Volume analysis is to be discarded as it is "too much information"
- Thread starter Buy1Sell2
- Start date
Quote from Buy1Sell2:
The post said that it is not necessary to do either to be successful. Both can be successful. Thanks for the question!!
Your post said that they were unnecessary which brings me back to my question of how you enter and exit a real trade.
sosueme
PS I need to add that I am only interested in real trades, not sim or imaginary stuff.
I trade all in, all out using price and a scant few indicators that reflect market sentiment. I apply prudent risk management to these trades. The point is that all of the things I mentioned in the second list are unnecessary to successful trading. You can use them if you want, but they are not needed. I appreciate the queries! You may be on the right track soon!!
sosueme I can only touch on the subject but here's a live example of what B1S1 misses waiting for lagging indicators to tell him about sentiment.
The 1 min chart on the left is a live trade still running and well up on this screen capture. The green line with the "L" on the price is where the trade was filled and the red line was the stop 5 pips below.
The chart on the right is a 5 min chart with volume. The volume on the 1 min is dizzy and is too advanced for me to attempt to explain now.
The green line shows the fill after slippage and is not a PA entry. Getting this entry on PA alone is quite a challenge.
To simplify things look at the 5 min chart. The move down shows decreasing selling and the green inside candle shows more buying than that over the past hour. Rather than wait for an indicator to signal that is based on past PA or for the high of the bar to be taken out you can already see the sentiment has changed.
Of course not every signal is a screamer and not every signal works but if you want to read sentiment there are two options: indicators that follow price or volume that leads, but the latter will require patient and diligent application to get the rewards.
The 1 min chart on the left is a live trade still running and well up on this screen capture. The green line with the "L" on the price is where the trade was filled and the red line was the stop 5 pips below.
The chart on the right is a 5 min chart with volume. The volume on the 1 min is dizzy and is too advanced for me to attempt to explain now.
The green line shows the fill after slippage and is not a PA entry. Getting this entry on PA alone is quite a challenge.
To simplify things look at the 5 min chart. The move down shows decreasing selling and the green inside candle shows more buying than that over the past hour. Rather than wait for an indicator to signal that is based on past PA or for the high of the bar to be taken out you can already see the sentiment has changed.
Of course not every signal is a screamer and not every signal works but if you want to read sentiment there are two options: indicators that follow price or volume that leads, but the latter will require patient and diligent application to get the rewards.
One last example of how PA and sentiment indicators lag volume clues.
That last trade culminated in a wide candle push looking like it was going to the moon. But there were problems that volume showed up.
Why did PA push up on less volume than the last push?
And why is the next red inside candle so small compared to the last red circled?
These two topping candles are on almost the same volume - the classic smart money reversal that is hidden to the PA crowd. The PA does not indicate what is going on with the underlying sentiment. The next candle could be a continuation up just reading PA.
PA allows you to take the break of the last circled red candle short, but with that last big push how big are your balls?
Specialists and floor traders know how to disguise trades and suck in the unwary but you can learn to read their moves. That is why the one thing they want to hide is volume because PA alone sometimes can make a fool out of you.
So while B1S1 is waiting for his indicators to tell him what the sentiment is the volume readers are waiting for him to enter the market and push their trade on further.
That last trade culminated in a wide candle push looking like it was going to the moon. But there were problems that volume showed up.
Why did PA push up on less volume than the last push?
And why is the next red inside candle so small compared to the last red circled?
These two topping candles are on almost the same volume - the classic smart money reversal that is hidden to the PA crowd. The PA does not indicate what is going on with the underlying sentiment. The next candle could be a continuation up just reading PA.
PA allows you to take the break of the last circled red candle short, but with that last big push how big are your balls?
Specialists and floor traders know how to disguise trades and suck in the unwary but you can learn to read their moves. That is why the one thing they want to hide is volume because PA alone sometimes can make a fool out of you.
So while B1S1 is waiting for his indicators to tell him what the sentiment is the volume readers are waiting for him to enter the market and push their trade on further.