# Volume query



## surelle (1 February 2006)

I know this is probably a dumb question.....but here goes

When looking at the days trading for any particular stock and it quotes a quantity for volume...how can you tell if it's purchases or sales....
thanks


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## Fleeta (2 February 2006)

It is purchases.

Actually, no, it's sales.

Hang on a minute, it could be purchases.

Actually, it's both!

Think about it this way. If it purchases are 1,000,000 and sales are 2,000,000. Who is the other 1,000,000 being sold to???

Did I just blow your mind, was it one of those 'if a tree falls over in the forest with nobody around... moments?

Nah seriously, good luck with the trading and remember the one key lesson...always listen to Baglimit!


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## surelle (2 February 2006)

thanks for that ...I'm still not 100%, but I suppose time and experience will heal my confusion
why listen to baglimit...experience???


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## Smurf1976 (2 February 2006)

For someone to be buying there has to be a seller and vice versa. So if 200,000 shares were traded on a given day then 200,000 were sold and 200,000 were bought.

To put that another way, 200,000 shares have changed ownership. There must be two sides, both buy and sell, for every transaction. Just like for you to buy a loaf of bread, someone has to sell it. Two sides to the transaction but it's only _one_ loaf of bread and would count as 1 on a volume chart.

It is possible that the 200,000 shares were sold by 50 different shareholders and 1 person bought the lot etc. Such an extreme situation with only one person buying on a given day would be unlikely to happen with very actively traded blue chip stocks such as BHP or TLS (Telstra) but will happen from time to time with less active stocks such a small mineral explorers where few shares change hands each day. 

No such thing as dumb questions in my opinion. Always better to ask, that's what ASF is for...


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## son of baglimit (2 February 2006)

FLEETA OL BOY - SUCH GENEROUS WORDS - good words tho - remember CEO....would i lie to you ???


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## surelle (2 February 2006)

thanks for that Smurf , totally understand now...I've been on the forum for less than a week and have picked up on some valuable education...

son of..you're kind of stuck on CEO - whats your thoughts...apart from what i've read in the previous threads ...


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## It's Snake Pliskin (2 February 2006)

Smurf1976 said:
			
		

> For someone to be buying there has to be a seller and vice versa. So if 200,000 shares were traded on a given day then 200,000 were sold and 200,000 were bought.
> 
> To put that another way, 200,000 shares have changed ownership. There must be two sides, both buy and sell, for every transaction. Just like for you to buy a loaf of bread, someone has to sell it. Two sides to the transaction but it's only _one_ loaf of bread and would count as 1 on a volume chart.
> 
> ...




Who is doing the buying or selling though? That`s what needs to be determined. If uninformed investors are buying when sophisticated investors are selling.......


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## Nick Radge (2 February 2006)

All volume prints are transactions between buyers and sellers. Yes, for every buyer there must be a seller. However, in order to assess volume correctly you must look at the impact on the "efforts" of either the buyers or the sellers. If sellers are desperate then they will tend to sell at lower prices, thereby causing prices to decline. If buyers are keen tehy'll tend to pay higher prices, therefore driving prices higher.

Forget who is buying and selling. It does not matter and its also impossible to determine. As an example, there is a lot of emphasis on Director transactions. This is a pointless exercise. Firstly many Directors are career employee's who simply add stock as part of their super fund. They are taking a 10 to 20 year retirement positions. Yes they have faith in the company which is why they are buying, but their transaction size and time frame make it a useless indicator. That said, when a single Director has the vast majority of stock, such as SRV, then you take notice but these are rare. Just because Alan Moss buys $200k worth of MBL will have zero bearing on the immediate future direction of the stock.

You can add as many Mum's and Dad's to the equation as well but they are insiginificant in the context of direction, unless the stock is highly illiquid. 

Look for area's of large volume and note what impact the volume has on the prices. Is there high volume with the close being near the high of the day? This means buyers. If its high volume with a low close, then it means sellers. Tight ranges with high volume is important, as well as many other facets, so reading volume correctly is very important.

