion and looking for a trend reversal, you first need a trend.

 

Just another reason why I would highly recommend the review of VBC's (Volume Based Candles).

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Brown : I know you are very enthusiastic about volume based candles, now you should understand that there is a contradiction towards volume analisis on that graphic aplication.... you see, you are just making an equal sum of equal amount of activity to each and every bar... so said: each bar has the same volume weight, same activity weight... so ironically when you give a same wheight to a bar you literally anulate any volume analisis on your chart... you only have the price action left on the chart.... "you may say I have a 1500v hammer", well yes, but the previous bar was also a 1500 v bar and next one a 1500v bar... you see... volume based candles are that... its really not volume analisis... maybe they share some word on the name, but true volume analisis must be able to measure from bar to bar diferent "weight" of volume... other wise stated, its not volume analisis... I think the original vsa concepts are the most clear volume analisis concepts, where in a given bar : how much volume "weight" there was, and what range there was, and where did he close ?.... you see on volume based bars you cant do that weight.... thats only an input wanted to add to all this, thought I believe TRUE volume analisis its about weight of a bar in a given context cheers Walter.

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so said: each bar has the same volume weight, same activity weight... so ironically when you give a same wheight to a bar you literally anulate any volume analisis on your chart... you only have the price action left on the chart.... "you may say I have a 1500v hammer", well yes, but the previous bar was also a 1500 v bar and next one a 1500v bar... you see... volume based candles are that... its really not volume analisis... maybe they share some word on the name, but true volume analisis must be able to measure from bar to bar diferent "weight" of volume

 

Walter - actually in real-time that is not true at all. By applying VBC's, I can visually see when there is and is not volume. For example, today's volume is terrible. I did not need an extra indicator or anything to tell me that, all I had to do was look at my chart. Candles are taking longer than usual to print; therefore I already know the volume is weak today.

 

I realize how this looks in hindsight, but until VBC's are applied to a real-time chart, it's hard to explain.

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Correct Brown, you see there you are aplying weight to TIME on your aproach, wich is fine and it would at the end discount a volume analisis, what happens is that you dont have that much visual aid to measure this time from an indicator "visual screen" point of view.... I think I have an indicator you may like.... it measures in histogram format how much time took to build a bar.... maybe that will give a better visual of what you are doing.... said so you are having weight and we may say you are doing volume analisis.... cheers Walter.

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Correct Brown, you see there you are aplying weight to TIME on your aproach, wich is fine and it would at the end discount a volume analisis, what happens is that you dont have that much visual aid to measure this time from an indicator "visual screen" point of view.... I think I have an indicator you may like.... it measures in histogram format how much time took to build a bar.... maybe that will give a better visual of what you are doing.... said so you are having weight and we may say you are doing volume analisis.... cheers Walter.

 

Do share Walter what you have in mind. I will take a look!

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Ok, here it goes, the indicator its called "Time per Bar" .... you will need to first copy the getmachinetime dll into tradestation program folder... so you can have seconds taken into acct on the calculation.... on historical data he will only take minutes into acct, the real time data will be on seconds...

when you get long histograms means it took more time to build the bar (weakness), true is oposite, hope this can help to identify better what you are looking at.... cheers Walter.

GetMachineTime.zip

TIME PER BAR.ELD

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Brown : I know you are very enthusiastic about volume based candles, now you should understand that there is a contradiction towards volume analisis on that graphic aplication.... you see, you are just making an equal sum of equal amount of activity to each and every bar... so said: each bar has the same volume weight, same activity weight... so ironically when you give a same wheight to a bar you literally anulate any volume analisis on your chart... you only have the price action left on the chart.... "you may say I have a 1500v hammer", well yes, but the previous bar was also a 1500 v bar and next one a 1500v bar... you see... volume based candles are that... its really not volume analisis... maybe they share some word on the name, but true volume analisis must be able to measure from bar to bar diferent "weight" of volume... other wise stated, its not volume analisis... I think the original vsa concepts are the most clear volume analisis concepts, where in a given bar : how much volume "weight" there was, and what range there was, and where did he close ?.... you see on volume based bars you cant do that weight.... thats only an input wanted to add to all this, thought I believe TRUE volume analisis its about weight of a bar in a given context cheers Walter.

