Volume Questions - from "Master the Markets"

Coming back to volume......

I have some questions in regards to 'relative' volume.

Obviously we can see if volume has spiked in recent weeks but for me I am a little less sure when comparing volume over a few days.
I think Tech/a mentioned something about bars being relevant for a period 3 days in terms of VSA (please don't quote me).

Is this the most important thing? For example:
11th Oct = 1,500,000
12th Oct = 2,100,000
13th Oct = 2,800,000

This would show a steady increase in volume. Depending on the type of up-move it could be said volume is building and the rise (result) may sustainable based on the volume (effort). A steady rise accompanied by this volume may be a good sign.

If however prior to this volume was trading around 5,000,000 or even 7,000,000; is the fact that volume has risen steadily from 1.5M to 2.8M a good sign? or because it is so low compared to the volume of the past few weeks, this increase means little?


I had no idea how to word this post, but the last paragraph is the question I am asking. I hope someone can understand what I am trying to say, because no doubt it didn't quite come out right.

In answer to your question above Pav.

Motorway has highlighted the key points to derive an answer

You maybe right or wrong
But what ever you are the "SUBSEQUENT RESPONSE" will dynamically and continually reveal more ( RDW analogies of a moving/motion picture like a film that unfolds )

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It is Just how long you take to adjust
How long it takes you to IDENTIFY

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Here is a working example that often occurs in my trading.
I will identify that something is happening it maybe exhaustion of a move.(SPI often)
I will place on a trade and move to B/E as soon as I can---its rare ill have a trade fall to stop from the get go but rare also for the trade to just power on in the direction Price action is indicating to me at the time of the first trade.

Its not un usual to close 2-4 trades before my trade gets moving and I can let it ride without concern for entry. ( 1 min Bars).
Can be true of any time frame.

AsIi have said many times
Keep placing yourself in front of the opportunity train and wait to be hit!

tech/a said:

If we look at the chart below TECM who is quite right in observation---would have lost a motzza of "potential profit" yet No More 4s
if he read it as positve cause---would have done very well.

View attachment 44867

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Tech, on the last chart you posted you asked a question about what happens next on the right hand side. I'm interested.

There is now weakness in the background - the bar at the previous high which thrust upwards but closed on its low with very high volume. After that price failed to make a new high and fell away. Now we have a ultra high volume up bar reaching into the previous area of selling. Although the last bar did manage to close on its high, I'd be wary of sellers.

Lone Wolf said:

Tech, on the last chart you posted you asked a question about what happens next on the right hand side. I'm interested.

There is now weakness in the background - the bar at the previous high which thrust upwards but closed on its low with very high volume. After that price failed to make a new high and fell away. Now we have a ultra high volume up bar reaching into the previous area of selling. Although the last bar did manage to close on its high, I'd be wary of sellers.

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So on the the next chart as we investigate VERY HIGH VOLUME bars at HISTORICAL HIGH LEVELS.

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This is what I've been asking myself now when looking for potential trades.

In terms of volume:

1. Is there excessive/very low volume?
2. Where is the stock in its lifecycle (including previous support/resistance)?
3. What is the behaviour of volume on up moves/down moves?
4. What is the effort v results?

Well there is NO resistance to the left of this chart
What you see is what you have.

So whats happening on the right hand edge?

tech/a said:

Well there is NO resistance to the left of this chart
What you see is what you have.

So whats happening on the right hand edge?

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A climax of buying;
Would expect prices to fail to sustain these levels

tech/a said:

Well there is NO resistance to the left of this chart
What you see is what you have.

So whats happening on the right hand edge?

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I would have also thought a buying climax. There is no overhead resistance so it looks like a top. There are no locked in traders selling.

mr. jeff said:

A climax of buying;
Would expect prices to fail to sustain these levels

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pavilion103 said:

I would have also thought a buying climax. There is no overhead resistance so it looks like a top. There are no locked in traders selling.

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The point Ive been making is that it
isnt as clear cut as youd think--reading volume.
The Trueisms---in particular
High volume high price = educated sellers selling to uneducated buyers are far from statistically significant.

SO
Are you sure??

tech/a said:

So on the the next chart as we investigate VERY HIGH VOLUME bars at HISTORICAL HIGH LEVELS.

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View attachment 44878

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Tech can you tell me what stock that is so I can look it up on my own charts.

TIA

tech/a said:

So on the the next chart as we investigate VERY HIGH VOLUME bars at HISTORICAL HIGH LEVELS.

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View attachment 44878

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Well now the move is looking parabolic and once again I would expect sellers. But having been wrong twice before, I'm likely to sit in front of the screen feeling depressed and asking myself - what are clues that volume is strength as opposed to selling?

