Let's play "teach IronFist how to use volume in his trading" (lots of pics)
- Thread starter IronFist
- Start date
I guess it never crossed your mind that mandatory conscription might actually deter military action, not encourage it?
BTW, I say this as someone who volunteered after the draft was suspended, proudly serving for six years in the service of this nation.
I daresay this country wouldn't be half as fucked up as it is now if more people didn't get their asses kicked up and down the parade grounds for 11 weeks of bootcamp then spent a few years finding out how the rest of the world lives.
Hey Anekdoten,
Thanks for the reply. So it looks like you're saying to look for divergences in reversal patterns (triple tops/bottoms in your example).
But I don't see that. The volume peaks don't necessarily line up with the tops/bottoms (see attachment).
Also, in my original post I made a comment about the ambiguous nature of some of the trend lines drawn in volume. I see in your charts that in hindsight it could be construed as decreasing volume, but at the time it may have appeared to be increasing as well. I'm not saying you're wrong, but I'm asking you how do you know which way to draw the trend lines (see bottom of my attachment)
Volume means shit when you are getting your ass handed to you shorting 10,000 aapl. Is it not a loss because the bull flags volume didn't increase when it breaks out? Does the market or your broker give you your money back when volume didn't confirm? Anybody who really trades for a living knows the answer and is aware that the only thing that matters is price.
IronFist,
Great question. After all who hasn't studied volume that is a serious student of the markets. Just thinking about what works and doesn't work makes us better traders.
I do see more than one problem with the way you present the question. Firstly, what screams at me is that you would like to have an answer to one chart.
Without a doubt I am sure that a pattern can be made with the volume in relation to the price action but that does not mean its repeatable. You simply have too small of a sample size to really discuss it with.
I believe and I think most successful traders will agree that we work with small mathematical edges that with the power of compounding (and enough trials) we are able to make money (think in terms of several months /a year or more)
To answer your question in general terms of the theory:
Some very good traders come to mind when it comes to using volume, Jesse L, W O'Neil, Vic, and others so I believe that volume may have value when used with other indicators for deciding on entries.
I also use volume but only used as a limited tool as an average volume to ensure that there is enough liquidity to enter and exit without causing slippage beyond an acceptable amount.
Beyond that limited scope I have found volume to not add value to my methods of trading.
I have a gut feeling that volume is more often than not a measure of telling us how many votes where cast with money and by how much to invest or divest in a stock. After all they found an equilibrium in both willing buyers and sellers at that price and time.
lastly, Be careful of the patterns that you find. We are pattern seeking by nature and just because you think there is a pattern does not make it so.
Best of trading to everyone
Great question. After all who hasn't studied volume that is a serious student of the markets. Just thinking about what works and doesn't work makes us better traders.
I do see more than one problem with the way you present the question. Firstly, what screams at me is that you would like to have an answer to one chart.
Without a doubt I am sure that a pattern can be made with the volume in relation to the price action but that does not mean its repeatable. You simply have too small of a sample size to really discuss it with.
I believe and I think most successful traders will agree that we work with small mathematical edges that with the power of compounding (and enough trials) we are able to make money (think in terms of several months /a year or more)
To answer your question in general terms of the theory:
Some very good traders come to mind when it comes to using volume, Jesse L, W O'Neil, Vic, and others so I believe that volume may have value when used with other indicators for deciding on entries.
I also use volume but only used as a limited tool as an average volume to ensure that there is enough liquidity to enter and exit without causing slippage beyond an acceptable amount.
Beyond that limited scope I have found volume to not add value to my methods of trading.
I have a gut feeling that volume is more often than not a measure of telling us how many votes where cast with money and by how much to invest or divest in a stock. After all they found an equilibrium in both willing buyers and sellers at that price and time.
lastly, Be careful of the patterns that you find. We are pattern seeking by nature and just because you think there is a pattern does not make it so.
Best of trading to everyone
Hi IFist. Good topic and started with funny questions that were way off target and impossible to answer, but now you're getting warm. Don't have time to go into any depth so I'm only going to glance on the subject, but forget trying to code this; VSA tried and made a complete dogs dinner of it.
First, here's my old mantra: everything works. They are just tools in the hands of labourers or craftsmen.
You can't have a single bar approach to volume. It has to be read in conjunction with prior bars and prior levels. Reading volume can often give a heads up (yes, a lead indicator) on what the next bar should do and how significant that confirmation will be in ways that price alone cannot always provide. So it's a great additional tool, but not the be all and end all.
Before any other signal appears, volume often gives a strong confirmation of a buy/sell signal and sometimes it's also alerting you to a significant trend reversal at the very start of the event.
I have attached some notes with your chart in a word doc to explain a simple Wyckoff approach, but I don't have time to go through the whole chart except to say it's loaded with clues and signals.
VSA's book, The Undeclared Secrets That Drive The Stockmarket is the most concise Wyckoff approach I know, but avoid the software.
First, here's my old mantra: everything works. They are just tools in the hands of labourers or craftsmen.
You can't have a single bar approach to volume. It has to be read in conjunction with prior bars and prior levels. Reading volume can often give a heads up (yes, a lead indicator) on what the next bar should do and how significant that confirmation will be in ways that price alone cannot always provide. So it's a great additional tool, but not the be all and end all.
Before any other signal appears, volume often gives a strong confirmation of a buy/sell signal and sometimes it's also alerting you to a significant trend reversal at the very start of the event.
I have attached some notes with your chart in a word doc to explain a simple Wyckoff approach, but I don't have time to go through the whole chart except to say it's loaded with clues and signals.
VSA's book, The Undeclared Secrets That Drive The Stockmarket is the most concise Wyckoff approach I know, but avoid the software.