# An example of trading with volume



## Nick Radge (31 January 2006)

I've been bullish LEI since last September. This has been in the face of alot of bearish broker's opinions. 

The setup here is quite straight forward for those that can analyse volume. The first day marked broke higher but closed lower. One may immediately think that this was a false breakout. The problem is that it closed well off its lows and did so on high volume. This can only mean that buyers kept it off its lows. If it was selling volume then it would've closed on its lows. Secondly, if it were true selling then the next day it should have continued lower. It didn't. It actually traded up off its open and closed on its high, again on very high volume. Buyers are in complete control. Yesterday saw a good volume increase and another close on its high. Buyers still have the upper hand. I'll be removing half the position a little over $20.00 if it gets there.







These are my current trading positions in this account.


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## RichKid (31 January 2006)

Nick, 
May I hazard a guess that you entered MRL on a similar premise to BPT? ie very high volume up days (instos) followed by low volume down days, prices stepped up in ledges, currently retracing on low volume towards previous ledge resistance. A general move up from a base formed last year.


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## Nick Radge (31 January 2006)

Most of my entries are based on strong volume factors. MRL was stopped out today, but that happens. The important thing to think about, especially with the likes of the LEI example, is that there are some larger buyers who are not scared to be buying at these all-time highs. That's a very important element. Large buyers who are attempting to accumulate a stock will only pay up if they beleive they won't get it cheaper. If they think they can get it cheaper they will wait, that's why you get very long periods of sideways price action at times.

Take a look at BBG. You'll see a long sideways period. Just recently though that accumulation is now taking place closer to the top of the larger range. Why is this happening? Most likely because those that are accumulating were not getting their fills at the lower levels so they stepped up some more. When they have accumulated as much supply as they can, then prices will naturally start to rise without them driving higher.


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## Nick Radge (1 February 2006)

Here is the BBG example discussed above. Obviously not all are as clean as this. The stop is now at $13.44, just under that seconadry accumulation area. If you find area's like this where a transition from seeling to buying occurs, then its a great place to start building a longer term position.




_This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information._


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## GreatPig (1 February 2006)

BBG is also showing a nice cup and handle formation.

GP


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## Nick Radge (8 February 2006)

GP,
BBG had a hiccup yesterday. Take a look at the volume.  

Here is another example of volume showing a transition from sellers to buyers. Let me say that there was zero chance of picking yesterdays move. I had picked up the volume change a week or so ago, but suggested that a SELL was certainly *not* on the cards as a continuation of the trend simply because that volume clearly indicated someone was keen to accumulate the stock. Funny how it seemed to happen just before the company suggests they've turned the corner...hmmm. The issue I have with this chart now is that whilst yesterdays volume was extreme, it appears to be more a reaction rather than a measured rise after accumulation (EXL shows a measured rise after accumulation as a better example). The close yesterday was also off the highs whihc means a few people were also quick to get out and run.


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## Nick Radge (10 February 2006)

Phase1: Market is accelerating lower on higher volume. Bearish.
Phase2: Volume dries up. Decline slows. Sellers exhausted. Turning the corner.
Phase3: Price starts to reverse. Volume starts to pick up. Buyers have most likely go the upper hand. 

Yesterday was a buy day when prices broke above Wednesdays high, although I would suggest this strength will be limited.








_This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information._


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## StockyBailx (12 February 2006)

hi Guys,

I'm no genius at the game, but may I suggest that all is fine and maybe correcting right now it certainly seems that way with the present activity, my stock characteristics are very similar when they have everthing going for them.

Hang in there...and they will come through again. Remember stocks always come off their highs and correct themselves, give you a good idea if you have caught a bull or a bear. And thats how you do your shopping.

Nick you may have just caught the right flight,but got of off at the wrong stop be patient.  (How much$ was your ticket?)  

*Stock'ie'Bailz*  

Allways off the highs and correcting


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## markrmau (16 February 2006)

Check out the volume on MIG - could signify a reversal.

MIG dropped to a low of 3.20, but the low price was rejected on high volume (currently 3.31, 21M shares traded, 3.28pm)

My thoughts, YMMV. We'll see how it closes.


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## Bobby (16 February 2006)

Hullo Nick,
Although this not right on topic & could have been answered from your site I think others would be interested in your answer.

