Recognising Volume - opportunity or trap?

[tech/a]

Re: Recognising Volume-----opportunity or trap.

Free in E book form here.

http://www.tradethetruth.com/downloads.html

 

[Synergy]

Re: Recognising Volume-----opportunity or trap.

Cheers Tech, its much easier with a bit of a walk-through like that. It makes sense so far, but i'm not feeling any ability to predict the future jsut yet!

Keen to see how it progresses.

 

[Awesomandy]

Re: Recognising Volume-----opportunity or trap.

It looks to me as a healthy pullback from the run, with relatively less volume than the few days before. There's possibly some support at around 5.9c, as it seems to me that the sp stayed around there for a little while on the way to the high. It's also about the halfway from bottom to up as well, so I would think of that as a possible re-entry point, depending on other stats as well. If it bounces, I think there's a possibility of a new high. Otherwise, the uptrend would be invalid, and further downside could mean we are back to square 1.

 

[CFD]

Re: Recognising Volume-----opportunity or trap.

Free in E book form here.

Thanks for that, a version I can print. I can't read that much on screen.

 

[CanOz]

Re: Recognising Volume-----opportunity or trap.

but i'm not feeling any ability to predict the future jsut yet!

.

think in probabilities, not predicting an outcome.

 

[tech/a]

Just to come upto speed on this trade.

From the low which showed good support at 59c 15 bars back.
11 bars back was my buy bar at 6.3c.
This trade may or may not work out.Support is 5.9-6c Resistance is coming in at 6.8/6.9c on a regular basis.(This is a 180 min chart).

At 5.8c I'm out.
Whats keeping me in the trade is the higher volume on up bars 13 and 11.
However selling has now come in at bars 345 and 6 so I'm left with little confidence after a good setup at the 50% fib level.

 

[CFD]

In response to your last chart, let me first say that I need to learn VSA as to my own understanding and I guess we are not about to see eye to eye any time soon (and let me acknowledge that you make more from it than I do).

I was not expecting this to work on such a cheap (5c) stock, so I was watching with interest. I also note that you obviously didn't agree with a post I made a few months ago about TG's colour coding of volume bars. However to my mind a bar that opens near the previous close, has a wide range up, closes well above its open (and previous close) on high volume is not a supply bar. ie a bar does not have to close right on its high to be a demand bar. (Especially when it occurs near support levels.) Surely there must also be neutral bars and others where the most appropriate reading is "stuffed if I know".
Edit: IMHO

That said I see nothing wrong with your trade and it still looked the goods, unfortunately many of my trades suffer the same fate, they get hit by a runaway train (the dow doing a 2% to 3% turnaround over night) and get stopped out.

 

[motorway]

That said I see nothing wrong with your trade and it still looked the goods, unfortunately many of my trades suffer the same fate, they get hit by a runaway train (the dow doing a 2% to 3% turnaround over night) and get stopped out.

The smaller the moves You trade
Will tend to involve you with smaller time frames

( note I do not trade time frames but moves that unfold across time frames )

NOW every magnitude has magnitudes within it

SO there are traders on those smaller moves making liquidity for the traders
on the larger moves..

Except when Your are operating at the smallest end of the scale then
there is no one below and often nothing below

The gaps and discontinuities are a given.........

Gaps occur when liquidity is withdrawn
To trade moves that unfold intra day
requires much more anticpation..
You have to get in and out
before the lquidity vanishes

Out on the weakness in the upbars
In on the strength in the downbars

( Think through and past the bars )

But on a magnitude that is useful and tradeable

Again I do not trade daily weekly or monthly time frames
I aim to catch moves of a certain magnitude
By anticipating markup and mark down

the smaller moves teach You that in a sense trends do not exist
By the time it goes up or down
There is no one left to buy or sell to..

inventory is simply passed between strong and weak hands
and markup and markdown follows automatically and often quickly.

CFD You are touching on a very important point

It is in trying to follow trends that weak hands buy the bulges and then
a train hits them..

Using trends properly is a different thing..


hope that is useful
motorway

 

[motorway]

--------->The more important are the traders trading on the largest magnitudes.

When they withdrawn from the market ( and they often do )

You are left finally with tic traders buying and selling to each other......BUT all at the same time and all on the same side of the spread....

So smaller magnitude traders need a healthy ecosystem...

A market with a diversity of traders regarding time horizons......

The largest magnitude traders ( years ) .......Don't !...They don't even need a market at all...........Different needs all across the spectrum........

On all magnitudes if you come to an understanding of weak and strong hands

everything else follows.......... esp $$$$

motorway

 

[CFD]

~~
hope that is useful
motorway

And tactfully worded, as always.

