Price/Volume Relationship

Quote from jack hershey:

Prof is offering you an understanding that purely links P and V.

Go to where he is for a moment and allow yourself to consider understanding P and V and their relationship.
More...

Thanks for the clarity, Jack. Appreciated. :cool:
 
Here is my input>

I went through a technical analysis program in SF at www.ggu.edu headed up by Hank Pruden. I was a average equity trader making a living grinding stock for 6 hours a day.

I believe this works best in liquid index and commodity products and have not traded a stock in many years.


Prof Pruden teaches a method using 3 Wyckoff Principals for Money Managers and Investor Types. The time frame is much longer than my 1 min to 1 hour trades, but Markets are fractal and work on many time frames.

1) Supply and Demand
2) Cause and Effect
3) Effort and Result

Effort is the volume in the Charts and Result is the range of the bar that the effort causes. This simple concept is all that is needed to find high probability trades that move to the area of least resistance. Based on where we are in the price cycle...this simple analysis allow you to trade bell to bell based on the typical cycle of climax blows offs and climax sell offs. The middle of these zones are simply signs and strength and signs of weakness that they markets and market participants throw off. Read the signs of the volume and price action and the decision making becomes simpler and no need to deal with your favorite lagging indicator.
 

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Quote from ProfLogic:

Time is a variable that doesn't exist on a Volume Bar Chart (VBC). A VBC is a perfect view of price movement uncorrupted by any and all variables in the market. Since it is so clean the oscillations are smooth, methodical and easy to read. The advantage is you are looking at pure price movement. The markets aren't traded in specific time increments (those are major variables). The markets are traded in share or contract increments and those are represented in the markets as price instruments.

A detailed description on how to read and use VCB's is in this thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=80582&highlight=Odd+Tick

The chart I posted is simply an entry and exit version of the Trend Chart for the eMini S&P. I'm posting the Trend chart for today. All of the labels; price, oscillation outcomes, trend lines and trend designation are all created in real-time by my computer program. The written labels are added by me showing the trade set-ups and execution points that were created today from this chart.
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Very interesting, Prof. I've never read about this approach before. I haven't read that long thread yet, but I will. AmiBroker isn't set up for volume bars and I'm not sure how hard it would be to set them up or whether or not it's possible with IQFeed or IB Feed, but I'll look into it.

What's the bottom indicator? And the zig-zag yellow line is just a zig-zag or something else? It looks like you just trade based on S/R with no averages, channels, etc.?
 
Quote from ProfLogic:

There is no such thing as a specific minute chart for volume bars. Each bar is a specific number of contracts traded. In the case of the posted chart, it is a 343 Volume Bar Chart. The times are marked and the time line is at the bottom for comparison of time.

I don't use minute charts because the markets aren't traded based on time they are based on price and read in volume.

Hope this helps.
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The problem with volume bars, I found Pro Logic is that they don't get cut at the right volume because of block trades. This happened to me in both Esignal and Sierra Chart. According to a post a ways back from you, if they aren't consistent that's no good. I am going off memory, but I do recall a post of you made in about a month ago. I don't know if multi charts can cut a bar at exact volume, but if Esignal can't that seems to be a problem with using volume bars.

I did appreciate your taking the time to educate us. :)
 
Hi BlueDemon77,

Amibroker does have N-volume bars built in, although I haven't used them.

This is from v4.80

TimeFrameMode( 2 );

- switches time frame functions to N-volume bar operation (positive values passed to TimeFrameSet are treated nowas N-volme bars)

Example:

TimeFrameMode( 2 );
TimeFrameSet( 50000 ); // 50'000 share bars..
...do something ...
TimeFrameRestore();



Quote from bluedemon77:

Very interesting, Prof. I've never read about this approach before. I haven't read that long thread yet, but I will. AmiBroker isn't set up for volume bars and I'm not sure how hard it would be to set them up or whether or not it's possible with IQFeed or IB Feed, but I'll look into it.

What's the bottom indicator? And the zig-zag yellow line is just a zig-zag or something else? It looks like you just trade based on S/R with no averages, channels, etc.?
More...
 
Quote from mischief:

Hi BlueDemon77,

Amibroker does have N-volume bars built in, although I haven't used them.

This is from v4.80

TimeFrameMode( 2 );

- switches time frame functions to N-volume bar operation (positive values passed to TimeFrameSet are treated nowas N-volme bars)

Example:

TimeFrameMode( 2 );
TimeFrameSet( 50000 ); // 50'000 share bars..
...do something ...
TimeFrameRestore();
More...

Outstanding! Thanks for the tip, mischief
 
Quote from ProfLogic:

Time is a variable that doesn't exist on a Volume Bar Chart (VBC). A VBC is a perfect view of price movement uncorrupted by any and all variables in the market. Since it is so clean the oscillations are smooth, methodical and easy to read. The advantage is you are looking at pure price movement. The markets aren't traded in specific time increments (those are major variables). The markets are traded in share or contract increments and those are represented in the markets as price instruments.

A detailed description on how to read and use VCB's is in this thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=80582&highlight=Odd+Tick

The chart I posted is simply an entry and exit version of the Trend Chart for the eMini S&P. I'm posting the Trend chart for today. All of the labels; price, oscillation outcomes, trend lines and trend designation are all created in real-time by my computer program. The written labels are added by me showing the trade set-ups and execution points that were created today from this chart.
More...

I had a longer look at your chart and I have to say this is one of the most helpful things I've seen posted on ET. How do you define your setups and what makes one aggressive and another conservative? What's PPF?
 
Quote from jack hershey:

Prof is offering you an understanding that purely links P and V.

Go to where he is for a moment and allow yourself to consider understanding P and V and their relationship.
More...

Do you think volume bars are superior to time bars?
 
Guys,

PL has posted the link to the thread that discusses volume bars in detail and the post -- and link -- has been quoted twice. At least read the thread before asking questions.

LC
 
I like constant volume bars, because it filters some of the noise produced by time charts during congestion periods. However I'm beginning to question if constant volume bars are perfect, and if it accurately displays the relationship between price & volume. For example, after reading bolter's thread (http://elitetrader.com/vb/showthread.php?s=&threadid=63202) about volume profile, he clearly demonstrates the lack of volume (a valley) at a certain price is just as important as a peak in volume. Constant volume bars are great when there is a lot of volume to measure price action, but when volume is low and there is volatility in price you end up with a lot of wide range bars similar to time charts, and the only way to compensate for this is to zoom in by using a smaller interval to see the price action. So the problem becomes what interval is right for current market conditions. Just my 2 cents.
 
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