There have been a few threads herein that show examples. A recent on is:

www.aussiestockforums.com/forums/showthread.php?p=31326#post31326

Take a look at ARQ and see what occurred yesterday. Is the volume high? Where is the close in relation to the days activity? What is to the left of todays bar (i.e. mid-December).


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## It's Snake Pliskin (2 February 2006)

Hi,

Yes, forget who is buying....yeh, I don`t need their names or titles. Just their intentions. Charts reveal intentions.

It is easy to have a microscopic view of volume - price action and trade that action. But what about the trend in volume?

How about determining trends by volume by looking where the smart money - not directors - are buying or selling. 

What is the crowd doing? Pushing up a price when volume is diverging! 

Good: I can look and wait for the change and trade it. 

By using volume studies I can look for where the smart money are building or diluting their positions. Who is actually buying or selling? I don`t know and don`t care. But I`m not buying with the crowd when volume is telling me to watch out there is a cliff coming. 

Snake


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## eedie (2 February 2006)

Hey guys (first post - insert greeting and introduction here), but rather than opening a new thread, i will ask my related question here...

Now i understand that 1 volume is when a buy/sell transaction takes place, but how can i try to comprehend the effects of a decreasing sell price (people are desperate to get rid of their shares) and vice versa, in relation to volume...?

E.g looking at a weekly view of volume and bid prices, company XYZ's shares were

day1 - 10 000 traded @ a falling price of $2 to $1
day2 - 20 000 traded @ a falling price of $1 to $0.50 
day 3 - 30 000 traded @ a falling price of 0.50 to 0.25

^ What is this an example off.. ? Seems more shares are being sold off at desperate prices to get rid of them. Would one be wary of buying these 'cheaper' shares at 0.25? Obviously people are buying them at 0.25 but why? with the expectation they are going to rise again and they thought they'd snatch up some speculative concern? 

What if this followed:

day 4 - 10 000 traded @ a rising price of 0.25 to $1
day 5 - 30 000 traded @ a rising price of $1 to $3. 

I'm not even sure if there is a direct question in this post so far.. haha. My head is clouded and was wondering how most people regard the influence of trading volume and what could be happening if there is a high volume & falling price, high volume & rising price, low volume & falling price, and low volume & rising price. Should i be concerned if shares i hold were experiencing unusual high trading volume with falling sell prices (with no obvious announcements approaching). 

I recently skim read a book by Joseph Sammon, which had him believing that viewing volume fluctuations help determine the future of share prices, by seeing what 'insiders' might be doing. I felt there was some common sense in this, e.g. if a boring stable stock all of a sudden had high trading volume (and perhaps a somewhat unaltered share price one day) would demand attention?

Ill stop typing now, before i leak all my confusion into this one thread, and wondering if anyone has any general of specfic ideas of how to interpret volume...

(albeit i havent used the search function yet- this started out as a very basic question!)

Thanks in advance 
-E


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## Fleeta (2 February 2006)

surelle said:
			
		

> thanks for that ...I'm still not 100%, but I suppose time and experience will heal my confusion
> why listen to baglimit...experience???




Before I joined this forum, my stockmarket returns ran at about 12% p.a., they are now up to about 22% - mostly due to Baglimit and his legendary tips - NVC (now PDO) and NMS - both which more than doubled in the 6 months since he first tipped them.

Is it luck, or is it skill? - who knows but i'll keep listening til I get burnt.

