Volume analysis is to be discarded as it is "too much information"

[Arthur Deco]

As always, Thunderdog, you stated the case perfectly, philosophically paralleling Hume's logic for his atheism (here I paraphrase, as memory fails): "If he is all powerful, why then does he allow evil to exit? If he is helpless in the face of evil, then why should I worship him?" If volume is helpless in the face of price, then he has no place in the Pantheon of my charting.

There also is the very old argument put forth by that wizened shrunken child of the '60s observer of the markets, one Hypostomus, who to his great chagrin (I am told) regretted his monumental failure to convince the Hersheyites that there is a nagual and a tonal, a quantum and a macro, to the markets. The tonal is built from the nagual, and the macro from the quantum, without exception. And the nagual/tonal duality is clearly evident on the one-second chart, where price leads volume like the little head of man leads his big head. The only explanation of the failure of the Hypostomean Argument to convince is that the one-second chart flies by too quickly for the dull-witted to comprehend it.

The Hersheyites would not believe, so they deserve their neverending torment at the hands of their Inquisitors.

 

[Thunderdog]

Quote from Arthur Deco:

...paralleling Hume's logic for his atheism (here I paraphrase, as memory fails): "If he is all powerful, why then does he allow evil to exit? If he is helpless in the face of evil, then why should I worship him?" If volume is helpless in the face of price, then he has no place in the Pantheon of my charting...

I like that.

Oh, and please be sure to give Hypostomus my regards.

 

[ARealGannTrader]

Quote from Thunderdog:

I don't know what you mean by a "prorata reading" in this context. However, if you are perhaps suggesting that a trader can enter before price gives an indication, then he may as well flip a coin. Did you not write earlier that price could go one way or the other on higher volume (or lower, or whatever)?

Bottom line is that price gives the cue on direction. If you move before price, your own argument suggests that it is premature from your quote above. And if you move after volume confirms, then your entry point may be at a less desirable dollar risk level. And if volume is to be a concurrent indicator, then is it one of those instances where volume goes up when price continues or when it reverses? Or is it perhaps one of those instances where volume declines when price continues or when it reverses? Have you really worked all that out? Really? With better than coin flip reliability? Really?

In any event, I think price dictates direction (of price). To act sooner is to act precipitously (read your own quote above) unless you're gifted, which I am not.

Well, this is the basis of the Hershey method it would appear. They use prorata volume to get a potential jump on the indicator and price users.

Their theory is that if wrong, it will b identified that much more quickly, which results in a break even trade, and one is to reverse immediately upon recognizing that price is going to go the other way.

I trade markets with no volume, so it is of no consequence to me, but the premise is sound enough, and I would trade this way if I ever had the need to try ES or stocks.

 

[Arthur Deco]

I am self-mortified that I debase myself to participate in such low and rude discourse, but the illogic of the "pro-rata" argument makes my head hurt like a bad case of constipation. The Hersheyites seek to peer inside their opaque five minute bars by predicting what the volume will be at the end of that bar based on the current volume in the nascent bar. It surpasseth all understanding why they do not simply watch one minute bars (my preferred timescale) to see if volume is accelerating decelerating or steady. Perhaps they once tried, and found that their cherished P-V theory crashes and burns in the bitter clarity of that timeframe.

 

[Arthur Deco]

I must add that I would share my associate Joe Doaks' pioneering, nay, seminal, research on the Unified Theory of the Price Efficiency of Volume with ET, but I decline to cast pearls before swine. This differential calculus based model clearly pulverizes the P-V theory like a Vegomatic shreds cabbage. But only one person on ET has been found worthy of this revelation, and at my age I have energy for only one understudy at a time. Those of you who are mathematically disinclined can derive the theory for yourselves given the hint of its name. For a coarser hint, recall your feelings upon slipping a five into the G-string of a stripper, only to get no more gyrations than had gone before. If you cried out in rage "Wiggle your ass, you lazy Bitch!", then you already comprehend the essence of the UTotPEoV paradigm. All volume is not created equal, and price is often a lazy bitch. The lesson is to make the stripper earn the five first, the same way that price knows it must lead if it wants to earn the volume.

 

[Arthur Deco]

Let me provide a counter example which just inconveniently occurred. I am idly vilifying a code change on the overnight market. Attached is a screen shot of a clearly tradeable 5 point move in NQ. The bottom study is volume (which I use in various ways as a kinda-sorta-maybe harbinger of incipient price exhaustion, confirmed only when price rolls over on its back doji stiff-legged like a dead hog struck on the freeway by a speeding semi). Can't see any volume on this screen scale set up for RMH trading? That's because there ISN'T any fucking volume! But brave souls make as much or more money trading the mean-regressive overnight session as others do trading the trending RMH. And I'll bet they couldn't give a shit less about Aristotelian academic theories of price and volume spun by an ancient relic who doesn't trade.

 

[ehorn]

Quote from Arthur Deco:

... And I'll bet they couldn't give a shit less about Aristotelian academic theories of price and volume spun by an ancient relic who doesn't trade.

If it ain't broke why fix it?

 

[Arthur Deco]

Assuming you drew that trend line correctly, the only definitive signal that chart shows is the trendline break and the reaction retrace back to it, which provides a much more solid entry signal than what you imagined you saw inside the congestion.

 

[MandelbrotSet]

Quote from ehorn:

If it ain't broke why fix it?

Here we go with the crayola crowd again ... ah, those lovely hindsight charts.

 

[ehorn]

Quote from Arthur Deco:

Assuming you drew that trend line correctly, the only definitive signal that chart shows is the trendline break and the reaction retrace back to it, which provides a much more solid entry signal than what you imagined you saw inside the congestion.

"kinda-sorta-maybe"... LOL!

Have a nice evening guys