As a "volume trader" I agree with that ... but in reality, the volume at one time of day can be about a thirtieth of or thirty times as much as much as that another time of day - not just "half" or "double", and that certainly matters.
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Short term trading
- Thread starter Newc2
- Start date
As a "volume trader" I agree with that ... but in reality, the volume at one time of day can be about a thirtieth of or thirty times as much as much as that another time of day - not just "half" or "double", and that certainly matters.
"momentum precedes price" is a well known theory."
It is volume that precedes price - not momentum.
Volume by price is the amount of units traded at a specific price level.
The amount of volume traded is determined by the buyers and sellers.
Bid and Ask sizes are not indicative of volume, as a buyer or seller can enter the market at any time and hit the bid or ask, inside, above or below.
Momentum is the rate of change of price.
The rate of change of price is determined by the quantity of buy and sell orders.
These buy and sell orders can be large or small in volume.
Volume does not precede price, how can it?
Ummmmm -- if I follow you here, you're recommending a book that wouldn't work for you, based on dismissing volume as being the other half of every trade besides price.
Ehhhhhh.
Errrr-ummmmmm.
Uhhhh.
No.
Any transaction is price x volume.
You ignore either at your peril.
Period.
Where did you see me recommend that book? I posted it cause so many might ask about it.
I quoted a book someone else might not have ever read as it is not mentioned if at all, when I bought it, was not a book, it was a copy of his original work of 1950?, there are many traders who have never written books but all have written Trading Plans, and I got copy of trading plans he used, but more I read, doubting it was last Trading plan. Perhaps the book is better and ask a library to see if they can get it.
There have been a number of highly trouted traders through the years who have taken Taylors' works and like George Angell made software to trade and Raschke have written or taught in some fashion Taylors' basic method of BL(buy low) next day goes higher then SO (sell higher open), I think Raschke PDF might add to what am already doing and perhaps filter out some of losing trades.
I have spent years studying and running back tests on volume, I just do not see enough stats that will change my mind on putting volume as one of the filters to take signals. I do use volume as in ave volume traded on whether to get into positions so long as there is decent open interest in the options, I won't take trades in low volume stocks as don't want huge slippage for exits and software doing much more options trading, it just better to pass on low volume anything. I applaud those who can trade using Market Profile, but one hump looks like the next with more or less volume, but never worked for me.
If volume works for you-that's great. I just never have found a large enough edge, you don't know if there is a spike in daily volume until after the fact, I rather get in based on what I use then wait to see what the volume is and get in at worst prices.
A nice discussion.
If momentum doesn't precede price then why is the first dip often a good place to buy?
Or am I reading this all wrong.
How do you know if the first dip today is going to behave in the same way as the first dip yesterday, or the day before, or the day before the day before, and so on and so forth.
Momentum is very important for short term traders. If you look at the ES prints/sizes you will see that the majority of trading is short term trading. This can be verified by checking the OI figures. ES momentum is far different to other markets, so do not use momentum as a general term that is the same for all markets, as that can cost you a good deal of money if you do not understand what you are doing.
Far too many people read far too much into far too many things.
If you are going to be a momentum trader then you need to know a good deal about momentum for the market you trade, but if not, then there is no need to know.
How do you know if the first dip today is going to behave in the same way as the first dip yesterday, or the day before, or the day before the day before, and so on and so forth.
Momentum is very important for short term traders. If you look at the ES prints/sizes you will see that the majority of trading is short term trading. This can be verified by checking the OI figures. ES momentum is far different to other markets, so do not use momentum as a general term that is the same for all markets, as that can cost you a good deal of money if you do not understand what you are doing.
Far too many people read far too much into far too many things.
If you are going to be a momentum trader then you need to know a good deal about momentum for the market you trade, but if not, then there is no need to know.
thanks. I trade equities. So where can i find out about momentum in equities?
I look for a big move up and then a small pullback (no more than 20% of prior move up).
It seems to work but not consistently.
thanks. I trade equities. So where can i find out about momentum in equities?
I look for a big move up and then a small pullback (no more than 20% of prior move up).
It seems to work but not consistently.
Like the ES, some stocks such as AAPL will have their own momentum "characteristics". This is due to the same people (manual or auto trading) trading the same thing all the time.
Therefore, what you are seeing is no more than the behavioral characteristics of individuals and programmers, which of course can be repeated over and over due to the nature of human beings. This has been put forward by so many for so many years, and if you think about it, it really can not be any other way.
So, your question should be "how do I spot a low risk trade for my chosen stock".
The answer is, well, let's see what you think the answer should be first?
Keep in mind what constitutes a "low risk trade".
In relation to your opening post, the bit about the closing 2 days after opening, well, the trade should only be closed when required. Why would you close a trade unless it requires to be closed???
As a "volume trader" I agree with that ... but in reality, the volume at one time of day can be about a thirtieth of or thirty times as much as much as that another time of day - not just "half" or "double", and that certainly matters.
What market do you trade and what size, just curious.
I am guessing FX (but no volume!)without checking any of your posts, correct?
You might find this funny. I thought your avatar was an "ear", until I clicked on your profile and seen it was a picture. No offense intended!
Yes it all comes back to risk management as a priority.Like the ES, some stocks such as AAPL will have their own momentum "characteristics". This is due to the same people (manual or auto trading) trading the same thing all the time.
Therefore, what you are seeing is no more than the behavioral characteristics of individuals and programmers, which of course can be repeated over and over due to the nature of human beings. This has been put forward by so many for so many years, and if you think about it, it really can not be any other way.
So, your question should be "how do I spot a low risk trade for my chosen stock".
The answer is, well, let's see what you think the answer should be first?
Keep in mind what constitutes a "low risk trade".
In relation to your opening post, the bit about the closing 2 days after opening, well, the trade should only be closed when required. Why would you close a trade unless it requires to be closed???
The best place to put a stop is as close to price action but with the lowest chance of being hit.
For me this is the holy grail that i seek.
Yes it all comes back to risk management as a priority.
The best place to put a stop is as close to price action but with the lowest chance of being hit.
For me this is the holy grail that i seek.
A low risk trade is not defined by your stop level, and your stop level is an integral part of your risk management strategy.
Stops are used to preserve your capital in case you are wrong on the next trade, so will prevent you from losing more than your allocated risk per trade.
Would you like to give another take on what constitutes a low risk trade?