Hi @Sprout. I was introduced to volume a while ago and actually use it in many of my trading decisions.
(1) I use a volume footprint chart on the short term
(2) I use the Cumulative Delta line on the medium term
(3) I use a delta volume chart on the daily long-term timeframe
Volume imbalance footprint:
I experimented with the footprint charts that showed the "ask x bid" numbers, but my trading is way too fast to have to process that much info quickly. So this is what I have settled on. The yellow dot is the POC for the bar. (15 tick range bar)
On a per-bar basis, are the sellers or the buyers more aggressive? Perhaps a simple red/green bar chart gives much of the same info, but I have found that indeed, there is something here that is helpful. I have seen green volume bars where the regular bar is red. This means that buyers are beginning to emerge and I need to be careful with additional shorts.
Cumulative Delta:
About a year ago I discovered that cumulative delta chart, and found that it gave me good info about 75% of the time. The bigger the spread between the CD and the actual price, the more likely price was to move toward the CD. For example, in the NQ chart above, I see some bullish pressure. Notice that the overnight prices had a nice bullish run toward the CD line.
This line is nothing more that all the (hidden) numbers in the previous bar chart all added together. As long as a trader realizes that the big boys are wrong sometimes too, then this is a very useful line. I use it in a confirming/filter manner, not as a primary signal. (For those experimenting with CD, the On Balance Volume indicator is very similar.)
Daily Delta Volume:
This is a DAILY chart of the ES. I use the ES because it has the most volume by far. The daily chart does two things for me. (a) It lets me quickly see the Support and Resistance back several days, including the high volume node or Point of Control for each day (yellow dot). (b) It shows me on a daily basis the underlying bias of the big boys.
Summary volume thoughts:
I agree with you that volume analysis does provide additional info. Considering a standard down bar shows who won on that bar, the volume studies do give some advanced warning as to a potential reversal (or continuation!). Each trader must do what works for them individually, but I think it is worth it for each to experiment a bit with volume.
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