TA and Volume - any relationship

M

Mut1ey

Being relatively green on trading - I'm receiving conflicting information. On the one hand volume is the main, reliable, tradable indicator. On the other, TA such as Stochastics and MACD combined are.

I have two questions:
1) Is there any relationship between underlying volume and TA indicators
2) Which is best - volume or TA?

Cheers

Mutters
 
Price, time, and volume are *real*. When I say real I mean that on planet earth there is a physical market place and transactions take place. Each transaction has a time, price, and volume. These can be plotted on the chart and this is how you can see transaction history and crowd behavior.

Indicators (stoch, macd, adx) are subjective. You tweak them endlessly (change parameters) until you'll see exactly what you wish to see. Then you can use other indicators if the ones that you are using don't show you what you are looking for. Price, time and volume cannot be tweaked or changed and therefore they are the only thing that can give you a REAL picture of the market.

Many people fall into the indicator trap, they are fascinated by them and they simply and literally lose touch with reality and with the market. Don't let it happen to you..... "keep it real" as they say in da hood..

I'm sure you'll hear different opinions too, take what makes sense to you!

Good trading
50
 
Quote from Mut1ey:

Being relatively green on trading - I'm receiving conflicting information. On the one hand volume is the main, reliable, tradable indicator. On the other, TA such as Stochastics and MACD combined are.

I have two questions:
1) Is there any relationship between underlying volume and TA indicators
2) Which is best - volume or TA?

Cheers

Mutters
More...
================

Tech analysis is defined as the study of price and volume;
Mutters ,note the order,price is before volume.:cool:

Mutters, note your broker will always keep score based on the price of your stock or derivative, volume is secondary at best.

A private library and or public library including ;
''books'' linked at the very top green line of this page helps and is a lot more accurate than info you recieved.

===============
The plans of the diligent tend only to advantage.-Solomon,trader king in the kingdom.
 
Hi Murray t turtle -

Afraid I may have misphrased my post above - sure I can see price is hugely relevant - I guess I was just wanting to isolate my question to volume as a primary indicator vs TA as a primary indicator.

50c - thanks for that.
 
Mut1ey,

technical analysis is a commonly used as a term for chart studies (price, time, volume and indicators too). It is opposed to fundamental analysis when you buy or sell stocks based on their earnings, cash flow etc.

price pattern (aka chart patterns) are one thing and indicators are another. technicians use them in conjunction many times (I personally don't use indicators as I mentioned before).

stockcharts.com illustrate the difference nicely:

http://stockcharts.com/education/

if you're just starting it's a good place to start (it's free)

Cheers
50
 
There are two camps on his:

Those who make money and those who don't.


I align the right trendline moves with the signals from the indicators I use. This double whammy is neat and invincible

To do timing of making money on equities, you need to prepare before price breakouts. Volume gives you the lists for this essential activity.

Volume breaks out before price. So you use that as a monitoring device. When volume breaks out you buy.

To sell you usually have about a two day window. Late the first day early the second day. You use peaking volume to tell you when the price is finished rising.

Obviously the prior posters cannot grasp this stuff. That is not a problem for you. It is their problem.

Your challenge is not difficult because you are not trapped in their baggage and myths as yet.

I posted my September results as a comment on each of the above facts. It is a beginner level performance by a committee of beginners. I coach them and I trade on an expert level.

You will find in ET that this record is considered to be just claims and ridiculous. Moderators back the criticism of my comments and apparently agree with the critics. Both these classes of people have two things in common. They do not understand very much in investing to make money and secondly, they never offer any alternatives that remontely resemble the PnL posted. The reason they are so screwed up is their personal life experiences. Somewhere along the line their minds got to be like the two prior posts preceeding this one.

Make it a point to separate yourself from crap posted in ET. You get the job done by not alowing yourself to do any less than excellent. That comes from work and good NLP pictures for dealing with the emotions involved.
 

