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Volume--- how to use it and WHY
- Thread starter marketsurfer
- Start date
Quote from ProfLogic:
I understand that but as time relates to the markets, it is fixed.
I know what you are thinking and we are moving off topic, but perhaps this will open up some ideas to add to your thinking.
The question on the video was, which clock was correct and the answer was that both are.
Take your constant Time chart and draw a few trend lines on it. Now take a chart with Time removed like a Volume chart, Tick or Range Chart.
You'll get different trend lines when Time is removed so which is correct. Both are.
You are using time and space time and getting different results but both are valid and can be traded.
Hope it helps as I'm not trying to defend anything. If you compare for a while you'll find trades you'd miss on Time only charts.
I'm reminded of the old story about the broker who called his client to tell him he had to close out his position because the market went against him and he had insufficent funds to meet the margin requirements. "On the pluse side," the broker said, "the market went against you on low volume."
Quote from Thunderdog:
I'm reminded of the old story about the broker who called his client to tell him he had to close out his position because the market went against him and he had insufficent funds to meet the margin requirements. "On the pluse side," the broker said, "the market went against you on low volume."
Very true. The biggest fallacy that those who don't understand volume fall prey to is that it's as simple as big volume moves markets. That's usually how they come to the conclusion that volume doesn't work. However lack of supply on small volume is the strongest mover and will cause gaps whereas lots of supply with big volume tends to not to gap.
Like any style of trading it takes study to yield the results and there have been many threads on ET that explain different approaches.
However, volume is not the holy grail and sometimes the signals are absent. Nonetheless it's a very powerful tool with frequent strong signals that lead the market.
Quote from Xspurt:
I know what you are thinking and we are moving off topic, but perhaps this will open up some ideas to add to your thinking.
The question on the video was, which clock was correct and the answer was that both are.
Take your constant Time chart and draw a few trend lines on it. Now take a chart with Time removed like a Volume chart, Tick or Range Chart.
You'll get different trend lines when Time is removed so which is correct. Both are.
You are using time and space time and getting different results but both are valid and can be traded.
Hope it helps as I'm not trying to defend anything. If you compare for a while you'll find trades you'd miss on Time only charts.
Analysis Paralysis . . .
I completely understand and agree with what you are saying but the object to successful trading is not only profit but consistent profit.
Most traders have had the wildly successful day only to give it back over the next few days. That doesn't make a trader, that makes a soon-to-be-ex-trader.
I've already spent literally, 4 years comparing time and tick based charts to constant volume charts and know which is more consistent.
A trader that is in a constant search for only the "home run" trades is doomed to failure. A trader that is happy with simply many consistently profitable trades will be around for many many years.
Thank you Dackster er General er Jack.
The discussions about volume affects or Time affects is about as useful to the average trader as the old discussions
about the number of Angels that could dance on the head of a straight pin.
Volume only makes it possible for you to enter or exit. No more no less. Unless you are perhaps a quant with all common sense trained out.
The discussions about volume affects or Time affects is about as useful to the average trader as the old discussions
about the number of Angels that could dance on the head of a straight pin.
Volume only makes it possible for you to enter or exit. No more no less. Unless you are perhaps a quant with all common sense trained out.
Quote from ProfLogic:
When you create a chart using constant volume bars as a replacement for time, tick or range bars, the variable aspect is completely eliminated.
If you have the ability, set up a chart using them and see for yourself. Don't take my word for it.
I've been all down that fricking road. Change the start time of your first bar and a winning system can be turned into a losing one. You cannot completely escape the time factor.
This is an unbelievable thread, there are three guys here with 12,000 posts between them telling us volume is not a good thing to look at... I'd hate to put them on ignore, they might know something at some point but jeez...
All I'll say about volume is that it's not easy to see how to read it but if you can read it, it speaks. well... volumes...
Quote from heypa:
Thank you Dackster er General er Jack.
The discussions about volume affects or Time affects is about as useful to the average trader as the old discussions
about the number of Angels that could dance on the head of a straight pin.
Volume only makes it possible for you to enter or exit. No more no less. Unless you are perhaps a quant with all common sense trained out.
I'll repeat my post because you evidently missed it.
Please explain to me what is esoteric about price and volume being constants?
I believed this for the longest time despite my not being able to limit the number of false positives and false negatives no matter how I analyzed or interpreted the charts. I even had a PM exchange with another member here a few years ago, defending the use of volume and realized I was on the losing end of that argument. And so, I dropped volume entirely from my trading. Presently, my trading is simpler and more reliable. However, I concede the possibility that you can see what I am incapable of discerning. Perhaps you are more adroit in these matters.Quote from Xspurt:
...Nonetheless it's a very powerful tool with frequent strong signals that lead the market.
Quote from Eight:
I've been all down that fricking road. Change the start time of your first bar and a winning system can be turned into a losing one. You cannot completely escape the time factor.
This is an unbelievable thread, there are three guys here with 12,000 posts between them telling us volume is not a good thing to look at... I'd hate to put them on ignore, they might know something at some point but jeez...
All I'll say about volume is that it's not easy to see how to read it but if you can read it, it speaks. well... volumes...
I'm probably misunderstanding your direction here but I agree volume is important. I just don't think there is a need to interpret it just embed it into your chart into the bars, then it becomes priceless . . . no pun intended.
If I change the start time of my constant volume bar charts . . . it doesn't change a fricking thing and the system stays intact. This is because time is not relevant to the natural cyclic nature of price movement. Those fricking oscillations will occur naturally not at any specific time of the day, day of the week or week of the year.