Although I do my own analysis when deciding to buy, sometimes I'm not sure if I should go ahead on some buys?, would you give a yes or no answer with no other information to a buy query ?.

What I mean is I pay you for (  yes or no, ) nothing else . 

Time reply to be considered regarding costing .

Regards Bob.


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## weird (16 February 2006)

Great posts Nick.    No BS


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## Nick Radge (17 February 2006)

Bobby,
Theoretically yes but what you're asking is known as Personal Advice and therefore it introduces some paperwork such as issuing a Statement of Advice for every single trade advised on. There are ways around it to turn it back to General Advice though. Example:

Personal Advice - "Nick, should I buy XYZ here?"

General Advice - "Can you analyse XYZ?"

Clear as mud?

Weird,
No problems. I'll post some more in due course.

N


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## Bobby (17 February 2006)

Nick Radge said:
			
		

> Bobby,
> Theoretically yes but what you're asking is known as Personal Advice and therefore it introduces some paperwork such as issuing a Statement of Advice for every single trade advised on. There are ways around it to turn it back to General Advice though. Example:
> 
> Personal Advice - "Nick, should I buy XYZ here?"
> ...



Thanks Nick,

Think I got it !.  

General Advice-- Can you analyse ???  your answer ( NO ) .
                        Can you analyse ### your answer  (YES ).

If I got this right did I see through the Mud ?.  

Bob.


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## Julia (17 February 2006)

Nick and Bobby:

Could one or both of you kindly provide some sort of quasi translation for those of us (well, at least me) who fail to see through the mud in this exchange?

With thanks
Julia


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## GreatPig (17 February 2006)

Julia,

My interpretation is that analysing a stock could be considered general comment, even if it does give a strong indication of whether the stock is worth buying or not, whereas an explicit statement that the stock is or isn't worth buying would be considered advice.

GP


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## Bobby (18 February 2006)

GreatPig said:
			
		

> Julia,
> 
> My interpretation is that analysing a stock could be considered general comment, even if it does give a strong indication of whether the stock is worth buying or not, whereas an explicit statement that the stock is or isn't worth buying would be considered advice.
> 
> GP




GreatPig,
All I can say is  I do like your interpretation skills.  

Bob.


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## Nick Radge (18 February 2006)

Personal advice is specific advice to an individual, such as:

"Julia and Bobby. *You* should buy XYZ"

When personal advice is involved I am required to know your specific financial situation, goals and risk tolerances. I take that data into account when giving advice and issue a Statement Of Advice outling all aspects of the advice given.

General advise is exactly that, general in nature and to nobody in particular but it still involves a recommendation or an attempt to influence an individual into an investment decision. 

"I think XYZ is a great buy"

With general advice I am not required to know the situations of the individual but must come with the appropriate disclaimer that appears at the bottom of my posts.

In both instances the indivdual must be licensed for one or both types. Not all people who are licensed can give personal advice. When a person gives any type of advice without a license they are essentially breaking the law. 
A web site such as www.smrt-trader.com would be pushing the envelope because they could be seen to be influencing an individual and therefore giving advice. 

Most educators get around the issue by using historic examples and not real time. A historic example can not be acted upon by an individual whereas a real time example could be. Where an individual buys software that specifically tells them what and when to buy/sell, then the software vendor must be licensed as well.

ASIC is attempting to remove the onus from the individual and place the responsibility into the hands of the service provider.


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## Ann (18 February 2006)

Hello Nick,

I would be interested to hear your opinion of Thomas N. Bulkowski's interpretation of volume. I have only recently started working with it in the last few months but so far I have found the results quite interesting.

-Ann


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## Nick Radge (19 February 2006)

Hi Ann,
I'm not aware of his volume analysis. Is there a reference on the web or is it in his book?

Here is a weekly chart of WES with another volume indicator I use called Volume Thrust (VT). VT measures the strength of an assault on a high or low. If the 2nd attempt at a low has a significantly higher VT reading then the chances are that prior low will get broken. If the VT reading is significantly lower, then the chances are that the prior low will hold. You can see here that the secon low has a reading some 50%  higher, 66.5 vs 40.2. The bounce that followed had small associated volume indicating weak demand (and its also a micro flag). Last week was a 2-bar Key Reversal week on high volume. Not a good sign and one that suggests to me that WES will trade lower.








