ES Journal - 2021/2022

Laissez Faire said:
Still looking for that 4698,50 print during RTH. So, maybe targeting 4700 and not trying to get too greedy after that.
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Close enough. :cool:

The rest of the day seems more uncertain. Probably going to see some range bound action / consolidation today. Probably not the best area to get greedy on long entries as we covered a lot of ground this week already.
 
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Laissez Faire said:
This is not clear to me. Can you show with an example how price follows volume?

The way I understand it - price moves because of liquidity imbalances, i.e., market orders (liquidity takers) overwhelming the available limit orders (liquidity providers) at a given level.

If the supply was unlimited at a given level, say 4700, price would never move higher regardless of how many market buy orders were hitting the market. So, high volume, but price won't move one tick.

However, if the available liquidity is thin - the market will frequently move quickly higher on even low volume.

In fact, this is how I've come to understand how markets work. It's nothing other than matching of orders day in and day out.

In markets that are less liquid than ES you'll have price gaps where price will actually jump between levels with no traded prices in between. And maybe the last quoted price won't be traded either. But that price can still be there as a quoted price, i.e., price can exist without volume. But volume can't exist without a price traded.

Thank you.
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I am not a writer, a market guru, or a textbook teacher (as opposed to in-person).
I can not explain the concepts of volume nor the reasons why such concepts are valid or not.
Further, offering cherry examples of MY insights is not useful as they are MY insights.

I do see there is an appetite for the topic of volume.
This thread is certainly not the correct place for such a feeding.

If your interest in volume is genuine there are many places to look.
Richard Wykoff is one of the fathers... a good place to start.

An offshoot is VSA (volume spread analysis) created by Tom Williams.
The concepts of accumulation and distribution are more easily understood via VSA.
Plus the connection of why non-intuitive low and high volumes may occur during these phases.

Market Profile is another method one can look at. MP originated at the CBOT. Some platforms include a licensed Market Profile.
Other platforms offer some sort of Price by Volume study which is a somewhat simplified interpretation of Market Profile.
Point of control, Naked point of control, value area, and more are derived from Market Profile.

For the brave, the Jack Hershey methodologies have 1000's of posts and a dozen or so threads here in ET.
There is a small faction of Hershey practitioners here on ET as well.
Hershey's first method used channels, which all have a beginning, a middle, and an end
and as such, provides some visual understanding of how (and why) volume operates.

I'm sure there are many other methods (and tools) I did not mention... volume is not some newly discovered data point.
And like everything else regarding trading methodologies, there are plenty of dead bodies that could not make volume work.
Don't be that person.
 
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