Volume: How can it be used in trading?

tech/a · 31 March 2010

Frank D said:
Volume is subjective unless it’s being optimized with something else.

Why optimised?

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.

You cant know anything with certainty in advance other than death and taxes.Personally I can anticipate price action through volume and price action itself.

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.

Frank marking a likley 5 day/Weekly/monthly/Quaterly or Yearly anticipated high or low and 50% level hardly guarentees accurately predicted prices.

Right now with the above analysis it is biasing toward long but with a caveat over a possible short move.
Neither will be clear until after the fact---hardly predictive!

As for THIS trade for me I'm still on the fence waiting.
The 20 minute chart is giving me a low risk long opportunity.
Back in a minute with the chart.

tech/a · 31 March 2010

20 min GBG chart

Frank D · 31 March 2010

tech/a said:
You cant know anything with certainty in advance other than death
and taxes.

You won’t know when you'll die unless you kill yourself. And not
everyone pays the same taxes each time. However, the probability of
them both happening is extremely high. (100%)

And I didn’t say accurate prices, I said Time.

Time is known in advance:- precisely and can be accurately predicted.
Each timeframe ends and begins with precise accuracy. (100%)
There’s no deviation in its accuracy whatsoever.

All I’m interested in is Support/resistance and likely trends:- risk &
reward strategies, and 'probability' associated with those levels.

As most probability and risk/reward scenarios are associated with Support/resistance & trends:-known patterns in advance

I happen to use Time to define dynamic support & resistance & trends.

tech/a · 31 March 2010

Frank D said:
You won’t know when you'll die unless you kill yourself. And not
everyone pays the same taxes each time. However, the probability of
them both happening is extremely high. (100%)

And I didn’t say accurate prices, I said Time.

Time is known in advance:- precisely and can be accurately predicted.
Each timeframe ends and begins with precise accuracy. (100%)
There’s no deviation in its accuracy whatsoever.

All I’m interested in is Support/resistance and likely trends:- risk &
reward strategies, and 'probability' associated with those levels.

I happen to use Time to define dynamic support & resistance & trends.

Frank you determine support and resistance on an algorithm based on past price levels then place it from the high and low of that TIME frame.(plus a little more but wont go into it if people are interested they can pay for your book as I did)---but you know I know how you calculate it.
Its a good calc.

Your not using time for anything but a periodicy definition.
Your probability hasnt been tested (as far as I'm aware) but is (as defined by you) a long term personal observation.
I dont have any problem with any of the above but to say your "Using" time is stretching the definition of usage---in my view.

As most probability and risk/reward scenarios are associated with Support/resistance & trends:-known patterns in advance

They maybe known but will not be proven.To say that you know with ANY certainty other than 50/50 is impossible---unless of course you have statistics (Not personal observation) which support your insistance that your support resistance and trends in any given timeframe (time) can be predicted with any accuracy greater than 50/50.

Not having a go here but your analysis is no different to any other in that it is only a setup which has just as much chance of playing out than any other.
VSA/Elliott/Point and Figure/Conventional analysis.

Frank D · 31 March 2010

tech/a said:
Your not using time for anything but a periodicy definition..

Yes I am:- Support, resistance, trends, probability and Risk reward scenarios.

Whether trading long term trends or short-trerm daily patterns.

tech/a said:
your analysis is no different to any other in that it is only a setup which has just as much chance of playing out than any other.
VSA/Elliott/Point and Figure/Conventional analysis.

That’s interesting….

I’m yet to see any other method that provides a template as robust for support/resistance and trend identification.

A Dilernia Principle signifies a point or points of probability on
a subject, which allows for the formation of a rule or rules by
interpretation of the expectant phenomena of events that will be created
or could occur. In this case, the rules of entry are based on
significant support around the Quarterly 50% and double Monthly lows. (page 46)

Recent patterns in 2010 suggest that something written years ago is still
valid today:- double monthly lows (February) and Quarterly 50% level

And lets’ see if my expectation for the 2nd Quarter plays out.

