Does volume cause vol or does vol cause volume?
Does volume cause vol or does vol cause volume?
- Thread starter SillyWilly
- Start date
Good question. But the question is better like "what is the correlation between volume and volatility?". I wonder someone has some statistics.
I always thought it was simply that price movement (volatility) causes more standing orders to be hit (volume), and if large movements (normally down) you get panic selling plus margin calls which feeds back to more volume and more price movement.
You can have low volume and low liquidity, which creates an environment for volatile movements when volume becomes one-sided with respect to supply and demand.
You can have high volatility with high volume during systemic crisises in index futures markets.
Take a look at data.
You can have high volatility with high volume during systemic crisises in index futures markets.
Take a look at data.
Chicken-Egg question...
You can have heavy volume but no big movements... when people are all in-line and are re-balancing or on expiration or whatever.
You can have low volume and relatively large movements (=higher volatility)...
But usually you have larger volumes on large movements.
Does volume cause big drops? Or do big drops cause heavy trading?
In the end, volatility is price related.... not volume. But you could argue you need volume to move a price. But also, not really... since market makers can move a price without trades... then you trade 1 lot at the close at -20%... tadaa... high volatility with no volume whatsoever.
You can have heavy volume but no big movements... when people are all in-line and are re-balancing or on expiration or whatever.
You can have low volume and relatively large movements (=higher volatility)...
But usually you have larger volumes on large movements.
Does volume cause big drops? Or do big drops cause heavy trading?
In the end, volatility is price related.... not volume. But you could argue you need volume to move a price. But also, not really... since market makers can move a price without trades... then you trade 1 lot at the close at -20%... tadaa... high volatility with no volume whatsoever.
It's an identity if per step volatility is constant.
I know it's Friday, but this one seems a collective miss.
Does the rooster crow because the cows have come home?
Do the cows come home hoping to hear the rooster crow?
Coincidence does not imply *anything* by way of causation.
And certainly, as the events happen at about the same time,
they would be *empirically* correlated. Fine!!
But!
Is anyone here going to tell me that full mammalian udders
are causally linked (ante hoc or post hoc) to some idiot bird's
answer to a Darwinian territorial imperative???? PLEASE tell me "no."
There's no identity, no 'one-causes-other' link here.
Go get that beer you've been promising yourselves. (I am.)
Does the rooster crow because the cows have come home?
Do the cows come home hoping to hear the rooster crow?
Coincidence does not imply *anything* by way of causation.
And certainly, as the events happen at about the same time,
they would be *empirically* correlated. Fine!!
But!
Is anyone here going to tell me that full mammalian udders
are causally linked (ante hoc or post hoc) to some idiot bird's
answer to a Darwinian territorial imperative???? PLEASE tell me "no."
There's no identity, no 'one-causes-other' link here.
Go get that beer you've been promising yourselves. (I am.)
I know it's Friday, but this one seems a collective miss.
Does the rooster crow because the cows have come home?
Do the cows come home hoping to hear the rooster crow?
Coincidence does not imply *anything* by way of causation.
And certainly, as the events happen at about the same time,
they would be *empirically* correlated. Fine!!
But!
Is anyone here going to tell me that full mammalian udders
are causally linked (ante hoc or post hoc) to some idiot bird's
answer to a Darwinian territorial imperative???? PLEASE tell me "no."
There's no identity, no 'one-causes-other' link here.
Go get that beer you've been promising yourselves. (I am.)
Of course volume creates volume. and volatility also causes/is volume.
2018 ET.
It's like the flow of hot liquid magma crashing and oozing out of a volcano. -- I think that's not the ideal analogy though.
I could care less though, I already made a killing today in the shock market.
%%
And volume tends to cause more volume; that is why so many do not trade irregular hours[after 3:00 chicag0/central/ TX time] Get up early like rooster does when he crows
; sure you can see big volume/vol @ midnight, but that is on old stock/ papercharts LOL