Is volume analysis useful in index futures?

[Laissez Faire]

I trade with scant conscious reference to volume on index or other futures.

Good post. I wonder if the proponents of volume in this thread can match your performance?

Everyone is of course welcome to voice their opinions, but I think a strong opinion should be backed by strong results. I am not saying people need to post blotters or results to participate in a discussion, but I hope those that are voicing very strong opinions one way or the other actually know what they're talking about.

 

[Slartibartfast]

Good post. I wonder if the proponents of volume in this thread can match your performance?

Everyone is of course welcome to voice their opinions, but I think a strong opinion should be backed by strong results. I am not saying people need to post blotters or results to participate in a discussion, but I hope those that are voicing very strong opinions one way or the other actually know what they're talking about.

Anyone can be a madman on the internet or course hehe. My friend who uses volume a lot makes great money, he has an edge over me swing trading. He also have more years of course. Maybe I will see a new trick someday he is blind to or maybe not. We are in a kind of an arms race of friendly competition and that helps one push harder.

Its Christmas, good cheer reaches even the more cynical hearts

 

[tfp]

Volume alone? not helpful.

Volume used in combination with support/resistance, supply/demand awareness? Absolutely.

It does not matter if we're talking index futures or any other instrument where volume can be adequately measured. Volume used together with other insights can be very useful in identifying surges associated with market makers probing the stops of weak holders. It's creepy how these can become interesting reversal points.

Good traders don't really need volume, but it can sure help

We need look no further than today's example on the ES. Every day has a story:

this nonsense is fractal - it plays itself out across multiple timeframes - here is today again, only this time on 1min chart:

 

[tortoise]

I’m surprised no one has brought up cumulative delta, a volume-related construct that I find splendid, when used in concert with support/resistance levels, for establishing a directional bias.

 

[volpri]

I’m surprised no one has brought up cumulative delta, a volume-related construct that I find splendid, when used in concert with support/resistance levels, for establishing a directional bias.

Probally because they have been arguing about if volume helps or not. LOL

 

[Laissez Faire]

I’m surprised no one has brought up cumulative delta, a volume-related construct that I find splendid, when used in concert with support/resistance levels, for establishing a directional bias.

It was mentioned on page 1.

 

[volpri]

Dear tfp
Retail is a very small percentage of the activity. They don't care about our potatoe chip money. It is one firm trying to take money from another firm. Sometimes we get caught with our pants down so to speak (our tiny little stops) as THEY battle it out but they aren't out to cleanse us from the market. They basically ignore us.

P.S. they don't have an xray or scanner machine like airports. They could care less what flight retail is on....they want the entire fleet of planes. Retail gets a free cup of water and maybe some peanuts or pretzels in flight but fleet owners are even cutting back on the free peanuts trying to save $ for the next big fight ...not with retail but with another institution.

 

[tfp]

Dear tfp
Retail is a very small percentage of the activity. They don't care about our potatoe chip money. It is one firm trying to take money from another firm. Sometimes we get caught with our pants down so to speak (our tiny little stops) as THEY battle it out but they aren't out to cleanse us from the market. They basically ignore us.

P.S. they don't have an xray or scanner machine like airports. They could care less what flight retail is on....they want the entire fleet of planes. Retail gets a free cup of water and maybe some peanuts or pretzels in flight but fleet owners are even cutting back on the free peanuts trying to save $ for the next big fight ...not with retail but with another institution.

Not sure about your clarification re: retail - I don't care about retail and neither does institutional money - so perhaps we agree.

When I shared in my chart a reference to 'retail stop cleanser', I was actually reflecting on another ET forum where everyone (all the retailers) happened to be bullish and long ES Friday before New Years holiday - and everyone unfortunately pretty much got clobbered...

What we do care about is institutional order flow - it's actually the only thing that matters

 

[punisher]

Hi,

Assuming that volume analysis of various kinds is useful in technical analysis - would a market like index futures be any different than other markets like for instance commodities? Or single stocks?

With index futures, you're basically trading a basket of stocks or an index, which is widely traded in multiple markets, i.e., various ETFs, the stocks composing the index, program trading/arbitrage, hedge fund managers hedging/offsetting positions, etc.

In light of that, I've always been wary about reading too much into volume or making any inferences based on volume.

Or are these markets so perfectly correlated that volume in the ES is representative of what's 'actually happening' in 'the market'?

Any thoughts?

Regards.

I did some volume analysis through Volume Profiling but frankly I think it is BS, it's just "en-vogue" nowadays. There is so much information that is either not going into the volume or blurs the volume analisis. For example:

1. There are options on everything, swaps, forwards, custom OTC derivatives that don't show in volume of whatever it is you are trading
2. There are arbitrage algos everywhere bluring the image
2. There are plenty of day-traders fighting each other that blurs the volume
3. In stocks there dark pools
4. In currencies most trading is done OTC on interbank, not futures
5. In bonds there are primary dealers etc, not only secondary futures market.
6. In index futures you have underlying stocks' volume that is not directly included in futures

You never know if the surge in volume is from short, mid term or long term trader. Anything you see (price, volume) is already historical information the moment you see it.

Also keep in mind another important aspect: Occasionally there is a strange yet meaningless (from volume analysis standpoint) market behavior, for example when suddenly particular ETF(s) decide/s to rotate out of one pool of stocks into something else, because it met some preprogrammed criteria or whatever. If you try to read too much into it you will be left confused.

I guess volume analysis is as good as anything else (astrology included) so trade accordingly.