Trouble interpreting price and volume

[bronks]

Quote from abxs:

I'm trying my hand at trading based solely on price and volume analysis, but I can't seem to get the hang of it just yet ...

TIA...

Your gonna have some fun. Don't mind coolio, he was dropped on his head.


Volume studies is very subjective, there are no absolutes... just tendencies. There are Highs, Lows, Reversals, Continuations, Consolidations, Trends and Chop, all done on heavy/medium/and low volumes. The only thing with any kind of volume consistency that I've seen is THE PUKE.

It's your job to figure out what those tendencies are in your market. To do that, your gonna have to watch it everyday. There will be price/volume patterns that happen repeatedly and just when you put money on it, like clockwork, it'll change. Will you pull the trigger the next time? Maybe - maybe not.

I don't know man, I've seen the offers dry up and the ask prices getting taken out aggressively, then suddenly the rug gets pulled. But you know, that kind of crap usually happens more in a downtrend don't it. Like I said... tendencies.

 

[Clym]

Quote from abxs:

I'm trying my hand at trading based solely on price and volume analysis, but I can't seem to get the hang of it just yet ...

Particulary regarding my entry at 10:14

Any pointers on what I did wrong?

TIA...

This is just the way I see it. I have learned to focus less on each individual bar and more on the last few. Forest instead of the trees.

 

[abxs]

ok, I agree with your vision but you just ignore the down bars or bars with low volume...

In hindsight it's easy to say ignore them, but at one time these are signals, other times you say to ignore them.

But I can show you a similar example when the trend does go down and when I'm right (perhaps just lucky?) that time... I'm in doubt if I'm using a good strategy:

I've been trading with an average of 2% profit a day. (is this good? mediocre? normal?) But... then I've had days with losses that amount to 10% which offcourse erase all the effort of the days before. I'm managing risk and when I'm talking about 10% loss this is spread over douzens of trades, it seems like a losing streak when you have 50 trades in one day and only 5 go in the right direction. Statistical very improbable, not?

 

[abxs]

Quote from coolweb:

your concept of volume is wrong

ok please let me know what you would do in this case:

it's a similar situation in my opinion...
I'm eager to hear your vision because at this moment the chart has passed to point so we can check with what really happened...

But I hope you respond before looking at what happened...

 

[abxs]

nobody wants to give his/her opinion?

 

[NihabaAshi]

Quote from abxs:

I'm in doubt if I'm using a good strategy:

I've been trading with an average of 2% profit a day. (is this good? mediocre? normal?)

First of all, its impossible to answer these questions because you have not explained in detailed your strategy that involves Price Volume Analysis and/or the source of your interpretations.

There are hundreds of different methods floating around out there about Price Volume Analysis and you haven't disclose any thing I'm familiar with except a chart with some single interval analysis.

Also, there are a few decent in-depth threads on the topic of Price Volume Analysis, Hammer Pattern Analysis et cetera here at EliteTrader.com

http://www.elitetrader.com/vb/search.php?s=

I think those threads will help anyone that's a Price Action Only trader (no indicators) or a trader that the bulk of their method involves Price Volume Analysis and those threads will quickly show one thing...

This is not (should not be) a subjective trading approach to the markets and requires a detailed trading plan (market price action causes, supply/demand analysis, volatility analysis, pattern signal, entry signal, intitial stop/loss method, trailing stop method, profit target method, contingency plans, other key market analysis that has impact on your trading instrument, position size management, money/risk management et cetera).

Then again, that 2% profit on average per day your doing...

If that's on a sizable trading account while not violating your money management rules...

Your doing ok and should be giving out trading advice whenever you have free time

Mark

 

[Ripley]

Quote from abxs:

nobody wants to give his/her opinion?

I haven't looked...

The trend is up and the volume is pretty low. Thus, it goes down ?

 

[kiwi_trader]

Everything Mark says is valid.

Re 2% profit per day. Say you have a 200 day trading year then your annual return would be ((1+0.02)^200)*100 = 5250%. That seems quite a reasonable result to me especially if you can do it with a six figure account.

 

[abxs]

Quote from kiwi_trader:

Everything Mark says is valid.

Re 2% profit per day. Say you have a 200 day trading year then your annual return would be ((1+0.02)^200)*100 = 5250%. That seems quite a reasonable result to me especially if you can do it with a six figure account.

yes, but alas I have frequent days of 10% loss also! which I still fail to explain how it's possible... My risk remains the same, it seems I just run into a losing streak and I'm talking about 40 to 50 trades of which only 5 go in the right direction... It almost seems as if my system only works 4 out of 5 days...

 

[abxs]

Quote from Ripley:

I haven't looked...

The trend is up and the volume is pretty low. Thus, it goes down ?

It goes down two bars, relatively much... but then the up trend continues... so I'm confused here, different signals pointing me towards ambigious conclusions...