Volume: How can it be used in trading?

[tech/a]

My take.
API

 

[roland]

My take.
API

Hi tech, thanks for that - would you mind drawing in a couple of bars that would show me what absorption, followed by a positive reversal would look like

 

[WaveSurfer]

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.

Interesting you say that nomore. I have traded the SPI a couple of times now, only because I recognised certain patterns that I see in forex a lot. More so, the failed patterns which then turn and move in the "pattern forecast" direction. Bit like a shake-out I suppose. Still, I acknowledge and agree 110% with what you're saying there mate; and is the reason why I only play it with chicken feed (axis allows you to trade $1 ticks). Will not be committing some serious dough until I learn the way she moves (I do like the way she moves though ).

I was a little trigger happy with my first VSA trade. My usual trading style had me looking for short opportunities as it was near the top of a range. I was however anticipating a move up first, so I guess there was some confluence in my madness there.

Couldn't agree more on the market mood. My motto for very short term fx trades is to buy when it's up and sell when it's down. Not a sure fire method, but keeps me out of trouble a great deal of the time.

 

[roland]

Fielding for comments, if I have read GBG correctly.

A huge spike in volume hitting a 2 month high with a close below the days high. Would this be considered a "Buying Climax"?

Chart history (as shown) shows a quick drop off on most of these similar patterns.

What did I do?, Well - I sold at a profit expecting a fall off tomorrow.

What would you have done ?

 

[Wysiwyg]

Fielding for comments, if I have read GBG correctly.

What would you have done ?

I haven't read the billions of dollars deal announcement but if it reads as a solid deal for GBG I would have hung on. Not only charts in my assessments. Going to read the ann. now.

 

[chrislp]

It looks bullish to me but don't really like the excessive volume. Using my style of trading I would tighten the stop outside of todays price action & see what happens.

IMO it will go sideways or correct for a couple of days & continue. If however there is a bearish reversal & large volume tomorrow that to me would be the signal it has reached a high for the short term.

 

[Trembling Hand]

What would you have done ?

Waited to see what tomorrows bar looked like. Especially if I was holding already for longer than the last 2 weeks. If the trade was just a quick flip then, mission accomplished I guess.

 

[Whiskers]

Fielding for comments, if I have read GBG correctly.

A huge spike in volume hitting a 2 month high with a close below the days high. Would this be considered a "Buying Climax"?

Chart history (as shown) shows a quick drop off on most of these similar patterns.

What did I do?, Well - I sold at a profit expecting a fall off tomorrow.

What would you have done ?

Not sure I can read much or anything just out of volume, but there's an evening star on that last peak on the daily and weekly chart.

I think you played safe selling.

 

[Trembling Hand]

Not sure I can read much or anything just out of volume,

You should throw that rubbish EW out Whiskers, as well as the MACD, and jump on board the Volume game. Everyone is playing it now.

EW is so last century.

 

[Whiskers]

You should throw that rubbish EW out Whiskers, as well as the MACD, and jump on board the Volume game. Everyone is playing it now.

EW is so last century.

Not so fast, or I'll go mad... I'm getting sfa to hang my hat on from pure volume alone so far.

 

[Wysiwyg]

Not so fast, or I'll go mad... I'm getting sfa to hang my hat on from pure volume alone so far.

Apart from the drop back in price (usually) I can't read anything into a volume spike either. Sell on a spike for short term holders I suppose would be one way.

 

[tech/a]

What did I do?, Well - I sold at a profit expecting a fall off tomorrow.

So this wasn't a VSA trade it was a trade governed by fear.

There are 2 close resistance areas.
One where we are now and another "zone" at $1.20ish.
(zone---conglomeration of closes in a price area).

Need to wait for the next few bars.
What you will have if you were still in is an area which makes a good stop.
The Lower part of the gap.
Gaps are thrusts by buyers to get stock at whatever is available.
These holders generally stay around for a while.

