Is volume analysis useful in index futures?

[Handle123]

We'll see who responds to my challenge. The questions to be answered... (1) "Is volume helpful in improving overall trading results.. i.e. making more good trades and avoiding some losers, (2) is volume consideration non-conclusive/ineffective and a waste of time, and (3) does volume consideration actually hinder success by resulting in more missed profitable trades"?

As the years gone by me, my attitude changes as well. I now see how just about anything in trading to be an added filter to reduce the number of trades. I think many "NEED" an excuse to take less trades, let's face it, most traders over trade either cause of emotions or too many signals to pull the trigger. So by adding volume, we can form rules to take less trades.

You are right IMHO, volume goes up /down as price goes up/down, does it mean anything which is similar to flipping to get a head/tail. I find it difficult to see a huge bar knowing there can be hardly any volume in it or can be very heavy volume in it. as for myself, I will use volume to exactly reduce trades waiting for divergences of price going higher on less volume, I view volume as "interest" or people's desires to be involved to make a difference, only use it for entries in scalping, day trading or very long term commodity trading, but exits I don't use as my level of patience of being in anything that has much of a retracement-I have already exited.

 

[Scataphagos]

As the years gone by me, my attitude changes as well. I now see how just about anything in trading to be an added filter to reduce the number of trades. I think many "NEED" an excuse to take less trades, let's face it, most traders over trade either cause of emotions or too many signals to pull the trigger. So by adding volume, we can form rules to take less trades.

Exactly right!

I understand why we don't want to be guilty of "overtrading" (and just what determines "over"?)

Adding volume consideration is "one more variable to line up in the trader's mind". The more variables you need to convince a trader to make a play, the fewer trades he's going to take. But that isn't necessarily good. The key is "trade well". How often doesn't matter if there is proper rationale behind the play. (One can, of course, trade less frequently and still trade less well.)

An analogy. Years ago I was a professional bowler... always in a bowling center. On time a person said to me "Bill* must be a really good bowler. I see him in here practicing every day". My response, "He's only average. He practices a lot but doesn't have good technique. He's going to get only so good with what he does." IOW... and as in trading, if you don't have good technique (thought) behind your trades, you're going to get more losers than you should... hence "overtrading".... not to mention the missed gains.

* I used to offer a bet to average bowlers that they couldn't throw the ball between the 4 & 6 pins 10x in a row without hitting one of them.... more difficult than it looks, as the margin for error is less than hitting a single pin. Bill is the only one who ever took my money on that! What often happened after someone tried a couple of times and failed, they'd make me the same bet. LOL... that was a no-brainer. But I digress.

 

[volpri]

The only reason I watch volume is to see if the position I want to take can be taken in a short time and without moving the market too much. I mainly trade index futures.

For the rest volume has NO VALUE AT ALL FOR ME. And I trade long enough, and with above average performance, to be sure that I don't need volume at all.

There can be a rise in the price if volume rises, but there can also be a rise in volume when the prices rise.
What was there first: the chicken or the egg?

Of course the chicken. For without the chicken there would be no egg. ROFLMAO

 

[Sprout]

For the rest volume has NO VALUE AT ALL FOR ME.

What was there first: the chicken or the egg?

Fair enough.

I appreciate the causality dilemma, however
unless you are a creationist, the egg came first laid by a proto chicken. Hard shelled eggs came into existence much earlier than chickens from an evolutionary biology POV.

There are no size limitations nor requirements for being trapped traders on the wrong side of the market. There’s always bigger fish who have different ideas in mind.

Even whales come in different sizes and enjoy different diets. Biodiversity is good.

All living forms had a form that came before, the form in existence now and the form yet to be.

 

[schweiz]

You must be trading institutional size to move the market in an index future. Like in the 100's of contracts at a time......

That's why I, till now, never had a problem.

 

[lcranston]

There can be a rise in the price if volume rises, but there can also be a rise in volume when the prices rise.
What was there first: the chicken or the egg?

It's an inappropriate question. Price and volume are simultaneous. One does not create the other. One does not come "first". Volume is nothing more than a manifestation of trading activity. If one does not care about the level of trading activity surrounding his trade, there's no reason for him to concern himself with it.

 

[volpri]

It's an inappropriate question. Price and volume are simultaneous. One does not create the other. One does not come "first". Volume is nothing more than a manifestation of trading activity. If one does not care about the level of trading activity surrounding his trade, there's no reason for him to concern himself with it.

BINGO

 

[Sprout]

Fair enough.

I appreciate the causality dilemma, however
unless you are a creationist, the egg came first laid by a proto chicken. Hard shelled eggs came into existence much earlier than chickens from an evolutionary biology POV.

There are no size limitations nor requirements for being trapped traders on the wrong side of the market. There’s always bigger fish who have different ideas in mind.

Even whales come in different sizes and enjoy different diets. Biodiversity is good.

All living forms had a form that came before, the form in existence now and the form yet to be.

An insightful podcast that continues the ecological analogy.

https://www.bloomberg.com/news/arti...s-original-theory-for-how-markets-really-work

 

[Laissez Faire]

It's an inappropriate question. Price and volume are simultaneous. One does not create the other. One does not come "first". Volume is nothing more than a manifestation of trading activity. If one does not care about the level of trading activity surrounding his trade, there's no reason for him to concern himself with it.

No, price can exist without volume as you can have a price that's not transacted (yet or ever), but volume can't exist without price.

 

[volpri]

No, price can exist without volume as you can have a price that's not transacted (yet or ever), but volume can't exist without price.

Wrong... you can only have potential next price or actual last price. Same with volume.