I find volume is related to the probability that a short term move will reverse or continue. But it is non-linear and the same raw volume means different things at different times of day.
How predictive is volume to index futures?
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I find volume is related to the probability that a short term move will reverse or continue. But it is non-linear and the same raw volume means different things at different times of day.
Hi black,
how would you make use of time of day / volume relationship to measure the significance of the volume.
Looking back at prior days volume by the hour and comparing?
Assuming volume to be more or less indicative of movement at different times of day?
Cheers
i
This is your concept of proof? Why do people think their opinion cinches it? Again, many realize price. Volume is questionable
I am awaiting your proof to the contrary, not your opinion to the contrary.
Here is a simple chart that tells the story for the times of the day.
Also note the rules for trading a quality selected universe.
During the natural cycle of position trading a stock, three volumes are significant. They lead price.
By sorting stocks in a quality universe, it is possible to plan the next several trades with each stream of capital being used. There is an approximately 80 page illustrated write up on how this chart was used to do this. 30 illustrations show the day unfolding after the list to be traded was prepared for the week on Sunday before the week started. In a prior post in this thread I mentioned the chart by name.
You are interested in how the information of the chart was prepared. The following steps were used.
1. A 30 minute volume chart was prepared by dividing the day into 30 minute segments and assigning the partial % across the bars so the total was 100%.
2. The % were put in a list for each bar.
3. A column was added to show the cummulative volume for the day.
4. A DU column was added by multiplying the column of 3. by a factor that relates DU to a 65 day average. A 45 day average is preferred but that is not possible at this point in the state of the art of TA commercially speaking.
5. A FRV column was added in the same way as step 4. The factor is at the top of the list for all three columns.
6. A peaking column was added in the same way as step 4.
7. The enteries in the columns of steps 4, 5 and 6 were color coded to show when to wait before entry, when to enter on the first day of the long cycle beginning and when to exit at the end of the profit segement.
Between the bar chart at the bottom and the signal list at the top are all of the rules written in the color of the part of the code.
The chart applies to all price ranges included in the universe sorting process.
Initially, the chart caused legal difficulties. At one time in the development of the financial industry, it began to be monitored by regulatory agencies. The agencies wanted to detect (as in dective work) illegal practices where ordinarily people would be send to jail for these infractions.
The monitoring neglected to include exceptions for people who had skills that simulated crimes. Over about three years, the regulatory agency got to learn about their failings. Because of the wishes of brokers I never was allowed to initiate a search for the coding used by the regulatory agency to determine the mistakes being made by the agency.
if you use this chart today, there is no problem in using it because the regulatory agency has learned to not cite people who use leading indicators of price to make money. Most of these indicators are not public. this one was, however because of my personal orientation to dealing on levels different from the financial ndustry's conventional wisdom.
The question you asked is, in my opinion one of the first questions anyone would ask if he were getting acquainted with making money. As you can see this kind of knowledge and attendant skills from the knowledge is largely considered impossible as a consideration.
I know the steps do not have complete information on the details. It is not possible to explain to you some of the interesting aspects of some parts. But you can choose to think critically about the facts given to you. you will notice that once you become acquainted with the chart purpose and value that you will look at charts of stocks and commodities entierly differently than you ever have before. The market are counter intuitive in many ways.
The signal from volume relative to price is about 1 and 1/2 hours in offset when you obey the values in the chart and list. 1 and 1/2 hours is a nice comfortable period of time to be able to make the trade before price moves and after you have the volume signal. the youngest people who have been able to use this are second or third formers. Anyone in forth through sixth form is able to grasp this on a moment's notice. I have had fifth and sixth formers use capital to pay for their college educations with just a 2 to 1 year head start. The limiting factor was usually how long the parents procastinated before they realized any scholastic level student was able to pay their own way through college if given the chance. young people love to have reputations as "insider traders" in communities like Greenwich Conn and the suburbs of the financial centers of the US.
Breaking this stuff down to 30 minute segments is about as fine as you have to get for using volume as a leading indicator of price in position trading. When you trade fairly close to optimum you are doing 100 turns a year @ an average of over 10% a turn.
Read the transcribed report or view the camtasia on the fifth meeting of the Tucson IBD MeetUp. The illustration was part of taking 100K to a million dollars in 100 days.
thanks SpyderTrader and Jack H!
Volume is only questionable if you have not assigned proper contexts in which to view volume. Volume on its own w/o context will be inconsistent at best. The key is to figure out how to DEFINE context. Once you do that properly, then overlay volume, you'll see a whole new market 
But I do agree volume is questionable on its own, context is the key.
But I do agree volume is questionable on its own, context is the key.
Over the years, I have given volume a try from time to time, looking at it in various ways and in different contexts. It always gave me a combination of false positives and false negatives that would do any coin proud. Perhaps there is a special way of looking at volume that continues to escape me. Nevertheless, I manage to survive without it.
Perhaps you could outline what constitutes a proof to you.
It is possible in some cases that a person's opinion clinches what is needed by another to enable that person to make use of the opinion.
In your case, we have seen through a couple of handles that your opinion is kinda shakey for making use of anything you have said.
In my case, with respect to volume, you probably can't make use of anything. It is not that what I post is an opinion because what I post usually are conclusions that are proven.
You do not "get it" most of the time. I figure that it is because you cannot think critically and as a consequence you post stuff that shows you cannot think much at all.
See if you can rise to the occasion and let us know where your head is on what constitutes a proof. my assumption is that you are poorly trained and are not a person who has been able to make use of much of anything that you have or has been given to you. You do make a good example of what can go wrong in the growth process.