Help me understand volume/price relationship

[Sprout]

Anybody have a way to use Volume to trade this move that started at 8:30?
View attachment 275816
View attachment 275818

In this chart, DU (Dry Up) is the volume distinction. It occurs as troughs. Generally, the pt 3 of a channel sets the RTL. Volume shows as troughs near the RTL and peaks near the LTL of the dominant channel. Prior to DU, the dominant leg was the channel short with progressively increasing peaks in volume until either 1) pt 2 of the channel or 2) the FTT (failure to traverse).

It's easier to see when there are annotated volume levels on your histogram. What one is looking for is new business attracted to the advertised prices.

A shift in sentiment started when you state but wasn't confirmed until the retest and continuation a couple of bars later.

The doji (on a higher timeframe) at the open of the 8am bar broke bull at 8:34 on increasing volume.

 

[Scataphagos]

What time frames would you say work best for using Volume to trade?
Worst?

You say you've taken my advice on other TA matters before. Kudos!

Yet you question me on volume. Really? You think I'm "all wet" on that but OK on everything else? (I understand "price and volume" is conventional wisdom and the holy grail... except it isn't for trades. I understand I risk the wrath of conventional wisdom and being labeled as a heretic for my disdain of including volume in the decision on a trade. At best, volume is a lagging parameter. At worst it's useless and contradictory. There. Now. Go forth and make your fortune, tossing volume to the wind.)

 

[easymon1]

You think I'm "all wet"

Nope. You ain't all wet. That goes for trading hardware too. Def valuable information.

What I would welcome is evidence to the contrary in the event that some ET traders can demonstrate that Volume works in their hands. I am still waiting. Text is one thing but annoted pictures are much more definitive.

If there's no written protocol, then no stats can be generated, then I can't use it.
If the occular proof of a method is provided, then written protocol should be possible, then stats should be possible. And I'm open to a method that works within the intraday timeframe.

O'brien has a very simple Volume Based method he uses on DAILY Charts on his youtube and TFNN.COM show daily where he takes phone calls live. He would welcome your call. I don't trade daily charts. His book Timing The Trade goes into how he do what he do in those quarters.

https://www.youtube.com/results?search_query=Tom+O'Brien+Show+on+TFNN+-+2022

 

[Scataphagos]

I know of O'Brien... I used to follow his show for a while. He's basically a radio personality that appeals to market participants with the lowest level of understanding about the markets. And he preaches "price and volume".

But just think... logically.... To consider volume, you need to know what the "volume is" for the particular bar... whether it be daily, hourly, or shorter. By the time you get to know what the volume "was", the price move has already begun. (See, you're seeing the price change on the chart, but you're "waiting to see if volume confirms". Well, you're late on the play already. And even if volume appears to confirm, it's not reliable. If that's the case, why consider it at all?) By including volume in your decision on a trade, you've not only included an additional variable... it's a lagging one. How can that dynamic improve trading results? Traders should be using STOPS to control risk, not "analyzing volume, confirming/not confirming" to try to avoid bad plays. That's a losing game.

Using volume in considering whether or not to make a play will not cause you to make losing trades. However it WILL cause you to pass-up many winning play opportunities because "volume didn't confirm".

 

[easymon1]

At worst it's useless and contradictory.

Here's a chart with a "Creek" "Jump" and "Backup" highlighted.
Volume is displayed in this chart.
Notice that on the lower chart where price re-approaches that Same Creek, I didn't even bother to put Volume on the chart.
When viewed on a half dozen samples over time, the volume didn't lend enough clarity to prompt more work in those quarters volumewise.
The Creek, Jump and Backup on the other hand, provides one more tool that provides what I DO use. Support and Resistance - from which very simple simple candlestick signals can offer a trader good heads-ups, imho. ymmv. Not FDIC insured, lol. Do your own stats.
https://www.elitetrader.com/et/thre...t-right-here-baby.335635/page-25#post-5521306

 

[murray t turtle]

Volume just tells you that a lot of people are interested in trading around that price.

%%
Exactly;
+ if one finds volume confusing, dont ever or seldom look @ itNeither of those is a price predictor..............................................................................................

 

[Scataphagos]

"Creek jump".. LOL. Haven't heard that one for a while.

 

[easymon1]

...By including volume in your decision on a trade, ...How can that dynamic improve trading results?

That is the question!
Will we see charts marked up to show how that would work?
Lets find out....

 

[easymon1]

"Creek jump".. LOL. Haven't heard that one for a while.

Shades of OB1 lurk in the folds of the ol grey matter, lol.
"Jumped the Creek and Returned To Ice" he'd say.
Call his ass up and give eem an earfull on why you don't buy his Volume parameter. At least he'd get a chance to defend himself to a skilled and dubious-at-best seasoned trader. He just might surprise you. Guaranteed to be one of his highest youtube view-counts. I'd stand in line for that.

 

[Scataphagos]

%%
Exactly;
+ if one finds volume confusing, dont ever or seldom look @ itNeither of those is a price predictor..............................................................................................

I've often said "volume is completely worthless". That was a bit of an overstatement.

As for trades, it's still worthless.

However it has some value when one is considering a large play and wants to know whether the market can absorb it with minimal slippage. The consideration here is "handle". That is, the "recent average daily volume". If that volume is huge relative to the size of your play, you can get in and out easily with likely no more than a tic of slippage. If that volume is light, you don't want to be so big that "you become the market".

The other sort-of-value to volume is when considering the stock indices making a "high/low on lower volume".. Not definitive, but does indicate some trepidation in the marketplace as to whether the move still "has legs". (Then again a spike volume at highs/lows could me "acceptance and acceleration". Could also mean "crescendo... last gasp exuberance". Which is it this time?)

But when it comes to "should I make this stock play at this price?", volume is no help at all.

As always it's "KISS, baby"! The fewer variables in your decision the better.