Volume: How can it be used in trading?

[Frank D]

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

I only posted in this thread because Tech/A commented on an increase
in volume at a particular level (resistance).

And his response was an increase in supply at resistance, which is stating the ‘obvious’.

My response was, 'buyers were in control' because of the ‘patterns’ in the market and ‘not the obvious’.

so no points to be added by posting non-volume strategies..

Fair enough, no more comments from me in this thread.

 

[tech/a]

I only posted in this thread because Tech/A commented on an increase
in volume at a particular level (resistance).

And his response was an increase in supply at resistance, which is stating the ‘obvious’.

My response was, 'buyers were in control' because of the ‘patterns’ in the market and ‘not the obvious’.



Fair enough, no more comments from me in this thread.

Frank

Your comments are as valid as any other contributor.
I have enjoyed our exchange and hope you continue to comment on this particular trade and continue with any further exchange.

Thanks.

 

[Boggo]

Frank

Your comments are as valid as any other contributor.
I have enjoyed our exchange and hope you continue to comment on this particular trade and continue with any further exchange.

Thanks.

+ 1

 

[tech/a]

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.

These comments and notes shouldnt be overlooked.
EXTREME low volume bars are a favorite of mine and will take some time later to post up some of what I have discovered.
They are infact an alert and indicator of VSA --- in context---No Supply or No Demand.
Good work Wysiwyg

 

[roland]

Following on with PLA.

Today saw another medium, but increasing volume day with a good spread. Closed quite weak. Good volume with a weak close nearing the resistance level of $1.10 - are we yet into absorption stage of weak holders?

The last attempt at breaching resistance had a much shorter consolidation period, so we may have a better shot this time, but if the volume is not there tomorrow - then I am worried that the weak close today may give us a down candle next session.

 

[Trembling Hand]

are we yet into absorption stage of weak holders?

What does that mean?

 

[roland]

PNA looks much nicer.

Slowly increasing volume with the last 2 x sessions on good volume pushing the SP through the resistance level of $0.54. Definate uptrend since 2nd week February looks to me to be a pretty fair chance of continuation.

Last candle finishing on the high for the day with slightly better volume than the day before.

My guess would be a slightly higher volume day tomorrow with a better than average spread finishing the day off from the highs but still in the green for the day.

 

[roland]

What does that mean?

Hi TH, not sure if I am being baited here, but the follow is an excerpt from Masters of the Markets from TradeGuider:

If you observe high volume accompanying wide spreads up, this shows that the professional money was prepared to absorb any selling from those locked-in traders who decided to sell – this is known as absorption volume.

I did pose the posting as a question as to whether this could be seen as absorption...

 

[Trembling Hand]

I did pose the posting as a question as to whether this could be seen as absorption...

But it fell from the open. I have never read Masters of the Markets from TG or any other VSA stuff but IMO something thats open at recent highs and fallen on largish vol is weakness.

I would of thought if the big nutz were "adsorbing" any selling the close would not have been as tardy?

 

[roland]

But it fell from the open. I have never read Masters of the Markets from TG or any other VSA stuff but IMO something thats open at recent highs and fallen on largish vol is weakness.

I would of thought if the big nutz were "adsorbing" any selling the close would not have been as tardy?

Good point, probably not enough volume to suggest big wig involvement anyway.

PNA does look better though

 

[tech/a]

Roland.
You need to revisit "Master the Markets" and pour through a few 1000 more charts.
Whats your seeing in PLA is massive selling.
You also need to look at overhead resistance at $1.10
Clearly this is an up thrust bar.Enthusiastic buyers started the day and Sellers certainly ended it.
If you are interested in this stock you would need to watch for testing and where the volume STOPS.
Good effort in having a go at it though.

PNA
The 6th sees clearly the bar you should be identifying as Absorption of supply.
Yesterday we didn't know that what we knew was that supply was coming in and resisting strongly at 54c There would have been no reason to expect anything more than resistance. As a Trader interested in this stock a conditional buy at say 55.5c would have been a play I would have considered.
(I'm not trading this). Had resistance stuck you would not have been filled.
Your initial stop would have clearly been 50.5c,But again if it was me I would be seriously moving my stop immediately to 53.5c on any close above the high of today.
So we have a clear breakout on even bigger volume with an initial potential of testing the high of 7/1 at around 63-65c
R/R is a bit measly.