Attachments

Quote from 50 cent:

Price, time, and volume are *real*. When I say real I mean that on planet earth there is a physical market place and transactions take place. Each transaction has a time, price, and volume. These can be plotted on the chart and this is how you can see transaction history and crowd behavior.

Indicators (stoch, macd, adx) are subjective. You tweak them endlessly (change parameters) until you'll see exactly what you wish to see. Then you can use other indicators if the ones that you are using don't show you what you are looking for. Price, time and volume cannot be tweaked or changed and therefore they are the only thing that can give you a REAL picture of the market.

Many people fall into the indicator trap, they are fascinated by them and they simply and literally lose touch with reality and with the market. Don't let it happen to you..... "keep it real" as they say in da hood..

I'm sure you'll hear different opinions too, take what makes sense to you!

Good trading
50
More...



Very well put.
 
Quote from Grob109:



Volume breaks out before price. So you use that as a monitoring device. When volume breaks out you buy.
More...

OR sell ..... Just be careful to not over simplify.

While I agree with these ideas I have to say that IMHO they are not the only relevant parameters: each issue has slightly different characteristics and you need to characterize these and give them due consideration in addition to merely looking at volume break outs. .... Perhaps your "indicators".
 
Quote from CalTrader:



OR sell ..... Just be careful to not over simplify.

While I agree with these ideas I have to say that IMHO they are not the only relevant parameters: each issue has slightly different characteristics and you need to characterize these and give them due consideration in addition to merely looking at volume break outs. .... Perhaps your "indicators".
More...

Take a close look at what I posted. It is exclusively for trading long which is what beginners do. I was not oversimplifying. What I was doing was stating the key factors for a beginner to deal with. Nothing more nothing less.

Your comment on differences between stocks shows that you do not focus on getting a top a notch universe for trading to make money. the culling based on FA and TA and repeatability sets the total scene for making money. What a person wants MOST of all is stocks that repeat and stocks that are uniform when they are compared. High quality selections for a universe is what achieves this and not looking at anomalies from one stock to another that crop up in a poor universe. Having any nuances to deal with when it is avoidable is just a result of inexperience and low standards. It is extremely important to not be lax in this way. It is much harder to go from where you are up to where I am than vice versa. Start with high exacting standards and optimize. don't spend time cuddling stcoks with special attention to deal with their handicaps.

This the tenor this post is similar to the postyou made to criticize my volume comment: (LOL) in reaction to a substandard reply post by a third party. Apparently I do not include enough to satisfy you. It turns out your standards are not important as seen above.

For a stock to get on my monitoring list for a potential volume break out is a long and deliberative process based on all of the above. I left nuance land behind me about three years into short term trading. That was about 1960.

I posted the PnL so anyone sensible could get the picture of how short trem investing works for beginners. Your comments indicate that you didn't get it and you apparently love to criticize.
 
Indicators can be drawn also on pure random walk. So to distinguish between noise and true signals analysts look at volume for validating the indicator's signal. Now a little secret from my model :D the volume has a negligeable effect on price equilibrium see "Market and Quantum Effect"

http://www.elitetrader.com/vb/showthread.php?s=&threadid=22833

The levels prices calculated above with or without volume wouldn't be much different. Volume has only local importance but not global that is to say the crowd cannot really interfere with price equilibrium contrary to what one could intuitively believe (and that is the third meaning of the mirror metaphor in "Trading in the Mirror" thread http://www.elitetrader.com/vb/showthread.php?threadid=22531: the Mirror can send you a picture that is an illusion :D )

Quote from Mut1ey:

Being relatively green on trading - I'm receiving conflicting information. On the one hand volume is the main, reliable, tradable indicator. On the other, TA such as Stochastics and MACD combined are.

I have two questions:
1) Is there any relationship between underlying volume and TA indicators
2) Which is best - volume or TA?

Cheers

Mutters
More...
 
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