Good luck


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## surelle (2 February 2006)

thanks Fleeta

and I'm sure that Baglimit is feeling pretty good right now, he's obviously sitting well in your books
I'm here to learn, so all your advice has been great so far..who know's  
I might be able to be a contributor soon
regards


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## son of baglimit (2 February 2006)

surelle - please refer to ceo thread - its all there - check website cnow.com.au


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## surelle (2 February 2006)

thanks son of.. will do
I'm only new to this and getting a little frustrated at the moment as everytime i buy something it heads south instead of north...
not having much luck at the moment - need a kick start somewhere


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## surelle (2 February 2006)

btw - have been watching this one and it hasn't done anything except sit in the one spot...with no volume of sales - why's that


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## Smurf1976 (3 February 2006)

surelle said:
			
		

> thanks son of.. will do
> I'm only new to this and getting a little frustrated at the moment as everytime i buy something it heads south instead of north...
> not having much luck at the moment - need a kick start somewhere



What you really need to do in my opinion is develop an actual trading _plan_ which you _know_ will be profitable over time even if individual trades make a loss. And that plan needs to be _tested_ both on historical data and also in real time with no (or little) actual money being traded. Once you've got the plan sorted out, _then_ trade will real $.  

It's not simple but it's not as complicated as it may seem and is well within the ability of practically everyone. Those who succeed in the market are no more intelligent than most (in general) they just have a _proven plan_.


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## surelle (3 February 2006)

thanks for that Smurf, will give that a go  (and then cross my fingers LOL)


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## Wysiwyg (1 September 2014)

Nick Radge said:


> Look for area's of large volume and note what impact the volume has on the prices. Is there high volume with the close being near the high of the day? This means buyers. If its high volume with a low close, then it means sellers. *Tight ranges with high volume is important, as well as many other facets, so reading volume correctly is very important*.



Nick explains it is important to assess large volume with ensuing price action.


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## tech/a (1 September 2014)

Wysiwyg said:


> Nick explains it is important to assess large volume with ensuing price action.




Its a great topic and widely miss understood.

Very low volume in context can also be very revealing.
Perhaps some chart examples would be beneficial.


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## Muddy71 (1 September 2014)

tech/a said:


> Its a great topic and widely miss understood.
> 
> Very low volume in context can also be very revealing.
> Perhaps some chart examples would be beneficial.





As a newbie, I'd be appreciative of charts with explanations
Thanks


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## tech/a (1 September 2014)

Muddy71 said:


> As a newbie, I'd be appreciative of charts with explanations
> Thanks




There are many many explanations with single or multiple bars/patterns within those explanations
I should put them up in the Learning T/A thread and crank that again.

I forget there are people like you watching and not commenting.
Ive been trading the DAX and thought about posting the odd chart.
Then I thought how long it takes and got the why bother's.

Then you posted.

Ill just pop up one tonight with this observation for those who want to include volume in their analysis.

(1) You are looking for EXTREME volume
(2) You are looking for EXTREMELY LOW volume.

Now you have to read it in context of the chart.
EXTREME volume and range throw the equilibrium out---this can happen in a single or number of bars.







Youll notice that extreme volume particularly on single bars with wide range will often see the next few bars correcting at a minimum. Often used by short term traders for counter plays.
This happens with a very high success rate and can often be short term before resumption of the move in the original direction of the initial volume.

So now notice the last 2 BLUE high volume bars.
Price reacts differently to the example shown.
Is supply coming in or is it likely to continue UP?


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## tech/a (2 September 2014)

> So now notice the last 2 BLUE high volume bars.
> Price reacts differently to the example shown.
> Is supply coming in or is it likely to continue UP?




No Takers?

For price to reverse we need to see Supply swamping demand 
and demand being withdrawn so that sellers have to accept lower
and lower prices.

What's volume and Range telling us on the bars after the 2 very high
volume bars?

Is it likely to continue up or reverse?


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## kid hustlr (2 September 2014)

no supply

up we go


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## tech/a (2 September 2014)

kid hustlr said:


> no supply
> 
> up we go




And as I know you know---so It does.


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## kid hustlr (2 September 2014)

tech/a said:


> can often be short term before resumption of the move in the original direction of the initial volume.




question is do u take the initial long given the above


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## tech/a (2 September 2014)

kid hustlr said:


> question is do u take the initial long given the above




It depends on a number of things

(1) The strength of the reversal 
(2) The risk in the trade 
(3) Where the reversal takes place IE a support or resistance area.