On the first very high vol bar you could say that volume has entered after a long period of forming a base, signs of strength ahead?

Second very high vol bar - Very high volume closing on its high coming into an area of resistance. Maybe this was a good sign as you need high volume if you hope to overcome resistance?

Last very high vol bar - Volume has now fallen away to very low in comparison to the up bar. However, price hasn't fallen back much and is holding well. I could say go long at the top of the most recent low vol down bar, stop beneath the high vol up bar. But in reality I wouldn't trade it because I am obviously lost.

Edit: You posted more while I typed. I would have been stopped out (unless I only traded on the close of the bar). But I still hold that it looks ok for long... maybe.

TECM said:

Tech can you tell me what stock that is so I can look it up on my own charts.

TIA

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At the end of the exercise.
I cant give you an unfair advantage.

Lone Wolf said:

Well now the move is looking parabolic and once again I would expect sellers. But having been wrong twice before, I'm likely to sit in front of the screen feeling depressed and asking myself - what are clues that volume is strength as opposed to selling?

On the first very high vol bar you could say that volume has entered after a long period of forming a base, signs of strength ahead?

Second very high vol bar - Very high volume closing on its high coming into an area of resistance. Maybe this was a good sign as you need high volume if you hope to overcome resistance?

Last very high vol bar - Volume has now fallen away to very low in comparison to the up bar. However, price hasn't fallen back much and is holding well. I could say go long at the top of the most recent low vol down bar, stop beneath the high vol up bar. But in reality I wouldn't trade it because I am obviously lost.

Edit: You posted more while I typed. I would have been stopped out (unless I only traded on the close of the bar). But I still hold that it looks ok for long... maybe.

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Yes I agree with all said.

This is my point.

Those who are making the point---we need more history and more infront of us to be able to read accurately---are I hope being satisfied by the inclusions I have posted in the last 2 posts.

So is it getting easier?
Are punters more accurate?

So So far
1 not so sure
1 its topped?
Any more?

tech/a said:

At the end of the exercise.
I cant give you an unfair advantage.

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Ok that is fine but can you email it to me so that I can check it against my system just to see if I would still be in the trade not even looking at the volume. LOL emac.84@bigpond.com - be a sport LOL

Tech I am confused haha! But I understand your point.

With these high volume bars it would ring alarm bells for me and I would trail my stop very tight, particularly because the trade would already be in large profit in the above case.

If I get stopped out then no big deal, I can always reenter.

When I'm unsure about something I find it's often better to just get out, take a breath and reasses as more info becomes available.

TECM said:

Ok that is fine but can you email it to me so that I can check it against my system just to see if I would still be in the trade not even looking at the volume. LOL emac.84@bigpond.com - be a sport LOL

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All will be revealed here.
Have patience.
(Yes I understand a system will have an algo which will see you in our out of a trade like this.)
Techtrader would have been still in the trade.
But this is on Volume analysis and you had made a statement refering to reading of volume.So far that statement (In this limited example) has proven ---less than accurate.

Your not game to add an opinion?

Lone Wolf said:

On the first very high vol bar you could say that volume has entered after a long period of forming a base, signs of strength ahead?

Second very high vol bar - Very high volume closing on its high coming into an area of resistance. Maybe this was a good sign as you need high volume if you hope to overcome resistance?

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This is how ive seen the first two bars, although only had comformation of the second very high bar in the last charts and was a little stumped at the time when the second one was at the very right on the shot.
If I was in the trade at the time I would have stuck to it with a stop at the low of the (second) high vol bar.

If I was in the trade up till the last action I would have put a stop at the low of the reversal bar (red one that makes the high) and got stop out the next day.

As for what i think comes next, It may climb back near the highs and start to fade away and have too much selling pressure from the buyers at the top, but I wouldnt buy here but wouldnt short either just now, but would put it on a watch list for one.

Edit, If one or more big volume bars keep coming now then I do think its done. This chart is giving more questions than answers for me the more I stare at it. crazy action here at the top though.

Awsome chart, lesson and feedback here, this is why I love this site. Great work, and thanx for the effort.

tech/a said:

All will be revealed here.
Have patience.
(Yes I understand a system will have an algo which will see you in our out of a trade like this.)
Techtrader would have been still in the trade.
But this is on Volume analysis and you had made a statement refering to reading of volume.So far that statement (In this limited example) has proven ---less than accurate.

Your not game to add an opinion?

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Yes of course I'm game to add an opinion - I just have got other things more pressing to do than watch for every update. You should know by now that I'm no shrinking violet though you do seem to have it in for me but - too bad too sad.

I believe volume tells a good story but is not the sole indicator anyone with any sense would trade off - and I never once said it was.