 

You guys are the experts but I think the purpose of volume candles is to take the guess work out of volume on your trading decisions and boost the power of the candle formations. Since the volume is in the candles, it is already taken into consideration.

 

You get more trading signals from volume based candles because you get more candles when you get more volume. Not true with time based candles. With time intervals you get X number of candles no matter what the volume is and you don't know what precise emphrance to put on the candle formations.

 

Everything I have read says volume moves price not time. If you have two exactly the same candle patterns in front of you, one based on volume and one based on time. Which would you trust more? For me, the volume one because I would know exactly how much trading it represents. Basically it puts the "tape" on the chart.

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Robert: you may want to put a volume histogram on a time based candles chart... you will see the diference, every time candle has a diferent volume weight.... on vbc every candle has the same volume, no weight there, so they have to rely on time weight per candle to determine volume analisis... I find more easy to measure volume histograms per time based candles, its more visual... but remember volume analisis its nothing more than wheight analisis of price action.... so if you have a hammer on a 1500v there is the same weight from candle to candle,doesnt mean nothing by itself.... no weight analisis, the only weight there is the time it took to build that hammer... so again we have time.... from one other perspective... cheers Walter.

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Robert: you may want to put a volume histogram on a time based candles chart... you will see the diference, every time candle has a diferent volume weight.... on vbc every candle has the same volume, no weight there, so they have to rely on time weight per candle to determine volume analisis... I find more easy to measure volume histograms per time based candles, its more visual... but remember volume analisis its nothing more than wheight analisis of price action.... so if you have a hammer on a 1500v there is the same weight from candle to candle,doesnt mean nothing by itself.... no weight analisis, the only weight there is the time it took to build that hammer... so again we have time.... from one other perspective... cheers Walter.

I do see your point. I really am enjoying this thread. Looking at the same things but in a new way. Analyzing things to see their relationships. I don't think there is a right or wrong, it's what works best for any particular person.

 

For me, I would rather have a lot of volume and a lot of candles to trade that volume. During the day I'm not really looking at time. I'm on alert for volume, trying to ride the wave. If I'm getting candles, I'm getting volume and know it immediately. I guess I see it as humans have a natural sense of time but no natural sense of volume. That's the inn and the yoh of it! :)

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OK now that I can clearly have a visual time weight of VBC I start too look at them with more respect and love... I attach an example of how after a super long time hammer formation we got a nice, very nice move... there is a lot to study on this... thanks to all for keep adding to this interactive volume research¡¡ cheers Walter.

5aa70dcea9357_longtimehammer.thumb.jpg.72a5e65286abab42e4fbef57e528c388.jpg

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Walter - glad to see you are coming around to VBC's. ;)

 

Here is the main reason why I moved to them - during quick moving markets, traditional candlestick analysis is useless. I will try to post some charts for examples this week, but basically during a quick move if you have a 3, 5, 10+ minute chart, all you may end up seeing is one giant candle. For me, that does nothing. I get to sit and watch all the action taking place. Then, once the action calms down, I can jump right in! ... Anyone see a potential problem there? :D

 

I can see the arguments for a minute based chart with volume broken down in a histogram form. I used to do just that!! And as long as the market is acting 'normal' it's not too bad. But good luck around econ news, FOMC, etc. A couple giant candles do nothing for me. That's the key though - for me.

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Equivolume candles' body gets wider as volume increases. So those are based on time charts. Tradestation has those. I guess it could be used to replace the volume histogram or whatever measure of volume.

 

Volume Based Candles are different. They are printed as volume takes place. The width of the body does not change. Tradestation has those as well.

 

While it is easy to get these mixed up though, they are very different.

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Equivolume candles' body gets wider as volume increases. So those are based on time charts. Tradestation has those. I guess it could be used to replace the volume histogram or whatever measure of volume.

 

Volume Based Candles are different. They are printed as volume takes place. The width of the body does not change. Tradestation has those as well.

 

While it is easy to get these mixed up though, they are very different.

What are the Equivolume candles in TS called? How do you get them started? I'd like to see them in action.

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