Personally I would now be looking to see where the volume ISNT on a test of the high of the bar or the low.
Continuation on average volume will indicate lack of supply.

 

[tech/a]

Resisting at $1.25/28 area on high volume.

 

[Frank D]

Resisting at $1.25/28 area on high volume.

And what's that telling you?

 

[roland]

And what's that telling you?

A lot of sellers cashing out?

 

[tech/a]

And what's that telling you?

Well at a guess I'd be thinking plenty of supply at these levels.
From the hrly chart I'm seeing supply waning.
Waiting for that bar/s where the volume isnt.

Anything to add Frank?

 

[Frank D]

Looking at price action alone....


You have a breakout of the February highs (single month)

I would normally look at the price action and already factor in a ‘break
and extend’ pattern into higher highs into April.

You have a 3-week sideways pattern above the previous highs in
February and last week UP move in the month should extend upwards
into the next month.

This verifies the expectation based on the break & extend pattern
and moving from the previous month (February) into the next month
(April)

Personally I would think buyers are in control in this situation, but I
would hope the traders would already be long and not trading longs around
these highs.

Traders should use the previous month breakout as support and trade
longs and use the 3-week 50% level or 5-day lows as support during March.

If this spike upwards was occurring in April (higher highs) I would
lean towards the potential of sellers in control, especially if the price
action was on a Friday & Monday opens lower.

Treat each Quarter as a single cycle. Starting a Quarter (April) around
the highs increases the risk that prices can rotate back during the next
cycle.

And today is the last day of the Month & the Quarter.

This isn't based on Volume, as I'm not a fan of volume, just the price
action alone.

 

[ThingyMajiggy]

This isn't based on Volume, as I'm not a fan of volume, just the price
action alone.

I was going to ask what you thought of volume, as I have never seen it on your charts. Have you done testing or experimented with volume in the past? Or is it something you just haven't gotten on with? I find it interesting, you are probably one of the most accurate forecasters of the market I have seen, yet you don't use volume, I've always gone about it as though its something of upmost importance, but not necessarily it seems.

 

[Frank D]

Volume is subjective unless it’s being optimized with something else.

It doesn’t provide me with an edge, as I will never know when volume will appear, so why would I use something that can’t be known in advance.

The only thing that provides me with an edge is TIME, because it’s the only thing in the market that can be accurately predicted with precise accuracy.

In my opinion Time is the arbiter of probability and risk reward strategies, as it clearly defines the dynamics of the market and allows traders to know where they should or should not be trading in advance.

 

[tech/a]

Looking at price action alone....

Let me get a handle on your notes.

You have a breakout of the February highs (single month)

I presume you mean MARCH.

I would normally look at the price action and already factor in a ‘break
and extend’ pattern into higher highs into April.

You have a 3-week sideways pattern above the previous highs in
February and last week UP move in the month should extend upwards
into the next month.

Should --not known but anticipated.

This verifies the expectation based on the break & extend pattern
and moving from the previous month (February) into the next month
(April)

A bit confused here the previous month is March.

Personally I would think buyers are in control in this situation, but I
would hope the traders would already be long and not trading longs around
these highs.

Again an expectation not known.

Traders should use the previous month breakout as support and trade
longs and use the 3-week 50% level or 5-day lows as support during March.

A plan yes.

If this spike upwards was occurring in April (higher highs) I would
lean towards the potential of sellers in control, especially if the price
action was on a Friday & Monday opens lower.

Treat each Quarter as a single cycle. Starting a Quarter (April) around
the highs increases the risk that prices can rotate back during the next
cycle.

So there is a risk then that this may actually rotate off these highs.

And today is the last day of the Month & the Quarter.

This isn't based on Volume, as I'm not a fan of volume, just the price
action alone.

Fair enough I personally think the inclusion of volume with price action particularly WITHIN a bar can be a solid indicator.But like you a personal opinion.