That chart whatever it is is far from a normal chart - if there is any such thing as a normal chart. There have been a couple of volume spikes but not of great significance in the whole scheme of things and in isolation considering the other bars around them may well have just been a crossing. To tell that you would have had to go to the market depth at the time.

The earlier one where you started yesterday was very significant and would have seen me enter the trade provided all my other ducks were lined up and I was able to determine if it was a crossing which is not too difficult when you have the live data and current chart in front of you.

The second one would have seen me exit but as the volume dropped off and price continued up provided all my ducks were lined up again I'd have gone back in.

As I said I don't know what the chart is but I suspect all you are trying to do is to pick me to pieces because you had it in for me from day 1. Doing that is counter productive. I don't care but other traders may lose some benefit from that aspect of your attitude.

To be honest I don't know how to post a chart here but I have seen that theory borne out repeatedly over the last 20 odd years. Even recently a stock one of my brothers owned displayed that volume signal and I told him to sell it and lock in a great profit - he wanted more and of course down it came again. Some months later it gradually groaned its way up again to an even higher profit and spiked again so I told him to sell and he didn't. Now 6 months later it is worth less than he paid originally and he missed out on $$$$$$$'s profit as he could have had 2 excellent profits already locked in based on volume and my reading of the market depth.

Not my problem - but that was a clear case of volume being a give away but my urging him to sell was based on other factors as well but the volume was what hit me between the eyes first.

Anyway enought of that - one chart is not enough to dispute my statement and as I said no one should buy/sell off volume anyway - it is just something else to look at and in trading the only thing that is certain is that nothing is certain.

tech/a said:

Techtrader would have been still in the trade.

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I'd like to be still on it as well ..... particularly if you caught the run early

The high volume bar at "A" has been tested by the next 4 bars, the last of which was "B" (the next highest volume bar by a small margin)

ie. If those in late during "A" were not shaken out by "B" .... there has been enough consolidation volume to suggest it should continue higher.

If it breaks "A" to the upside with little resistance, it looks strong .... If it breaks the low of "B" with little support, it looks weak.

TECM said:

Yes of course I'm game to add an opinion - I just have got other things more pressing to do than watch for every update. You should know by now that I'm no shrinking violet though you do seem to have it in for me but - too bad too sad.

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You should re read my posts with regard to your self. Not one has been a specific attack at YOU.
Questions yes--generalities yes.---personal no.

I believe volume tells a good story but is not the sole indicator anyone with any sense would trade off - and I never once said it was.

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True AND I think you can in all cases.

That chart whatever it is is far from a normal chart - if there is any such thing as a normal chart.

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True but there are quite a few of these.

There have been a couple of volume spikes but not of great significance in the whole scheme of things and in isolation considering the other bars around them may well have just been a crossing. To tell that you would have had to go to the market depth at the time.

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Not crossings its a weekly chart!

The earlier one where you started yesterday was very significant and would have seen me enter the trade provided all my other ducks were lined up and I was able to determine if it was a crossing which is not too difficult when you have the live data and current chart in front of you.

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See above.

The second one would have seen me exit but as the volume dropped off and price continued up provided all my ducks were lined up again I'd have gone back in.

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Yes wise.

As I said I don't know what the chart is but I suspect all you are trying to do is to pick me to pieces because you had it in for me from day 1. Doing that is counter productive. I don't care but other traders may lose some benefit from that aspect of your attitude.

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Your not the only one involved in this site or this thread.

To be honest I don't know how to post a chart here but I have seen that theory borne out repeatedly over the last 20 odd years. Even recently a stock one of my brothers owned displayed that volume signal and I told him to sell it and lock in a great profit - he wanted more and of course down it came again. Some months later it gradually groaned its way up again to an even higher profit and spiked again so I told him to sell and he didn't. Now 6 months later it is worth less than he paid originally and he missed out on $$$$$$$'s profit as he could have had 2 excellent profits already locked in based on volume and my reading of the market depth.

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This is a case of trade management. If he had a management plan that he was/is comfortable with then this would not have occured to him--- or anyone else who suffers in decision.

Not my problem - but that was a clear case of volume being a give away but my urging him to sell was based on other factors as well but the volume was what hit me between the eyes first.

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Ok.

Anyway enought of that - one chart is not enough to dispute my statement and as I said no one should buy/sell off volume anyway - it is just something else to look at and in trading the only thing that is certain is that nothing is certain.

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Nothing is certain but the way we manage all our trades.
We anticipate moves and minimise losses while maximising gains.
Personally I think we can trade off any signal/s Individual OR multiple signals (Confirmations).
Even RANDOM entry.

I can post many examples of where the statement falls down and many where it is supported---but thats NOT THE POINT!