Makosgu... I agree with you that price cannot move without a change in volume... or more specifically, price doesn't move until a buyer AND a seller agrees to make a transaction at a certain price, whether that price is higher, lower, or the same as the current price...my point is that you can look at any EOD chart and show substantial price moves out of consolidation areas, or within established trends, or out of retracements, on either low or high volume. It doesn't seem to make a difference. Volume *only* indicates the number of shares that passed between buyers AND sellers at any given price. I even concede that volume represents the demand for the stock at a certain price, but that doesn't necessarily mean that price will continue to move up, or down, on the next bar just because the number of transactions underlying the current bar, or past few bars, is low or high.
Is Vol. Really Important ?
- Thread starter Babak
- Start date
Makosgu... I agree with you that price cannot move without a change in volume... or more specifically, price doesn't move until a buyer AND a seller agrees to make a transaction at a certain price, whether that price is higher, lower, or the same as the current price...my point is that you can look at any EOD chart and show substantial price moves out of consolidation areas, or within established trends, or out of retracements, on either low or high volume. It doesn't seem to make a difference. Volume *only* indicates the number of shares that passed between buyers AND sellers at any given price. I even concede that volume represents the demand for the stock at a certain price, but that doesn't necessarily mean that price will continue to move up, or down, on the next bar just because the number of transactions underlying the current bar, or past few bars, is low or high.
"People who do not know anything about volume cannot make high velocity money. I have always suggested that when you open a book go to the index and see if there are a lot of citations on volume. if not do not buy the book.
" - grob
That statement is so true, the other things he mentioned I had a headache reading it, How does one put together words without syntax errors yet I get a brain tumor trying to decipher it
Regarding when some people mentioned low volume dry up,
Theres different types of volumes that mean different type of things with each DIFFERENT type of situations.
You can not place high volume = buy now!
you have to know
high price level -> high volume? -> what does it mean?
high price level -> low volume? -> what does it mean?
retracement -> low volume? -> what does it mean?
consolidation -> low steady volume -> what does it mean?
big drop -> high volume? -> what does it mean?
Theres different types of meanings for each type of
PRICE LEVEL/action
+ VOLUME level
Volume only increases probability, it is not an exact indicator.
Nothing is certain in the markets, but you can always increase probability.
Hope this helps someone
" - grob
That statement is so true, the other things he mentioned I had a headache reading it, How does one put together words without syntax errors yet I get a brain tumor trying to decipher it
Regarding when some people mentioned low volume dry up,
Theres different types of volumes that mean different type of things with each DIFFERENT type of situations.
You can not place high volume = buy now!
you have to know
high price level -> high volume? -> what does it mean?
high price level -> low volume? -> what does it mean?
retracement -> low volume? -> what does it mean?
consolidation -> low steady volume -> what does it mean?
big drop -> high volume? -> what does it mean?
Theres different types of meanings for each type of
PRICE LEVEL/action
+ VOLUME level
Volume only increases probability, it is not an exact indicator.
Nothing is certain in the markets, but you can always increase probability.
Hope this helps someone
Grob109 - your post appears to suggest that neither myself, nor anyone else who doesn't use volume in their trading decisions, is making money or will ever be able to make money - which is something that I have to disagree with; speaking predominantly as a futures day trader.
Although volume is apparently very important to you, ultimately, it's just another indicator, and how it's used in conjunction with a trader's plan and trade management will determine profitability - I simply have chosen not to use volume as I have found different tools to use for trading that work more consistently for myself.
Although volume is apparently very important to you, ultimately, it's just another indicator, and how it's used in conjunction with a trader's plan and trade management will determine profitability - I simply have chosen not to use volume as I have found different tools to use for trading that work more consistently for myself.
I'm not trying to be an a**, but in the chart that you posted, didn't the proceeding price rise off the bottom (12:00 - 12:30 time frame) occur while volume was dropping?
Makosgu is a person who is reasoning and reasoning logically.
Lets say there are 150 steps of reasoning required re volume to get a good start on making money.
Are you able to handle any analogies from other fields that might give you a breakthrough out of where you are stuck? Try making up some to find out. See if it is possible to find anything anywhere that can back up where you are coming from. If not, then would it be reasonable to open up to something new to you?
Look ahead a few days for this thread as well. You can see a couiple of branchings already. There is one appearing that deals with a topic that is akin to how macro geology was handled, say at Yale, before the tectonic plate theory emerged elsewhere.
What is there turns out to be a superior methodology to supply and demand? Try market microstructure and practioners for example.
For older ET'ers for example, there was an S & D effort made that would not use more than a trendline for explaining S & D. When a refinement to a trendline could have been made, it would have been clear that the S& D presented was faulty since the use of channels messed up all the S & D percieved signals from trendlines do not really apply.
How volume works throughout the potential range of trading prices is determined by characteristics of the market as yet not mentioned.
Consider the possibility of opening up to alternatives that you now lock yourself into.
By copying the thread and making a list (or hiliting) each and every substantive comment you will see a monster mess that cannot be assembled into a logical structure. As in DU before a price move, something has to change to get to what is the value of things.
Volume and potential volume are two different things. How to bridge from one to another is going to be very important. Of the two potential volumes seen, the smallest volume is what is of greatest import.
I also heard that momentum precedes price - does that then mean that momentum and volume are the same thing?
So Jack,
Just because we disagree on the value of using volume in the making of trading decisions means that always I'm wrong and will never make money in the markets? Does that mean that Seykota, Dennis, Schwartz, Weinstein, Baruch, Mark Fisher etc.. are "wrong" too? I know that those guys made millions in the market, how about you? I posted on this thread because Babak had the same questions regarding volume that I always had. Just because someone doesn't see your way of thinking doesn't mean that their wrong and you're right. You would think that after "50 years" in the market you would know that.