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

Is volume histogram useful in your trading?

  • Yes - it is useful to help predict price action

    Votes: 57 60.6%

  • No - it's as useful as random distribution

    Votes: 37 39.4%
  • Total voters
    94
Quote from lindq:

Then why don't you write an entry rule from that chart that uses volume and share it with Ironfist?

The rule needs to show at least some positive return in backtesting. Short or long.

My challenge to you is that you can't.
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This oughtta be interesting.
 
Quote from Anekdoten:

Iron,

Look for volume divergence when a reversal formation presents itself, preferably on the 1 min chart this will alert you of "Sellers Done, Buyers Done, Stops Hunted and Found".

For now, ignore all other occurrences.

Simple samples attached.

Anek
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Thanks for the chart. How close are you getting your entry to the actual turn in ticks, by using the volume div?. Very interesting.
 
Quote from bilbod:

Hi IF,

Your view of volume is too simplistic. If it were that simple, everybody would be rich.

The most valuable use of volume is in discerning what Smart Money (aka Market Makers, Floor Traders, the Floor, Strong Hands) are up to.

A frequently quoted statistic is that 90% of retail traders loose money. Where does that money go? It doesn't disappear into thin air. It flows into the pockets of the MM.

If you want to know how to use volume, study Richard Wyckoff's work and a modern off shoot called Volume Spread Analysis.

This is a non trivial topic and will require substantial time and effort to learn how to use it.

Bill
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I've studied VSA and lots of wykoff's work and found it to be inconclusive.

Volume should be used simply.

High Volume at tops / bottoms = high probability climax.

High Volume from low volume areas = high probability break outs.


It really isn't that complicated.

The problem is people's patients.
 
Quote from bilbod:

Volume is useful in combination with prices but the patterns are not repeated exactly....

"volume increased on an up bar so prices are going higher"


Bill
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=================
IrfiT;
But thats the correct order;
A] fundamentals[oil/stocks or real estate doesnt trend the SAME AS spy/es...], price, [C]volume.

a]AND SOME COULD MAKE A CASE FOR NOT EVEN LOOKING ON FUND-AMENTALS;
BUT STILL NOTE THE ORDER.[price before vol, thats why most of us put price on top of vol,we read top to bottom...................]

b]One day[or candle] doesnt[does not, repeat not] mean much;
takes 2 days or 2 years++..,,,,,,,.to make ''the bottom''.

c] Only liars catch all the tops or bottoms;
this bear rally may go higher, smaller buy volume makes sense-
not many want to trade big yet in countertrend bear rally.And just like in 1929,30's'' big meddlers in marketplace''[GM,F private jet set may get gov aid/waste....]

For the media to say the market went higher on probable GM waste/loan;
is the most absurd thing i ever heard in my life-its a bear rally/overdue. 1929-1930's had plenty of bear rallys

sincerely,
murray TT
:D :cool:
 
Humerus thread. Humerus because most of you guys are missing the detail that is needed to correctly read volume. Volume is the cardiograph of the market condition. A good heart doctor can identify an anomaly in a cardiograph and determine what ails the patients heart. You boys and gals are not ready to play operation yet! I think if you start trading the vampire hours overnight, it may help you start putting the pieces to the puzzle together.
Trading the Chicago or New York hours is a lot more difficult to learn to read Volume.
One of the key elements of correctly reading the volume is watching the closing prices on the bars. If you use Anekdoodles favorite trading method (pattern recognition) You will see a volume spike on most peeks and pullbacks. I said most! not all! What follows the event is of major importance. The first key to a top or bottom is a weak bar close on the volume spike. The next will be consolidation. The next event is of equal importance. What will happen to the volume when we break out? Can anyone of you guys or gals answer that?

The devil is in the details and the details will drive you crazy in the beginning. Its what happens later that matters. You start getting use-to information overload and than there will be lots of eureka moments. Its called more screen time!
 
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