But if it looks like the one shown then it's a very good one.
I'll also check other timeframes ( that's a 3 min ) to see if it's reflected in that as well
Like a 9 min. It won't look the same but will tell me a lot about the longer term.
The low volume no supply bar is a great one to raise your stop to after it is confirmed as 
This one was.

Often though you won't get a long reversal before it returns to the initial trend.
The low is often tested. It wasn't here. If it comes back at it on high volume and a down bar then it's likely to be taken out. Lower volume it's likely to hold and often tests the exact same low price.


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## Muddy71 (2 September 2014)

tech/a said:


> There are many many explanations with single or multiple bars/patterns within those explanations
> I should put them up in the Learning T/A thread and crank that again.
> 
> I forget there are people like you watching and not commenting.
> ...





Thanks Tech/a,

Appreciate the time you took to reply. 

I'll try to work out how to post a pic of a chart and ask a few questions when I have a bit more time if that's ok.

Thanks again.


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## tech/a (2 September 2014)

Sure


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## kid hustlr (2 September 2014)

tech/a said:


> Often though you won't get a long reversal before it returns to the initial trend.
> The low is often tested. It wasn't here. If it comes back at it on high volume and a down bar then it's likely to be taken out. Lower volume it's likely to hold and often tests the exact same low price.




Agree with everything said.

Also agree that waiting for a test is ideal and probably the safest option

but my experience tells me the test doesnt always come - and the ones where it doesn't are the ones you want to be long for.


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## tech/a (2 September 2014)

kid hustlr said:


> Agree with everything said.
> 
> Also agree that waiting for a test is ideal and probably the safest option
> 
> but my experience tells me the test doesnt always come - and the ones where it doesn't are the ones you want to be long for.




Yes totally agree.

Those are usually pretty clear in the effort expended to stop then reverse the trend.
The lack of supply ( long play ) or demand ( short play ) is often very clear.


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## Muddy71 (2 September 2014)

Ok. Had a bit of a crack at volume on this chart and added some comments. 
hopefully on the right track??

Anyway, given that the stock is trending up, I'd expect it to continue to do so given that the last high volume up bar is indicating that the buyers are back in control. I'd obviously wait for confirmation for a couple of days before entering. 

I don't own this stock or any others for that matter, still trying to get my head around the T/A side of things (which will be awhile) before I look at entering the market.

Thanks in advance.


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## Faramir (2 September 2014)

Hi Muddy71
Tech/a is brilliant. Mind if I make a comment?
4th last bar - Selling Pressure, higher than average volume
3rd last bar - Buying Pressure, pushing price up, higher than average volume
2nd last bar - Very low volume, sellers seemed to have dried up
Last bar - Buying pressure, more buyers, not enough sellers available
Next bar? I think the sellers might come back so that they can profit from this buyer's pressure. Not sure if there will be enough to relieve the buying pressure? I am just guessing here.

PS: I am very much a beginner, I would get low marks in tech/a's class if I was one of his students. Might need to bring an apple to class.


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## Faramir (2 September 2014)

Reading "Master the Markets" - Confused
https://www.aussiestockforums.com/forums/showthread.php?t=28484

I tried answering some of the questions with nearly zero knowledge. Tech/a was very busy at that time but he still took time to post up questions and answer questions.

May not be relevant to this post but it is interesting.


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## Muddy71 (3 September 2014)

Faramir said:


> Hi Muddy71
> Tech/a is brilliant. Mind if I make a comment?
> 4th last bar - Selling Pressure, higher than average volume
> 3rd last bar - Buying Pressure, pushing price up, higher than average volume
> ...




Hi Faramir,

Not at all mate, the more the merrier!

