Daytrading- Big Picture and Volume Analysis

Quote from EMC2Trader:

Thunder

I agree with you in the sense I that I have never used volume in a tape reading sense at all, and it can certainly be much more of a distraction than anything else.

I mean I can see when Im in a long trade and price is breaking through highs, how often there are thousands of contracts in the matrix on the ask side, but this has no bearing on how I look to exit or manage the trade at all.. (Although it goes hand in hand with how higher volume at higher prices is often a sign of acceptance of these prices not rejection, but there is still a tug of war from the patient buyers down below, so you dont know how things will play out, nor need to know, to trade sucessfully........

Therefore, the way I put it to use, is that price will continue higher until volume dries up higher, or the patient buyers regain control lower, and that is very much big picture stuff relative to the trading decsions I am looking to make..

So I hope I am not confusing two here......For me, Volume is a useful way to gauge bigger picture conditions for probability puirposes, and not as a micro way to manage trades.
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Just curious. How, exactly, would your trading differ if you disregarded volume in the manner you describe? Would it actually change where or how you enter and exit?
 
Quote from fearless9:

EMC2Trader
Price broke lower out of 1240 zone because the price fell and the trend is sell.

And your contention that price will head lower until it does'nt is again very accurate.

regards
f9
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Fearless,

Of course you are right relative to the timeframe you are looking at (Trend down- price will go lower till it doesnt), but here is the subtle difference.....I saw volume dry up at the bottom of bracket, therefore I was "expecting" a big move from initiating from this area.

This is very different from price that is now trending below this area, and I no longer have these same expectations.

Instead my expectations, are focused on how the patient sellers and buyers react as price moves down.

If the sellers cannot regain control on pullbacks, it makes sense that price will continue to swing lower, and I will continue to trade with the trend, and as soon as they gain control, I may want to cut back on taking trades with the trend from a probabaility standpoint, even though price can still move lower.

So I agree you can always look at a trend in your chosen timeframe, and simply stick with it, but if you want to try to be more selective in your trading, volume is one way to place things into a higher probability context
 
Quote from Thunderdog:

Just curious. How, exactly, would your trading differ if you disregarded volume in the manner you describe? Would it actually change where or how you enter or exit?
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Thunder

Very good question. Here are the ways this type of volume analysis helps me in actual day trading. Since I primaraly look to trade with the trend with a faily nmechanical way of generating setups, I will only take these setups if my bigger picture volume analysis and structure confirms. Therefore, without volume, and big picture structure I would be less selective with the same trade setups over an over again. NOw these trade setups have a context for me. A short set up breaking below a key bracket , is a lot different from a short trade setup after volume has dried up in a logical pullback to swing area.

Second, I use volume as a signal on how to trail my exits on the shorter timeframe. As long as volume is confirming my move on a winning trade, I stay with it. When volume is not confriming my trade, I look to tighten up my exits.

So, volume for me is used as a trade selction tool for higher probabilities, and as a way to manage winning trades from an exit standpoint.

I would be less selective trading without volume, and I would have a harder time gauging winning momentum trades when I am in them.
 
Quote from EMC2Trader:

Fearless,

Of course you are right relative to the timeframe you are looking at (Trend down- price will go lower till it doesnt), but here is the subtle difference.....I saw volume dry up at the bottom of bracket, therefore I was "expecting" a big move from initiating from this area.

This is very different from price that is now trending below this area, and I no longer have these same expectations.

Instead my expectations, are focused on how the patient sellers and buyers react as price moves down.

If the sellers cannot regain control on pullbacks, it makes sense that price will continue to swing lower, and I will continue to trade with the trend, and as soon as they gain control, I may want to cut back on taking trades with the trend from a probabaility standpoint, even though price can still move lower.

So I agree you can always look at a trend in your chosen timeframe, and simply stick with it, but if you want to try to be more selective in your trading, volume is one way to place things into a higher probability context
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Gracias

No matter what I try, I cannot milk more out of each price wave than I am currently getting without increasing my risk and having followed VA closely (or maybe not closely enough perhaps) nothing has changed.
As far as I am concerned your dry zones are reflected in my volume bars.

As I may have mentioned, I think that this game is won or lost before looking at the charts.
To offer an example I believe stops need to be a tic or two ahead of the large orders ( in the correct direction of course, but then direction and distance to run are the most important factors)

If you agree with this and think VA offers an edge, I would be more than receptive to your opinion.
I just cannot see how to get closer to the edge without jeopardizing the trade.

regards
f9
 
Quote from EMC2Trader:

Thunder

Very good question. Here are the ways this type of volume analysis helps me in actual day trading. Since I primaraly look to trade with the trend with a faily nmechanical way of generating setups, I will only take these setups if my bigger picture volume analysis and structure confirms. Therefore, without volume, and big picture structure I would be less selective with the same trade setups over an over again. NOw these trade setups have a context for me. A short set up breaking below a key bracket , is a lot different from a short trade setup after volume has dried up in a logical pullback to swing area.

Second, I use volume as a signal on how to trail my exits on the shorter timeframe. As long as volume is confirming my move on a winning trade, I stay with it. When volume is not confriming my trade, I look to tighten up my exits.

So, volume for me is used as a trade selction tool for higher probabilities, and as a way to manage winning trades from an exit standpoint.

I would be less selective trading without volume, and I would have a harder time gauging winning momentum trades when I am in them.
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Fair enough. The only question remaining (for me) is whether this volume analysis has actually enhanced your overall bottom-line trading performance. I generally understand the theory you have described, and I had my own theories in the past about volume as a meaningful variable. Unfortunately, in my own case, the theory did not pan out all that well in tangible dollar figures. And so, to restate my question: How would your recent perormance have compared had you ignored volume? Have you ever scrolled back and objectively identified where your entries and exits would have been without volume? And if so, how does it compare? I'm genuinely curious.
 
Here's the intraday strength as it was created between Friday and this morning. When the intraday played into the direction of the long term strength it is a simple decision to make trading decision in that direction (see previous chart posted) . . . regardless of what the talking heads may say.
 

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Quote from Tasker_182:

Perhaps I missed the description but would you advise what the indicator is on your graphs?

Thanks in advance,

T_182
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T 182

I use the Volume Ratio study to plot my readings of up and down volume.
 
Quote from ProfLogic:

Here's the intraday strength as it was created between Friday and this morning. When the intraday played into the direction of the long term strength it is a simple decision to make trading decision in that direction (see previous chart posted) . . . regardless of what the talking heads may say.
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What is a "breach HH and a PPF LH

regards
f9
 
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