And I already know my high probability patterns in advance using 'text
book' orderly patterns.

However, the market doesn't always operate as text book patterns, but I know what to look for.

tech/a said:
To say that you know with ANY certainty other than 50/50 is impossible---unless of course you have statistics (Not personal observation) which support your insistance that your support resistance and trends in any given timeframe (time) can be predicted with any accuracy greater than 50/50..

Wrong again….

I have stats:- go to chapter 5 and standard deviation techniques.

Over 10 years the market regresses within a 5-day pattern 63% of the time

That means I can place shorts and longs around the 5-day ranges and
know that 63% of the time it won’t break out, and on occasions provide
a rotation towards the 50% level of 8.5 to 14 points on the S&P (400-700US)

I also know when those odds increase:- around Weekly and monthly highs:- point or points of probability on a subject

And I haven’t included using 50% levels as entry levels during trends until 'lines of least resistance' are reached.

If you think my work falls into the same basket as VSA/Elliott/Point and Figure/Conventional analysis you are sadly mistaken.

tech/a · 31 March 2010

Frank D said:
Yes I am:- Support, resistance, trends, probability and Risk reward scenarios.

Whether trading long term trends or short-trerm daily patterns.

Frank all your doing is extending a line from a point forward and anticipating price to move toward it /resist or be supported at it.Its harly using time.
I could argue that if price remains above a 34 day line drawn as an ema of price then I am using time.
Hardly different to yours.

That’s interesting….

I’m yet to see any other method that provides a template as robust for support/resistance and trend identification.

I dont know the rest of the world does ok without your method.There are many swing traders who do well without knowledge of your principals.
Your support and resistance fails just like most others its certainly not fool proof.
Oh and the reason your trends look so orderly is you have standardised Bar range to 22 pts.
Standardise anything and thats what you'll get a nice 45% ----looks good though.

A Dilernia Principle signifies a point or points of probability on
a subject, which allows for the formation of a rule or rules by
interpretation of the expectant phenomena of events that will be created
or could occur.

Are you sure you dont have a penchant for politics---this is Brilliant!

expectant=anticipated

In this case, the rules of entry are based on
significant support around the Quarterly 50% and double Monthly lows. (page 46)

Click to expand...

Fair enough a point of analysis which will be proven correct or incorrect---so if trading by your principal would you be waiting for confirmation or trading into or away from this?

Recent patterns in 2010 suggest that something written years ago is still
valid today:- double monthly lows (February) and Quarterly 50% level

No different to a statment of "divergence has shown to be a good indicator in the past and still would be seen as a good indicator now and in the future"

And lets’ see if my expectation for the 2nd Quarter plays out.

And I already know my high probability patterns in advance using 'text
book' orderly patterns.

However, the market doesn't always operate as text book patterns, but I know what to look for.

We all look for different things you look for your things and I mine we both believe we read our charts and take action based upon high probability setups that we know from testing or observation to be "High probability"
Our initial risk and then trade management takes care of the rest.

Wrong again….

I have stats:- go to chapter 5 and standard deviation techniques.

Over 10 years the market regresses within a 5-day pattern 63% of the time

That means I can place shorts and longs around the 5-day ranges and
know that 63% of the time it won’t break out, and on occasions provide
a rotation towards the 50% level of 8.5 to 14 points on the S&P (400-700US)

I also know when those odds increase:- around Weekly and monthly highs:- point or points of probability on a subject

Ive not seen any papers from academics who have tested your claims rigorously---simply stating a statistic doesnt make it factual---not to me at least.

And I haven’t included using 50% levels as entry levels during trends until 'lines of least resistance' are reached.

Again if there are rigorous methods which support the claim that this inclusion further increases reliability Id love to see them.
Lines of least resistance--what are they!

If you think my work falls into the same basket as VSA/Elliott/Point and Figure/Conventional analysis you are sadly mistaken.

Yes quite true.

tech/a · 31 March 2010

Chart update Daily GDN----worth following.

Trembling Hand · 31 March 2010

tech/a said:
Chart update Daily GDN----worth following.

