Does Volume precede price?
- Thread starter EqtTrdr
- Start date
Does Volume precede price?
When did this ever work?
ALWAYS... ALWAYS...
As ridiculous as this may sound, it always does. You'll have to really be open minded about this and really monitor a few items on a chart. You don't need to analyze to observe that volume leads price but you certainly should be aware of it. The analysis part is needed to effectively trade the leading variable. So here's some very simple logic which is in fact true. Look at the T&S. There are many executions on the T&S. If you string along a bunch of executions, you'll notice that the 2 types of volume showing on the T&S is increasing with respect to the previous pivot. One will be increasing more than the other and dominating and with respect to it's pair. Eventually, the leading volume value will exceed a critical value and THEN a new price emerges. All price charts/lines are a result of this continuous repeated sequence... You'll also notice that if you strip any graph with any chart and just look at individual bars, you will notice that there is very strong relationship with volume and price (ie. large volume changes also result in large price changes). Is price leading volume in these bars? That would be saying that change in volume is a result of change in price. Your Q is a good one since you are aware of both price and volume which as 2 variables. How do you regard these 2 variables?
As ridiculous as this may sound, it always does. You'll have to really be open minded about this and really monitor a few items on a chart. You don't need to analyze to observe that volume leads price but you certainly should be aware of it. The analysis part is needed to effectively trade the leading variable. So here's some very simple logic which is in fact true. Look at the T&S. There are many executions on the T&S. If you string along a bunch of executions, you'll notice that the 2 types of volume showing on the T&S is increasing with respect to the previous pivot. One will be increasing more than the other and dominating and with respect to it's pair. Eventually, the leading volume value will exceed a critical value and THEN a new price emerges. All price charts/lines are a result of this continuous repeated sequence... You'll also notice that if you strip any graph with any chart and just look at individual bars, you will notice that there is very strong relationship with volume and price (ie. large volume changes also result in large price changes). Is price leading volume in these bars? That would be saying that change in volume is a result of change in price. Your Q is a good one since you are aware of both price and volume which as 2 variables. How do you regard these 2 variables?
Bullshit! Bullshit! Watch tick charts! Miss Price leads Mr. Volume around by his dork!
none
anyone who watches books or tick charts knows that at least in the short run merchant is right.
But I think in realty the question is what kind of volume are we talking about.
In low volume markets the price gets moved around to find volume.
But when fundmentals change volume seems to move price.
It used to be a lot easier to answer this question before all of the derivatives.
anyone who watches books or tick charts knows that at least in the short run merchant is right.
But I think in realty the question is what kind of volume are we talking about.
In low volume markets the price gets moved around to find volume.
But when fundmentals change volume seems to move price.
It used to be a lot easier to answer this question before all of the derivatives.
You never saw the inside market pulled on NO volume? Hahahahaha!
I can't speak to futures, but with respect to the specific set of equities that I trade, I have used this fundamental premise as a cornerstone of my trading methodology.
- Spydertrader
- Spydertrader
This may sound strange, but every single moment I know how many contracts are required before price will change. I have what is like a countdown. Someone hits the bid, someone hits the ask, for me PRICE has NOT changed. When the PAIR move to a new set of values, THEN price has changed. You can see many sequences of ticks in which the PRICE has not changed. Many ticks will occur at bid/ask or one large tick will occur at bid/ask and then voila dP. An institution arrives with a large order and dP moves for one reason and one reason only, the volume of the tick exceeded a critical level. When generalizing such activity to any traded instrument, you wind up with another independent variable. When the inside market gets pulled, why am I not getting screwed, that is the tougher question to answer? 