_This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information._


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## Ann (19 February 2006)

Hi Nick,

It is covered in his book Encyclopedia of Chart Patterns. Very interesting book.

Well worth a look.


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## Nick Radge (20 February 2006)

Thanks Ann. I reviewed his book many years ago, but can't say I remember much about the volume. I'll take a look.

Here is another one today in JBM that I traded. I had my buy order 1c above Fridays close, but was filled slightly higher. Closed today was on its high. Friday was a push lower to form a double bottom with a prior pivot low, but this level was completely rejected. A close on its high with increased volume can only mean one thing - buyers were in.


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## Nick Radge (23 February 2006)

I read on another forum that volume is a garbage indicator and has no ability to help in a decision making process. I've mentioned herein the 3-phases a stock tends to travel through when its about to turn and start a new trend. Below is a portfolio I run that tracks a price pattern with the combined 3-phase volume analysis. This portfolio commenced in September last year and gets updated weekly. Looks ok to me and the core input is the volume. I even alluded to FLT on 8 February and it was subsequently added to the portfolio on 13th February as volume confirmed the turn. Some on the radar list are GNS, PBB, MGW and CDO again.


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## markrmau (9 March 2006)

Any thoughts on MIG's volume? Volume is massively up, but the SP only went up 2%. To me this means the buyers were met by plenty of sellers, so perhaps MIG could consolidate over the next few days. 

Personally, I'm hanging on for $4.30 - $4.50


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## Nick Radge (9 March 2006)

Very good markrmau. A tight range on heavy volume means sellers. The trick is to look at the left of the current price action. You can see in this example and old high is being tested. Those that didn't exit at that point may now be attempted to exit. Tomorrow however will be the important day. If weakness occurs then sellers remain in control and until they're cleared prices will not be able to rise.


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## Bobby (9 March 2006)

Hullo Nick,
Is it possible to manipulate price within lower ranges of volume ?.
I just have this idea that someone or more are buying & dumping BMX in order to pick up best prices ?.

Its like for every 100,000 they get at a cheap price they dump 20,000 to 40,000 in smaller deals to set off others to sell ?.
Then pick up the next 100,000 and so on.

Is this stupid thoughts ?  

Bob.


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## Nick Radge (10 March 2006)

Bobby,
Absolutely. Its been around for at least 80 years and was first written about by Richard Wyckoff. Professional money will attempt to get as much supply as they can at the lowest possible price. What you refer to is known as a "test". This is where a short sharp spike (up or down) on low volume occurs to determine the strength of supply or demand. The daily BMX is a very different picture to the weekly. Note that the move on the 6/3 was on high volume with a high close. Buyers are still in, but they're still not prepared to take it higher. This suggests they know they can still accumulate at lower levels. Since then prices have drifted lower again, but on light volume. So there is no committed selling, just some weaker hands taking profits which pushes prices down because the professional money is sitting back. Its just a matter of how far they'll allow prics to fall back. Look for more evidence of the large buying and then you'll know for sure.


Here is an exercise for those taking an interest in volume. Look at the charts for GCL and BPT today and look at the developing story over the last week or so for them both.


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## GreatPig (10 March 2006)

Nick,



			
				Nick Radge said:
			
		

> Here is an exercise for those taking an interest in volume. Look at the charts for GCL and BPT today and look at the developing story over the last week or so for them both.



My interpretation...

Over the last week or so, both seem to have had higher volumes on up days than down days, with both prices gradually working higher. On the largest volume days, prices have closed on or near the highs. For BPT in particular, down days have closed above the low.

To me, that is positive news for both (from a long position point of view).

I currently hold BPT, bought on 2nd March, and did get a buy signal a few days ago for GCL but didn't buy it - mainly because I'm off overseas in a few weeks and am currently only buying stocks that I think may give a moderate gain during that time, since I'll probably sell most stocks before leaving.

Of course that now means GCL will blast off in a couple of days and BPT will stagnate 

Cheers,
GP


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## Nick Radge (14 March 2006)

Lend Lease shows some great volume characteristics:

http://www.projectstreamer.com/users/reefcap/1404_llc/

Nick

_This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information._


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## Bobby (14 March 2006)

Hullo Nick.
Thanks for your last reply to my post.

Gee now I know what can throw out ones analysis - (possible manipulation).

Guess you could do a whole chapter on this in your next book .  

Bob.


