Hello all, I have been trading for 3 months and have done decently well as my main strategy is to buy 20-100 contracts, look for a 3-10 cent price move, and collect premium. I want to learn why I am right when I am right and why I am wrong and how to do this in a professional manor, ANY advice, help about charting, volume trading would be invaluable. I use EMA, Parabolic SAR, and Pivot Points to day trade blue chip stocks and ETF's
Advice for a new trader on how to recognize trends through Volume
- Thread starter DAYMSTR
- Start date
Only thing i can think of is.
If price pauses in an area and volume increases say after a drop, then still got larger sellers but someone is also buying large to support, so good odds price will turn up, ofcoursevsometimes this doesnt atttract more buyers and the buy side runs out first so it will go lower.
If price pauses in an area and volume increases say after a drop, then still got larger sellers but someone is also buying large to support, so good odds price will turn up, ofcoursevsometimes this doesnt atttract more buyers and the buy side runs out first so it will go lower.
Use price for your main theory. Use volume just as a confirmation.
As you should know, volume doesn't necessarily follow the trends. For example, in currency markets you can see huge trends in holidays such as December 24th when the volume is really low. That's because the trends are the consequence of the equilibrium between offer and demand regardless the volume of the offer or the volume of the demand.
Nevertheless, in normal conditions, high volume accompanies the trends. That's why it is a good confirmation signal.
If you want to know a little bit more about trends' origins, take a look at the concept of "market microstructure".
And, in general, use volume, PSAR, price patterns or whatever just as part of a well-tested strategy, never as a crystal ball that shows you the future of the market.
Cheers!
As you should know, volume doesn't necessarily follow the trends. For example, in currency markets you can see huge trends in holidays such as December 24th when the volume is really low. That's because the trends are the consequence of the equilibrium between offer and demand regardless the volume of the offer or the volume of the demand.
Nevertheless, in normal conditions, high volume accompanies the trends. That's why it is a good confirmation signal.
If you want to know a little bit more about trends' origins, take a look at the concept of "market microstructure".
And, in general, use volume, PSAR, price patterns or whatever just as part of a well-tested strategy, never as a crystal ball that shows you the future of the market.
Cheers!
Thank all who responded, I am trying to get stocks right at the cash open like fyi, MSFT is down 16 cents pre-market so I am going to short it with a put with a really high (negative) delta and buy 40 contracts, get a 10 cent move, make 400 bucks. Any ideas on why everyone just doesn't do this?
You did trade during 3 months with low volatility and few surprises. So basically you haven't ever trade yet. You will understand by yourself why you are right or wrong after thousands of trades. Test your ideas during volatil markets and you will understand why winners just don't do what you are doing.
So best advice is :
trade small because you will lose all sooner or later.
This is the price to learn.
CM
%%
Yes ; because option sellers tend to be good traders. Besides i like dividends, if long; + real liquid markets, if short...........................................................................Good, wise question
I guess everybody else hates making money, that's why they don't do it.
I don't use volume for trend at all, but I do use it for lack of volume, if making a new high done on light volume is crucial information for me or making new lows-same.
You trading stocks? As they not referred to as contracts unless you trading stock futures at One Chicago.
Has anyone traded stock futures any?
You trading stocks? As they not referred to as contracts unless you trading stock futures at One Chicago.
Has anyone traded stock futures any?