 

[roland]

How does one identify professional volume? It's quite easy to assume that any large volume spike is professional volume, but on news, the hoard can put together a fair amount of volume.....

I'm just studying daily histograms of volume versus time and volume versus price to see if anything clicks in my head

 

[tech/a]

Roland.

My personal view and one held by a few others is that Identifying professional money through volume in the Aussi market is similar to watching pigs fly.
Other than say the top 50 ASX US and European markets Futures and Forex even attempting to identify Professional money is a joke.

Does it matter that you cant identify "Professional" Money clearly in the ASX----NO.

 

[roland]

Roland.

My personal view and one held by a few others is that Identifying professional money through volume in the Aussi market is similar to watching pigs fly.
Other than say the top 50 ASX US and European markets Futures and Forex even attempting to identify Professional money is a joke.

Does it matter that you cant identify "Professional" Money clearly in the ASX----NO.

Watching tick trades and the associated volume, it is interesting to note what some of the larger parcels are doing. Can one assume that larger parcels are placed with more expertise?

For example with GRR just now, there is a parcel of 85K gone through at $0.61 - that at least shows some confidence (in their mind) that this level will hold.

 

[tech/a]

Watching tick trades and the associated volume, it is interesting to note what some of the larger parcels are doing. Can one assume that larger parcels are placed with more expertise?

From the view that they know what THEIR plan is quite possibly.
To assume that THEIR plan is the same as yours and that you can ride on the back of single placements is dangerous. Looking longer term than a few minutes we must see how the instrument reacts to volume and just as importantly where there is extremely low volume AFTER extremely high volume.He lies a key to the future.

Im trading GRR so will place up some comments shortly.
When I see something on the chart worth mentioning relative to your observation.

If your T/H you look for volume and ride it---not that easy and only a few are expert at it.(Seconds or minutes max).
Not for me---its way to intense for me.

 

[Trembling Hand]

Can one assume that larger parcels are placed with more expertise?.

NO!!

If the magician shows you his hand then his not a very good magician is he.

If your T/H you look for volume and ride it---not that easy and only a few are expert at it.(Seconds or minutes max).
Not for me---its way to intense for me.

Tech I wish I didn't have to have this conversation every time. I do not chase big volume.

I FADE IT


mostly

 

[roland]

Watching tick trades and the associated volume, it is interesting to note what some of the larger parcels are doing. Can one assume that larger parcels are placed with more expertise?

For example with GRR just now, there is a parcel of 85K gone through at $0.61 - that at least shows some confidence (in their mind) that this level will hold.

The chart looks to be telling me that some big dude dumped the stock to lock in profits on a down down day, lots of little potatoes got scared and followed, another big dude - maybe even the same big dude came along and said that's a good price and snapped them up.

Now the potatoes are getting back in.

 

[Frank D]

Sorry I had to Butt in again

GRR.....

Breakout of the 3month cycle in January has completed the move into April’s highs.

IMO this puts the stock at ‘risk’ during this cycle:- break & extend pattern complete.

Ideal pattern for the next trend UPWARDS would be to see the stock come back down into .39-49cents….

Stabilizes around the 50% level during April

And then continues higher from MAY using the MAY monthly 50% level back towards higher highs in the 3rd Quarter.

That’s how I would treat the stock at this point, and that's only a
Technical opinion as I have no idea about the fundamentals of the stock.

 

[roland]

Now this may seem to be a lame comment, but what is the point of the action with GRR and many other stocks that dip and recover on down days?

Is it really a shake out of weak holders?

Seems like a lot of trading for no purpose.

 

[roland]

Sorry I had to Butt in again

GRR.....

Breakout of the 3month cycle in January has completed the move into April’s highs.

IMO this puts the stock at ‘risk’ during this cycle:- break & extend pattern complete.

Ideal pattern for the next trend UPWARDS would be to see the stock come back down into .39-49cents….

Stabilizes around the 50% level during April

And then continues higher from MAY using the MAY monthly 50% level back towards higher highs in the 3rd Quarter.

That’s how I would treat the stock at this point, and that's only a
Technical opinion as I have no idea about the fundamentals of the stock.

Thanks for the input Frank, I'm up 60% with GRR but have been starting to feel like I should be taking profits.