Basic Question About Volume

C

callmepaul

Hello,
With most of the volume being generated by computers, which operate without stopping, why is it that at the beginning and end of a training day you can see most of the volume as when most volume was manually generated? Is it that most of that volume is "human made" or are those algorithms also coded to most trades at the beginning and end of the day?

Sorry if this is too basic.
Thanks
 
Many don't want the risk of overnite, so many are entering buying/selling stocks/ETFs/Options and hedging, then there are heavier day traders who will do accumulate volume on one side of an Index like ES pre-market and in another Index or Financials take other side in more of outside of the normal prem/discount as first minute price can become more wild so as to put on a spread, I do this all the time programmed. Then there is small retail getting slaughtered as they kept stops in, then non retail traders simple trading off first bar of the day session. Plus there are those who are clever when they do arbs between ES and full S&P500 pit traded cause ES trades in quarters and S&P dimes. Then there are Long term and swing traders taking losses or profits or reversing.

I may have missed a couple, but you can see why the heavy volume.
 
Redneck said:
It the only way - pits are all but a bygone era
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Thanks. By this I meant that computers are the decision makers on most of the volume. I am not sure that is accurate but it seems to be the case. I was wondering then , why is it that computers make 'most' of their decisions at the end and the beginning of the session.

What Handle123 says makes lots of sense, I will study his answer.
Thanks for your time.
 
callmepaul said:
Thanks. By this I meant that computers are the decision makers on most of the volume.
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Your're Welcome Sir

Computers do not make decisions - they follow programs

Don't let them make you hesitant - they can be exploited like anything else



btw...,You're on a good track here - keep it up till it reveals itself to you

RN
 
callmepaul said:
Is it that most of that volume is "human made" or are those algorithms also coded to most trades at the beginning and end of the day?
More...

Higher volume is often generated early in the day and at the end.

However, I find volume analysis to be TOTALLY WORTHLESS.

Significant highs/low occur on both high/low volume... therefore, there is no value including volume considerations in trading plays. In fact, including volume in trading decisions actually hinders performance! (Volume surges are more akin to "emotional brain farts" than anything of analytical value.)

As a trader, your objective needs to be "in tune with PRICE"... PERIOD... not some interpretation of volume. You get paid when your play is "price correct", not "volume" anything.
 
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Scataphagos said:
Higher volume is often generated early in the day and at the end.

However, I find volume analysis to be TOTALLY WORTHLESS.

Significant highs/low occur on both high/low volume... therefore, there is no value including volume considerations in trading plays. In fact, including volume in trading decisions actually hinders performance! (Volume surges are more akin to "emotional brain farts" than anything of analytical value.)

As a trader, your objective needs to be "in tune with PRICE"... PERIOD... not some interpretation of volume. You get paid when your play is "price correct", not "volume" anything.
More...

Study volume engulfment.
 
Autodidact said:
Study volume engulfment.
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"Volume Engulfment"? Can't say I've ever heard that term before... ??

The one volume/price correlation I still recognize... is the "-90% off of the high" correlation.

Seems once an issue drops ~-90% from the high, there is a HUGE volume spike.... that is, longs (regardless of where they purchased during the decline) "can't take it any longer", and dump... while bargain hunters fade them.

Don't believe? Check out the charts.
 
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Scataphagos said:
"Volume Engulfment"? Can't say I've ever heard that term before... ??
More...


Obviously, applicable to context. Here are four random samples of volume engulfment.

VE.jpg
 
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