 

[cuttlefish]

cheers tech, interesting exercise to look at a chart alone without knowing anything about the stock. I can see the logic for your entry which seems sound. I've gotten a bit confused about your bar labelling when describing why you hadn't exited on the first break down - do you mean bars 11 and 13 when counting backwards from the end?

Having the stop where you do, do you see risk of slippage on the exit given its just below a significant support level? I'm also curious as to whether you use automated stops or examine the price at the end of each time period and use a manual stop.

Do you see the possibility for exit slippage as a risk to overall plan profitability when trading a stock like this that has had high volumes traded after a historically lower period?

 

[Millsy]

Just to come upto speed on this trade.

From the low which showed good support at 59c 15 bars back.
11 bars back was my buy bar at 6.3c.
This trade may or may not work out.Support is 5.9-6c Resistance is coming in at 6.8/6.9c on a regular basis.(This is a 180 min chart).

At 5.8c I'm out.
Whats keeping me in the trade is the higher volume on up bars 13 and 11.
However selling has now come in at bars 345 and 6 so I'm left with little confidence after a good setup at the 50% fib level.

Fib levels??? tut tut, and i was enjoying this thread as well.

Seriously tho, been trying to get to grips with vsa myself for quite a while now.

 

[tech/a]

Fib levels??? tut tut, and i was enjoying this thread as well.

Meaning?
Fib levels are an integral part of analysis.

 

[Millsy]

Meaning?
Fib levels are an integral part of analysis.

They probably are i didnt mean to offend.

I just find fib levels kind of good after the fact like other TA. Theres probably no reason why you cant trade a profitable system around them tho, if they work for you then......

Once mastered tho i do think price and volume is all you really need to know.
Fib levels, moving averages, moon cycles or whatever will become irrevelent.

 

[ithatheekret]

I've only ever considered volume when calculating VWAP , (volume weighted average price) , the semaphores are too confusing to decypher any coded information held in intraday trading for my attention and are filed under market noise along with any numbers , especially statistics that are spurted out by administrations . Hence I feel safer using volume as a measurement and not a catalyst to entry , especially when right now we are finally seeing risk being priced into the spreads . I did see a mention here of price and volume being all one needs to know ........... words fail me there , I'm absolutely gobsmacked ........

......................
not meaning to be forward , but.....

price and volume alone are like trying to read tea leaves out of a coffee cup , one must take into consideration that movements within the market are not constant , the rate of exchange varies , so too the speeds of the exchanges , hence the flaw in using price and volume alone , there are other variants that need to be incorporated into calculations .

 

[prawn_86]

there are many different ways of making a profit in the share market and each to their own. If price and volume are all some people need good on them.

It also depends a lot on timeframes i guess.

Point being: there is no 'right' way

 

[ithatheekret]

Of course , that's what makes the market go round , but with price and volume , I would first have to consider a stop loss and if it's forex an attached trailing stop on the stop loss .

 

[motorway]

Lets assume that Mr Smart Money wants to profit from an anticipated move.

What will reveal his intention ?

That those who know more about it than the observer cannot conceal their future intentions regarding it

Why can their future intentions not be concealed ?

because they have to BUY or SELL first...

They can not BUY or SELL after..

This naturally means VOLUME

And

Their plans will be revealed by the stock's subsequent action

So Volume given context by the subsequent action ( Price movement that results ) in the context of the action prior...

Is impossible to manipulate...

Everything else can be a tool of manipulation

mkts are a double auction process...
allows for all sorts of games..
except with volume ( on balance )

what time frame does Mr Smart Money operate on ?

All time frames ... The Volume bars are His footprints...

Volume is very important
But it is not everything..
The volume that matters is not necessarily the volume that accompanies the price action.
But is the volume that leads the price action
The volume that stops is often ( but not always ) the volume that starts...

Fib levels have No significance other than as useful measures of relative strength and weakness... The main reference point is 50%..

motorway

 

[Millsy]

Now ive started something.

Some time ago i witnessed a bar and volume chart forward and reversed engineered quite accurately, with a detailed commentary on all the shakeouts fakes etc etc.
Of course you don't need to know all of this to be profitable.

 

[tech/a]

Fib levels have No significance other than as useful measures of relative strength and weakness... The main reference point is 50%..

Absolutely.
You must know where you are in a trade before you take it.
I find Elliot helpful here.
I also find fib helpful in placing myself in a position to take advantage of a setup.
38.2% usually occurs in a continuation of a wave 3.
50% in a retracement of a wave 4
61.8% commonly in a wave 2
1.0 commonly a measurement of a wave 1 to 5
1.618,2.0 also common wave 1 to wave 3 extensions.
When trading short term I can find confirmation at these levels from other analysis particularly VSA to take or terminate a trade.

RANGE and VOLUME rather than price play a huge part in telegraphing a short term trade in all markets.

Of course you don't need to know all of this to be profitable.

I would argue that you can be much more profitable if you do know how to read theses.