this question was asked:
*is volume being considered to enter "volume apex/peak reversal" trades only or to note direction of a trend and enter in driection of trend?
This is the second half of the response.
Here we bring up the aspect of trading that involves having a neutral bias.
We also address why the fact that trends overlap affects when reversals are taken to realize the whole profit segment going in both trend directions.
We will also handle how volume leads price during non trending periods like when R and S are being tested.
The underlying rule for advanced beginners is to reverse on peaking volume and to hold through volume troughs.
How far ahead of the price movement extreme do you know that the leading volume signal has been provided? This is a key question and it can lead to getting into intermediate and advanced intermediate trading considerations.......
We need to examine a couple of things at various times in the profit taking sequence. They are found in the interval between the beginning of trend overlap and the breakout of the first trend in the overlap period. All of this is a smoothing sort of thing in trading and it provides for eliminating the "freakout" part of trading some prevalent in ET postings.
Look at the volume cycle: it has components where some are long and some are short in duration. Peaks and troughs are short (brief) and the rising and falling parts are long in duration. We hold through three of the four parts. Only the peak is used for doing exits and entries.
The beginning of overlap starts on a peak and the beginning of BreakOut comes immediately after a trough. the reversal is at the peak time and the Breakout and trough we hold through and they both provide a "comfort" type feeling signal.
Up to this point, I am transferring information and instructions to you. you are doing some choosing. and you are also doing what is called translating. This translating is a kind of mistake and for most people it is unavoidable based on the fact that they do not have the ability to think critically. Both Hyp and Big are victims of not understanding critical thinking. This is a thrid point in this conversation where you have to make a decision to part comany with these people's way of doing things. You have to begin to think critically.
What I am pointing out is not usually part of conversations in ET. This is the difference between transference and translation. If comes down to two aspects: people add to what I say and they subtract from what I say. In critical thinking neither is done.
In econometrics there are four components of theorems: direct, indirect, induced and substitution. In critical thinking processes, only direct applies.
There is only one format, roughly speaking, for doing tranference among people and that, per se, is not available on ET since it is primarily a socializing system.
What happens between what is put in the space and what anyone gives to it to create utitlity for the user is very important to be able to understand and process.
Let me take this to an advanced beginner level so that you can give what I am saying some utility for your purposes. During all times other than critical turning points in price, a complex of occurances are happening. In a skill and knowledge progression, these things come into play to increase the money velocity on the non stationary time series.
Basically, the time of holds involves two distinct market characteristic mutually exclusive sets. These sets are extant during the reversal and at that time they are not significant. trending is one of the sets and reversion is the other. Reversion is not a significant set for lesser skilled and lesser knowledgable people. And reversion is most often a period of time when significant amounts of money can be made. Ignoring periods of reversion is the best tactic. This is true for all fractals down to the limits of human perception. Use 100 milliseconds as a perception limit. Reps of viewing at 10 times a second is still imprintable and often a circumstance where things look relatively static.
You now have the trading rule for using volume as a leading indicator of price.
People generally cannot use it simply because they cannot handle the beginning of profit segments properly.
A profit segment begins on declining volume just after peaking volume in a price direction that is opposite to the new trade. for most people this is difficult since they have a non critical thinking enter/exit mentality. The very next thing they get hit with is the end of the trends overlapping. This near past period is one where the MLR line is being extinguished as the moving window of the MLR in the non stationary time series moves into new territory where briefly there is almost always a failure to truncate the MLR automatically.
You may have heard of whipsaw. It causes its victims to DO many things that are VERY counterproductive.
When only one trend (no overlap) begins, things get relatively simple up and until the beginning of the first dominant reversion in the new trending hold. here a subjunctive flavor enter the picture due largely to the underdamper character of the reversion and it finally being extinguished in favor of a trend volatility expansion coming up. The dynamics of a trend really do not hatch until after the overlap ends..
As time passes you wil reevaluate your thesis or observation that three Q's were still not answered as the thread progressed.
The asymptote of to get to completeness (knowing that you know) simply has not surfaced for you and most others. As you see it is not a necessary condition for being a trader.. Markets are counterintuitive. What makes this a true statement is mostly hidden from people. It goes back to their context for learning and acquiring skills. You can see this part of people being snuffed out by their successive translations of information being potentially transferred to them and they deny it's utility by their priority of focusing on translation instead.
