Price and Volume

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Quote from dbphoenix:

the principles apply regardless of the instrument.
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Also, regardless of the trading method! It is just a really amazing, unifying concept. E.g. The shooting star is my favorite candle to short. We had one on the 9:55 EST bar this morning. However, if you look at what preceeded it (up on higher vol, back on lower volume), it was obviously a very risky short.

It even solves the whole "lunchtime dilemma" IMO. Usually the market is slow, but sometimes there are great moves. Well, sometimes there is less supply/demand because it's lunchtime, but who cares WHY, I just trade what IS. When the market is moving, you can see the supply/demand is still there.
 
Quote from peterfigliozzi:

Also, regardless of the trading method! It is just a really amazing, unifying concept. E.g. The shooting star is my favorite candle to short. We had one on the 9:55 EST bar this morning. However, if you look at what preceeded it (up on higher vol, back on lower volume), it was obviously a very risky short.
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While I'm pleased with the response as indicated by the number of downloads, I'm hoping that at least a few of those who are interested in this will start journals of their own to explore strategy.

As I've said earlier, there are just too many possibilities to cover in a single journal, particularly this one. But translating this knowledge to strategy and tactics can be, and usually is, very frustrating. Those who are interested in following at least one effort would do well to follow Peter's journal (Pete's Place).
 
Quote from JackDaniel:

DB,

In your pdf demand files you talk about all the phases that happen to stocks using daily info. Do you propose that some or all of those same phases happen on an intraday basis when
looking at a 5m chart of somethin like the NQ or the ES or whatever intraday chart of whatever instrument you are trading?
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The accumulation/distribution cycle illustrates the principle of demand and supply. However, one can't assign every movement in trading instruments to this cycle. News, reports, wholesale dumping can also affect movement. Similarly, one need not have a corner on the gold market in order to make money buying and selling collectible gold coins.

Even so, the mechanics of acc/dist are discernible in the bases and springboards that occur in intraday charts. Therefore, one must know what he's looking at in order to know what to do with it.

As to the 1115 bar, it is a retest of the "low" made by the 1100 bar, the latter of which is accompanied by what might be minor climactic volume ("minor climax" seems like a contradiction in terms, but there need not be anything singular about a climax, as any woman can tell you).
 
DB,
"As to the 1115 bar, it is a retest of the "low" made by the 1100 bar, the latter of which is accompanied by what might be minor climactic volume"

Although both contracts, the NQ and ES
similarly reversed to the up side at that
1115am candle, on the ES there was higher
volume on the 1115 candle vs the 1100.
However the price at 1115a, unlike the NQ
actually did come within a tick of the opening
low, and the volume there was higher than
it was at 1115. If you looked at the ES chart
(I'll post it if you don't have it) could you
associate similar supply/demand & price/volume
observations to this 1115 reverse area on the
ES as you did on the NQ?

jd
 
Given that price dropped to tentative S and formed a hammer on strong volume, one can postulate that the volume was climactic.
 
031204

Rarely do any of us grow up learning how to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way. In the trading environment, you will have to make up your own rules and then have the discipline to abide by them.

The problem is, price movement is fluid, always in motion, quite unlike the highly structured events that most of us are accustomed to. In the market environment, the decisions that confront you are as endless as the price movements you intend to take advantage of. You don't just have to decide to participate, you also have to decide when to enter, how long to stay in, and under what conditions to get out.

There is no beginning, middle, or end - only what you create in your own mind.

-- Jesse Livermore
 

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Quote from ktmexc20:

First, thanks for sharing your experience and excelent elaboratation.

Noticing on the 3/12 chart that you notate right up to the EOD... I wonder if you give credence to the EOD "signals" (ie. shooting star, climax vol., doji) when approaching the following morning's opening.

Also, while I'm on the subject... I have a tendency to evaluate the EOD volume strength (according to price direction) in consideration for following day entry (securities). Do you feel this is valid analysis (for watchlist consideration) of short term swing trades. I realize that this is not your method of trading, but I hope you might still comment.

Thanks
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As to your first question, it's a long 17 hours from the close to the open. And while I realize that the futures trade outside those hours, the volume is such that what goes on there is only very rarely pertinent. So, in a word, no.

As to your second question, I'm afraid I'll have to disappoint you again. If you've read my posts, you'll know I'll say that what I or anyone else thinks really doesn't matter. Since you have access to old charts, go over them and evaluate them according to how well the EOD volume predicts anything having to do with the following trading day. Given the narrowness of your inquiry, you could do an entire year's worth in a day. Then everybody would be asking you what you think. :cool:
 
What was the last thing you traded? Look at its 1 year, 6 month, 1 month, and 3-5 day charts. Can you see all the opportunities where you could have made a profit? Should have gone long there, shorted here . . .. You're assessing "opportunity" based on price activity subsequent to the point at which you believe the opportunity existed, which means that you're working backward to identify that point of opportunity.

While trading, these are the very opportunities a trader is aiming to spot. This and the desire to make trades will often drive the inexperienced trader to "see" opportunity where there is none, simply because the trader can easily envision the price pattern moving in any given direction. If his predisposition or any of his analysis makes him inclined to forecast a certain direction, he can quickly envision the movement of price in the direction that will yield profits. By envisioning such price pattern formations, it's often the case that the trader will mentally emulate what he has previously viewed on historical charts, and perhaps even had a desire to experience. And this psychology is made even more complex when the trader begins to find "evidence" in current price activity that supports his forecast/vision and ignores any information that contradicts it, thereby providing a false justification to make the trade.

This type of thinking will cause a trader to make trades when no real opportunity exists. The fundamental problem is that the reason for action is based on a forecast/vision, and not on what has happened and what is happening right now. Given the fact that forecasts and visions are not realities and that historical and current activities are, decisions that are based on the proper interpretation of what has happened and is happening will be correct far more often. It's critical to avoid mentally creating opportunities and to know when to stay out of a trade.

Looking at the charts again, try to identify forward-looking opportunities, where you consider only each price point and the price patterns before it. You'll find that it's now far more difficult to spot the winners, but those are the opportunities that you need to identify and then appropriately act on in order to be a successful trader.

Any experienced and successful trader will agree that it's very important not to trade until there's a true opportunity.

-- Innerworth
 
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