Proflogic: "Constant Volume Bars eliminate the arbitrary nature of price action because it makes news and other spike generating actions immaterial and irrelevant...."
Jack Hershey: "To retain the most information, it is necessary to keep volume and price separate and of equal importance. The reason being that volume leads price. Signals come from volume and not only price."
I have studied both. It is true that Constant Volume Bars make certain patterns easier to see...If you look at a CVB charts, it appears less "spiky" than a time based chart, so if your game is trading HL's etc., they seem to give a clearer picture. There are drawbacks though:
The biggest one I have seen is that CVB's, by incorporating Volume in the bar or by eliminating time, remove the option of judging PACE, or the relative change of volume in an objective way:
-For example: Strong moves occur on big volume. This is clearly visible if you have separate volume, but obscured if you do not.
-Moves on declining Volume tend to fail. That is useful information,and better than relying on targets etc.
-Moves that occur on huge volume but fail to reach important S/R (static or dynamic) can be an exit signal.
-Breakouts without accompanying increasing volume fail.
All these can be clearly seen and interpreted by comparing the bars in a separate volume pane but are much less clear when volume is integrated within the bar.
(In order to get around these limitations, I even had someone write me an indicator a couple of years back that made a tick noise whenever a CVB bar completed...so I could actually HEAR the market 'speeding up'...since more volume bars printed in the same time-frame, that meant Pace was increasing....similar to Edmund Levefre listening to the sound of the ticker tape I guess. Did not use it though...)
3. Jack has a point of course that picking a certain Contract amount per bar is no less arbitrary than picking 5 minutes for the length of a bar, and so is basing fractal nesting on this...always troubled me, just for reasons of logic... perhaps not a problem though, seems to work reasonably well.
Volume bars per se do not "eliminate the arbitrary nature of price action", IMO. It seems intuitive to say they do because you seem to have eliminated TIME as a factor but I think this is a fallacy...
Time based charts LOOK more chaotic, but that is really just a superficial appearance: I looked into the tool-sets that Jack's guys are using -for example, Sequences of Volume 'Gaussians' that occur at every breakout,'Pro-Rata volume' that tells you in the first minute of a bar where it is likely going to end up, channel lines that look like spaghetti to the untrained eye but are not once you can read them: if time-based charts were that "chaotic", price movement in them would hardly make it possible to use channels reliably...
Having said all that, I still use Volume bar charts
.... I am used to them, figured out something that works with them, and I seem to have trained my Eye/brain to read them; however these days I have a broader view and am not anymore convinced that Volume bars are without question the most reliable way to present price movement on a chart.