GBN = GBG

roland · 31 March 2010

Hey Tech, what do you read into GRR?

A steady and slow increase in SP on very low volume. Had a couple of very high volume days earlier in the month - the Pro's accumulating??

If the Pro's have accumulated I suppose we could expect a high volume day in the future where they will offload.

There was a huge range spike about a year ago at this level - but no volume to read anything into.

tech/a · 1 April 2010

Trembling Hand said:
GBN = GBG

Dyslexia

I'm trading GRR.
Still looks strong to me.

Frank D · 1 April 2010

GBG:- Weekly bars

As I mentioned yesterday:- a breakout of the highs of the previous
month will normally continue towards the highs on the next month.

In this case April:- 1.32-36

Current resistance in March @ 1.27 disappears at the end of today.

Around April’s levels the risk increases, because the short term
breakout pattern will complete, but it doesn’t mean the price will
reverse down.

It’s simply a completion pattern:- break & extend pattern during a
Quarterly cycle from 1 month into the next.

The 2nd Quarter Target remains 1.48

tech/a · 1 April 2010

Frank D said:
GBG:- Weekly bars

As I mentioned yesterday:- a breakout of the highs of the previous
month will normally continue towards the highs on the next month.

In this case April:- 1.32-36

Current resistance in March @ 1.27 disappears at the end of today.

Around April’s levels the risk increases, because the short term
breakout pattern will complete, but it doesn’t mean the price will
reverse down.

It’s simply a completion pattern:- break & extend pattern during a
Quarterly cycle from 1 month into the next.

The 2nd Quarter Target remains 1.48

Thanks Frank thats clear.

Minor I know but

Current resistance in March @ 1.27 disappears at the end of today.

End of yesterday?

So what your saying is the line drawn using the TIME of March now extends using the line derived around the March high into the TIME of April.Which has its own TIME resistance of ----

Have I got that?

Frank D · 1 April 2010

tech/a said:
End of yesterday?

So what your saying is the line drawn using the TIME of March now extends using the line derived around the March high into the TIME of April.Which has its own TIME resistance of ----

Have I got that?

Yes to the 2nd part.

First part...

Yes March has ended, but I always treat the market using a
weekly timeframe based on the Weekly timeframe close, which is still
inside March.

Therefore I would still view the market is going slightly higher, but it can
still remain 'capped' under the March highs today.

If today rallies on the close and closes much higher, then the upper target
in April will be higher.

roland · 6 April 2010

Volume spike on LYC today looks like a buy signal.

Big volume spike, off near lows on a wide spread, finishing on the day's highs.

Gotta be a good sign

tech/a · 6 April 2010

My take on LYC.

While it is a good sign it is also one which comes at a point where timing
may not YET be the best.
There could be 2R in it currently---a bit of patience may see a setup where
5 or more R could be achieved.
Id be a little patient and will follow if you like.

I like the longer consolidation prior to this bar that the other noted.

weird · 6 April 2010

Find it interesting that FD is posting so much in this thread ... whatever his strategy is.

Volume is an interesting topic, yes many traders do trade without it ... so no points to be added by posting non-volume strategies.

Lets see how it can be used.

roland · 6 April 2010

A little glimmer of "Essence of Volume" with PLA - one of my sleepy holdings.

Thought I picked it last 29/1/2010 on a nice volume spike

Still held though ....

tech/a · 6 April 2010

"Essence of Volume"

Care to elaborate.

roland · 6 April 2010

tech/a said:
Care to elaborate.

a bit like sniffing the cork

Wysiwyg · 7 April 2010

Have been experimenting with low volume/low range for several days to come up with something that may be useful. Within the low vol./low range periods there are several opportunities to change criteria for experimenting. This is good for finding higher probability entry points. Knowing that any trade is only as good as the next bar.

Since Roland brought up LYC and PLA, I have two images that use low volume/low range markers as examples. The top half markers of each stock image are unfiltered.

Click on image to expand from blurry.

Volume: How can it be used in trading?

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