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## wayneL (14 March 2006)

For those that couldn't get Nicks link to work, it works now.


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## RichKid (14 March 2006)

Nick Radge said:
			
		

> ....
> Here is an exercise for those taking an interest in volume. Look at the charts for GCL and BPT today and look at the developing story over the last week or so for them both.




WARNING! Learner in action below!

My attempts, please don't laugh folks, unless it makes you happy, only way to learn 

BPT: big buyers are accumulating around 1.10 to 1.20, not happy to buy higher, a rounding pattern emerging, initially some tails showing them coming in as prices fall but close closer to highs and then some tighter bars later in the turn as they reach the highest price they are willing to pay, meanwhile smaller players off-loading from time to time. Overall effect is that prices have moved up steadily over the last few days, now around the resistance level again, will supply dry up before an explosion to new highs? Last week or so has seen some very low vol declines, will big buyers enter again between 1.15 and 1.20 as they have before, probably if they think it wont go lower.

GCL: Stopping volume in November, with follow through and buyers still accumulating as volume spikes show, some down days but prices are holding at higher swing lows. For example, down day and very high vol on 14 Feb but result of that effort was a small range so obviously someone is keen to buy up supply, only big instos have the fire power to buy so much; then a small dip on very low vol and again a big volume day and prices rise. Higher swing lows forming. Now for the last week or so: high vol, prices go higher, even down days see mid range closes, prices moving up steadily. Currently in an ascending triangle. 

Just my guesses going by what you've posted so far Nick, thanks for info, hope I get this volume stuff right in the end.


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## bunyip (15 March 2006)

Nick

With your LEI trade, what was your reason for setting a profit target a little above $20?

I like the way you were bullish on LEI in the face of broker opinions to the contrary. You had the sense to listen to the message of the charts, irrespective of the fundamentals.

I've enjoyed your ATAA presentations by the way.....thanks for your willingness to help others.

Bunyip


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## Nick Radge (15 March 2006)

bunyip,
That was an Elliott Wave target. Under normal circumstances that is only used as a guide and I'll usually be more reliant on volume/price than targets. I finished up exiting the whole position above $20 I think.

Regarding the consensus analysis I do list it with my own research so subscribers can get a feel. The divergence tends to stand out mostly when a stock is correcting and the analysts still have outperform or buy on it. By using the EW corrective analysis and volume we can tend to get better levels rather than wearing any pain on the dips. Some stocks can decline 30% or so even though the brokers retain a buy, so its a timing issue.

I don't get them all right though! I've been bullish MXI, which is a strong buy from the analysts, yet I was looking for more of a decline, which appears not to be the case at present.


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## Nick Radge (4 April 2006)

Here are the results of a Model Portfolio that picks stocks basis price and volume. These have been running since September last year. Those that have read my book will note the skew between average win and average loss. Hard to discount the influence of volume when making trading decisions, and I should point out that the volume I use has nothing to do with Director volume. 

Take a look at TAP today. I just initiated a position...but is it long or short?








_This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information._


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## Bobby (4 April 2006)

Hello Nick,

Tap, long.

Looks a bit wobbly today but   .

Bob.


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## Milk Man (5 April 2006)

Tut tut tut Nick!  :nono: Doesnt look like any fixed fractional position sizing there. Whats the go with that?


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## Nick Radge (5 April 2006)

Yes Milko, I know. I will also convert to that format as well when I get around to it.

Bobby, yes. Wobbly - but alas that's what stops are for!

Nick


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## Nick Radge (21 April 2006)

I posted this last night for subscriber's. If you have an interest in the use of volume this may be of interest, especially since Gold dumped over night.

Bolnisi Gold (BSG)


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## ctp6360 (31 May 2006)

Holy crap Nick, you were 100% spot on with this one, unbelievable! I just subscribed to your service!


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## Nick Radge (31 May 2006)

I get lucky sometimes. Plenty of bad calls too.


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## markrmau (19 October 2006)

What are people's thoughts about MRE?

Can't argue it has been in a signinficant uptrend.

Today's volume was double recent volumes.

While MRE did drop 3.5%, the bar was very short. ie the selling was met by commited buying. If this were the end of the trend, on todays volume I would expect a wide ranging bar - with the close well off the open.

(as you know, I am a committed believer in the nickel trend and MRE's fortune)

BUY


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