Volume: How can it be used in trading?

[tech/a]

Roland

Here is my take.

Firstly the very big picture---Tells us something already!
I'm preparing the now picture.

Daily chart

 

[tech/a]

My short term take.

Click to expand

 

[roland]

My short term take.

Click to expand

Well, the volume statistics do help make the chart more readable, but I am not seeing how it could help with predicting an outcome.

If the volume had not of dropped off at the double top on the end of the chart, then most likely we would have breached $0.50, and of course our volume indicator would have looked different.

We could look back into the chart to see what happened last time we topped, and we have a similar occurrance of a drop off in volume followed by a run to the support line.

Maybe CPL is too thinly traded for me to start with....

 

[roland]

HGG is an interesting comparison to CPL.

It's the opposite, rising volume to support the falling SP with a peak in volume at, or near the support level.

We fall off in volume at we approach resistance. No blow off this time. I would guess at a slight consolidation until a progression further past the resistance level.

 

[tech/a]

Well, the volume statistics do help make the chart more readable, but I am not seeing how it could help with predicting an outcome.

Not predicting anything just anticipating what could happen.

If the volume had not of dropped off at the double top on the end of the chart, then most likely we would have breached $0.50, and of course our volume indicator would have looked different.

But it has.

We could look back into the chart to see what happened last time we topped, and we have a similar occurrance of a drop off in volume followed by a run to the support line.

Maybe CPL is too thinly traded for me to start with....

We could and it looks like this.
Familiar?

HGG I see very differently I'm afraid to your analysis.
No room for guessing.
Get a hold of "Master The Markets" shown in the link above---it will be a great help.
Your reading of volume will literally be turned upside down.

HERE https://www.aussiestockforums.com/forums/showthread.php?t=13804

 

[roland]

mmm, I think I may be looking at volume incorrectly.

Correct me if I am wrong, but large volumes are not likely to be the general market. I have been looking at volume as being a collective of general traders

Aha, we are seeing the market makers ! (if that is the right term)

 

[Boggo]

This is an example of what my basic Metastock scan is looking for, a volume uptrend associated with a possible breakout.

(click to expand)

 

[roland]

Am I reading this correctly:

HGG is looking to have a high volume day. A volume spike of around 10% of an average day has pushed the SP to a 3 month high. Would this be an attempt at distribution?

The SP has been rising on decreasing volume indicating a drop off in demand - is this correct? We now have the smart money pumping the high ready for a bail out and reversal.

I thought I was understanding volume until I started to write it down...

 

[roland]

Also, it's a bit hard watching what is happening with volume when some large trades don't show up in the queue. 575,000 sold at $2.40 without affecting the depth ?????

 

[Trembling Hand]

Also, it's a bit hard watching what is happening with volume when some large trades don't show up in the queue. 575,000 sold at $2.40 without affecting the depth ?????

Dark pools.

:vader:

 

[rnr]

Am I reading this correctly:

The SP has been rising on decreasing volume indicating a drop off in demand - is this correct?

Roland,

Decreasing volume together with increasing prices indicates a drop in supply!

 

[rnr]

Also, it's a bit hard watching what is happening with volume when some large trades don't show up in the queue. 575,000 sold at $2.40 without affecting the depth ?????

Roland,

Would suggest you have a look at the Course of Sales for HGG (make sure you click on more and then View all Trades).
I believe that any trade that has an XT in the Condition Code column is not reflected thru the depth screen you are watching. Refer to webIRESS help for a description of the Condition Codes.
Also interesting to see the number of trades done in succession where the volume traded is identical........very systematic without hitting the market with one larger order.

 

[WaveSurfer]

First VSA trade

I figure that even though FX futures vol is only a very teeny tiny portion of the market, there must be some people trading it who know what they're doing. LOL

Point A - Increase in volume on the breakout (pushing through supply??)
Point B - Here is my long entry (test/no supply is this correct?)
Point C - I chickened out and took my 5 tick gain :dance:

Stop was just below the test/no supply bar (a tick or 2 below it and I would have been out).

I think I get the picture, except for point C. I read it as a wide spread up bar closing well off the highs (sellers stepping in?).

 

[WaveSurfer]

Well, I guess this shows that I was a weak holder and was shaken out of a good position. The high volume that made me call it quits was in fact not high at all. Black oval is where it all was at before.

Ahh well, you get that. Lesson learned.

 

[roland]

First VSA trade

I figure that even though FX futures vol is only a very teeny tiny portion of the market, there must be some people trading it who know what they're doing. LOL

Point A - Increase in volume on the breakout (pushing through supply??)
Point B - Here is my long entry (test/no supply is this correct?)
Point C - I chickened out and took my 5 tick gain :dance:

Stop was just below the test/no supply bar (a tick or 2 below it and I would have been out).

I think I get the picture, except for point C. I read it as a wide spread up bar closing well off the highs (sellers stepping in?).

Well done WaveSurfer. I would have entered at point C and stuffed it up. I guess the secret was to hit it just as it broke the resistance line you had drawn..

 

[WaveSurfer]

Well done WaveSurfer. I would have entered at point C and stuffed it up. I guess the secret was to hit it just as it broke the resistance line you had drawn..

Thanks mate.

Yes you are right. I believe there were two clues/chances to get positioned early. The increase in volume leading up to and on the break (possible aggressive entry). And the final confirmation - testing the area of supply which showed absolutely no selling pressure (conservative entry).

From my limited research so far, it appears that forex has a lot of shake-outs. I was just a victim of one of them lol

 

[Trembling Hand]

From my limited research so far, it appears that forex has a lot of shake-outs. I was just a victim of one of them lol

A bit of context is all you needed yesterday. Everything (FX, commods, equity) was green and taking out recent highs. In that type of market its a matter of buying pull backs and hanging on.

Top down trading fundamentals on a short term trading are much under utilised, especially in regards to short term analysis application. IMO.

 

[WaveSurfer]

A bit of context is all you needed yesterday. Everything (FX, commods, equity) was green and taking out recent highs. In that type of market its a matter of buying pull backs and hanging on.

Top down trading fundamentals on a short term trading are much under utilised, especially in regards to short term analysis application. IMO.

Great advice, thanks mate. I sort of came to the same conclusion after reflecting on it last night.

Fundies and I have not seen eye-to-eye as of yet. Lack of expertise on my part - no questions about that. I just struggle to decipher the useful from the useless.

 

[nomore4s]

A bit of context is all you needed yesterday. Everything (FX, commods, equity) was green and taking out recent highs. In that type of market its a matter of buying pull backs and hanging on.

Top down trading fundamentals on a short term trading are much under utilised, especially in regards to short term analysis application. IMO.

Good point TH,

Understanding the overall position & mood of the market is much overlooked by most short term traders.

Since I've been trading the SPI on an intraday basis I've also found most if not all traditional TA patterns that you can use on trading shares EOD just don't work and if relying on those set ups to trade you will get crucified.

 

[roland]

Is API in "Absorption" phase?

- at a >6 month low
- Point A on the chart, a shake out of weak holders and stop loss triggers - marked down to a low finishing on a high, large spread. (maybe not enough volume?)

- Point B, another low test

- C through to D, absorption

- Point E, shake down test, low volume, good spread, finish on a high.


Volume disappearing on the low tests - shake downs finished?