# Volume attracts volume



## Synergy (30 November 2010)

This is a little saying I've read a couple of times in various places, but what does it really mean?

Most of us will recognise that If a candlestick on a chart has high volume, there is probably some sort of heightened interest in the stock for whatever reason. This high volume attracts attention, and in turn maintains or further increases the volume over coming days. Not always the case of course, but I would say that is where the saying comes from.

Then I was thinking...
Does it also apply to on screen orders?
Will a large on screen buy order attract other buyers, or a large seller? Quite possibly. It would allow the seller to exit his position with minimal price movement.

A large sell order above the bid will likely cause others to sell, possibly at a lower price. But, my gut feel/experience is that it will not normally attract large buy orders. 

Have others noticed this? Large buyers attract sellers but large sellers don't attract buyers?

What is the reasoning behind this? 1 person wants to sell... and the price tumbles. Does it simply have to do with the timing of events? Big buy orders normally come when the price is rising, people want to buy. Big sells come when the price is falling, so create further selling pressure.

Or is there a perception that large sellers 'know best'? I feel that often small sellers will be passed off by the market as uninformed, or inexperienced. I often see a large seller put an order on market and it's as if every other holder thinks 'that guy's selling, something must be wrong'. Even potential buyers run scared.

Is there a general perception that current holders of a stock know better than those looking to buy?

Bit of a random ramble.


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## colion (1 December 2010)

There are volume followers and some appear to be successful.  Googling will undoubtedly turn up some but here is one website that I know of:  http://volumedynamics.com/forums/index.php?showtopic=939


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## tech/a (1 December 2010)

Volume one of my favorite topics.

There are 2 extremes in volume I look for.
The obvious --Massive volume
The not so obvious---extremely low volume

This of course has to be taken in context to the price action over X periods---regardless of time frame.

Those with the capability of moving an instrument wont be guessing what punters are thinking. they will have very set plans of what they are doing with their volume.

Price will only rise if
Supply is overcome by demand
Supply dries up.
Price will only fall if
Demand is overcome by supply
Demand dries up.

The trick is to be able to ACCURATELY (Not guess)
if the volume is Buying OR Supplying.
This can be done with better accuracy than 50/50 by reading the subsequent volume within each bar in that period.
This of course is done with analysis of range---Open/high/low/and close.
Support and resistance.

When trading Index futures R/T intra day thats all I use.
There are some interesting Vids on You Tube with some good exponents demonstrating how they operate.


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## opulence (1 December 2010)

tech/a said:


> The trick is to be able to ACCURATELY (Not guess)
> if the volume is Buying OR Supplying.
> This can be done with better accuracy than 50/50 by reading the subsequent volume within each bar in that period.
> This of course is done with analysis of range---Open/high/low/and close.
> Support and resistance.




I'm not sure I understand what you mean there. I've always been intrigued by volume analysis because surely for every transaction there is both a buy and a seller which puzzles me when people say "high volumes of selling etc".

Are you saying that to determine if the volume is Buying that there were Bids in the market that were filled and that if the volume is Supplying there were asks in the market that were then filled? Surely this is better reflected in the price action? I'm all confused.


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## tech/a (1 December 2010)

opulence said:


> I'm not sure I understand what you mean there. I've always been intrigued by volume analysis because surely for every transaction there is both a buy and a seller which puzzles me when people say "high volumes of selling etc".
> 
> Are you saying that to determine if the volume is Buying that there were Bids in the market that were filled and that if the volume is Supplying there were asks in the market that were then filled? Surely this is better reflected in the price action? I'm all confused.




It's worth understanding
my hard drive fried last night so I'm using my I phone
I don't have charts
I will try to pit one up tommorow but have a bugger of a day out of the office till 4


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## opulence (2 December 2010)

A chart that helps to show effects of volume?


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## tech/a (4 December 2010)

opulence said:


> I'm not sure I understand what you mean there. I've always been intrigued by volume analysis because surely for every transaction there is both a buy and a seller which puzzles me when people say "high volumes of selling etc".
> 
> Are you saying that to determine if the volume is Buying that there were Bids in the market that were filled and that if the volume is Supplying there were asks in the market that were then filled? Surely this is better reflected in the price action? I'm all confused.




Maybe this thread will help
https://www.aussiestockforums.com/forums/showthread.php?t=19831&highlight=Volume


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