Cheers


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## tech/a (3 September 2014)

My opinion of the chart


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## tech/a (3 September 2014)

Faramir said:


> Hi Muddy71
> Tech/a is brilliant. Mind if I make a comment?
> 4th last bar - Selling Pressure, higher than average volume
> 3rd last bar - Buying Pressure, pushing price up, higher than average volume
> ...




You'd get an ' A ' as you at least had a go at reading it.


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## rnr (3 September 2014)

Marking up your chart with anticipated support and resistance is also a great help when analysing volume, especially when you scroll back to old areas of support and resistance not immediately obvious on the chart.

This is my take on potential resistance levels which are close to current price action for BBG.


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## tech/a (3 September 2014)

Ah BBG

That's bullish!


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## tech/a (3 September 2014)

RNR makes a very sound observation and its VERY important to consider what happens as price comes into resistance. Youll note in BBG's case that supply comes in as it races toward the resistance area. More about this chart later.

*What I really wanted to show you was tonights DAX.*

Firstly the 15 min chart and the remaining 3 min charts explaining the trade.

*Click to expand any chart*










I haven't drawn in the resistance areas but you can see it blew through one clearly
There is another off page. This is very clear volume and range patterns which shouldn't be ignored
1 contract and 35 min and I'm done for the night---more than happy!


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## tech/a (3 September 2014)

This is where we are now.
There is something of great interest here and guys like PAV/The Kid and other futures traders will know exactly what I mean.

*Click to expand*


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## kid hustlr (3 September 2014)

tech/a said:


> This is where we are now.
> There is something of great interest here and guys like PAV/The Kid and other futures traders will know exactly what I mean.
> 
> *Click to expand*
> ...




just got home. no such thing as 9-5. on the surface looks like an aggresive sell tech but will analyse further


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## kid hustlr (3 September 2014)

tech,

im talking ftse, dont have the dax, i assume similar action.

in my view,

there was an ok entry on the ftse on the short time frame when it made a lower low then a swing low after the huge run up. this on the back of the apparent lack of volume/demand (you circled) and what appears to be a pivotal point on the ftse CASH INDEX makes for an ok short.

I think longer term the trend is still up for a few reasons although if they were to smash it down in the US session tonight my view would change.

for me the trade of the week was the long set up u posted 2 days ago, i took that, should still be long (out way too early) and id be sitting back watching the bachelor well in the money

my 2c, intrigued as to whether u see it differently.

EDIT: should have mentioned something about the apparent high volume area circa 9600 on your chart


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## tech/a (3 September 2014)

Sorry I think you mis understood my comment.

The reversion is something you would see all the time
So I commented that you and others would know what I mean!


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## kid hustlr (3 September 2014)

tech/a said:


> Sorry I think you mis understood my comment.
> 
> The reversion is something you would see all the time
> So I commented that you and others would know what I mean!




all good.

and yes you are correct, very few free lunches


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## Muddy71 (3 September 2014)

tech/a said:


> RNR makes a very sound observation and its VERY important to consider what happens as price comes into resistance. Youll note in BBG's case that supply comes in as it races toward the resistance area. More about this chart later.
> 
> *What I really wanted to show you was tonights DAX.*
> 
> ...




Thanks Tech/a, 

Informative charts and well done on the trade.


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## Faramir (5 December 2014)

tech/a said:


> You'd get an ' A ' as you at least had a go at reading it.




Thank you Tech/A. I have been following The Continuous Breakout thread.
https://www.aussiestockforums.com/forums/showthread.php?t=29142&page=2

I feel that I cannot make a contribution because my knowledge is so limited. Thank you for putting the work into that thread and this one. I have to keep re-reading this one as well. I think I might be wrong but not enough books, How to Guides, etc look at volume but tech/a launches into it immediately. This aspect should be emphasised first. I want to understand this volume aspect first before I look at trend lines or other aspects. I know that everything is all related but I feel a thread like this should be my Step 1. Please correct this statement if it needs correcting.


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