Let's play "teach IronFist how to use volume in his trading" (lots of pics)

[IronFist]

Quote from Spydertrader:

Without correct Bar Coloration, you can expect to never see what Volume tells you. Start with a 5 minute chart of the ES and color the Price and Volume Bars in such a fashion that areas of change stand out. Forget the software default settings. They don't allow for accuracy.

- Spydertrader

What do you mean "areas of change?"

The way it's colored by default is a bright green bar on an up candle and a dark green bar on a down candle.

How are you suggesting I color it instead?

 

[IronFist]

Quote from AMT4SWA:

Back from my two week vacation and the kids are back in school....so I will chime in on this thread.


I LOVE volume analysis when used in a very specific way......

http://www.linnsoft.com/tour/techind/vb.htm

Learn how to PROPERLY use Cumulative Delta and then you will have volume information that CAN be used for successful trading!!!

http://www.linnsoft.com/videos/vb/

Cheers!

That looks similar to my volume indicator I made that I said "almost works."

I don't have up tick/down tick volume available to me, tho

 

[IronFist]

Quote from optioncoach:

Iron:

Volume will not help you on a 133 tick chart which is what you are using.

Why not? At what timeframes does volume become useful?

 

[IronFist]

The only thing I've ever come up with that almost makes volume useful for trading is this.

Basically the difference between up and down volume. I colored the candles based on this.

But it's still useless. Trading based on these signals = loss (so do the opposite, lol).

 

[Spydertrader]

Quote from IronFist:

What do you mean "areas of change?"

Points in time where the trends (on the time frame you monitor) changes from one direction to another.

Quote from IronFist:

The way it's colored by default is a bright green bar on an up candle and a dark green bar on a down candle.

Forget the default setings of the software used. Program the correct settings yourself (if possible). If not, use different software which allows for changes to how a trader wants to color their Price and Volume Bars.

Quote from IronFist:

How are you suggesting I color it instead?

First, choose a set of colors which easily differentiate direction (I use Red for down; Black for up). Next, determine how your software colors the bars, and compare those settings to how the market actually moves. You should find an error in the software defaults, and you can then go about the task of correcting those errors.

I'll search for the link where I outline correct settings and send it your way once I locate it.

Edit: You'll also need to use a time chart. I use a five minute ES.

- Spydertrader

 

[lindq]

Quote from IronFist:

The only thing I've ever come up with that almost makes volume useful for trading is this.

Basically the difference between up and down volume. I colored the candles based on this.

But it's still useless. Trading based on these signals = loss (so do the opposite, lol).

There is nothing that volume tells you that isn't already revealed in price levels on short term charts. Look at any volume study, including that on your chart, and you will see the point.

I dare say that you could take any candlestick chart and draw your own volume moving average from your imagination, and be close to the mark. Sharp price moves are accompanied by rising volume, tight trading ranges are accompanied by flat volume.

It's all in the rearview mirror.

 

[Slave2Market]

If you did not read or understand my posts I will explain further, but I thought I was pretty clear?

I am in complete agreement with the statements made by lindq; he sounds like a trader who has done some research on volume.

 

[MandelbrotSet]

Quote from IronFist:

The only thing I've ever come up with that almost makes volume useful for trading is this.

Basically the difference between up and down volume. I colored the candles based on this.

But it's still useless. Trading based on these signals = loss (so do the opposite, lol).

There actually is a lot of information in that study.

You just have to look for it to see it.

In fact I see three really solid trades on the chart, based on your study ... how's about you give us the code, and I'll show you what they are and how to find them.

 

[IronFist]

Quote from Spydertrader:

Points in time where the trends (on the time frame you monitor) changes from one direction to another.



Forget the default setings of the software used. Program the correct settings yourself (if possible). If not, use different software which allows for changes to how a trader wants to color their Price and Volume Bars.

Oh.

I thought you were saying there is one specific correct way to do it. I can color volume however I want on my chart, and if I couldn't modify the volume study, I could just write my own for special colors or whatever.

First, choose a set of colors which easily differentiate direction (I use Red for down; Black for up).

When you say "up," do you mean an up candle, or a volume bar that is higher than the previous volume bar?

Next, determine how your software colors the bars, and compare those settings to how the market actually moves. You should find an error in the software defaults, and you can then go about the task of correcting those errors.

My software colors bars by default like this:

bright green bar = up candle
dark green bar = down candle

I'll search for the link where I outline correct settings and send it your way once I locate it.

Thanks, I'll look for it.

 

[IronFist]

Quote from MandelbrotSet:

There actually is a lot of information in that study.

You just have to look for it to see it.

In fact I see three really solid trades on the chart, based on your study ... how's about you give us the code, and I'll show you what they are and how to find them.

I see 3 really awesome trades in there, too. And a bunch of really crappy ones.

Are you saying that the 3 really awesome trades were identifiable from the bad ones before the fact?