Volume--- how to use it and WHY

Quote from aceholic:

...As far as time is concerned, for the purposes of a market, time is a constant. I would highly question ignoring time as ProfLogic suggests, but I wouldn't consider it the be-all end-all either. People operate on time. They wake up at approximately the same time each day...
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Actually, the time that I wake up is largely a function of the volume in my bladder. So there is something to be said for volume.
 
My apologies for the intrusion, Thunderdog, but the egregious stupidity of the alleged PV relation causes me to spew bile-laden spittle on my volume-less trading screen whenever it's proponents rear their peckerheads. I am embarrassed at how much time I spent first trying to prove it, then to disprove it, only to find that there is no relation or anti-relation in any mathematical realm I am facile in.
 
Quote from Xspurt:

Level headed and honest answer. Took me a few years on different approaches. Eventually I had charts specially designed for me so I could see the signals.

I based half of it on this but I didn't like the software although some of the ideas were valid. I had to figure out how to delete the false signals and actually their book is better at that than their software.

http://www.youtube.com/watch?v=KeoqJs8L70Y&feature=related
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I watched the short video. It just doesn't do it for me. To be candid, I was initially intrigued by ProfLogic's use of volume charts, so I had a look. My review was hardly exhaustive, but I saw no incremental benefit in the way that I interpret the market action. It was neither particularly worse nor better for me on balance. Sometimes there were entry setups at roughly the same time and sometimes there were not. So for me, it was six of one and half dozen of the other, more or less. This is consistent with my own current view that volume doesn't provide me with useful incremental information. Again, I limit my observation to my own limited review. Others may see a benefit that I don't. I might add that the volume chart put me at a slight disadvantage, because I have grown accustomed to the cadence of my time-based charts, which are very short term. But that's just me.
 
Quote from David Hume:

I never cease to be amazed on ET at the persistence of Aristotelianism in a Cartesian age. The usefulness of volume is for ET's Aristotelians a matter of dogma they will not abandon even with the clearest counter proofs. The most casual observation of a one-second chart distinguishing volume at the bid from volume at the ask disproves their cherished belief. Price leads volume around by the nose like a pimp leads his hooker. Volume clearly is price's bitch. And what do the Aristotelians do when price moves with no relation to volume whatsoever, or when there is no discernible volume? No doubt they stand aside complaining of faulty data.
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Totally wrong. Limit orders say that you are wrong.:)



Dackster.
 
The depth of either side of the inside market does not constitute volume. Lifting of the bid or ask merely confirms my point that price may lead volume.
 
Quote from Dackster:

Fact number 2.

2. Volume can hit either the bid, or the ask.
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Then why am I seeing trades that are between, above and below?
 
The T&S you see is based on an algorithm to match the book against trades. For latency and other reasons (like a big trade going "upstairs"), T&S is highly unreliable as to whether a particular trade was at the bid or ask, or as to what either of those even were at the time of the trade. This is easy to see when you grab the data stream yourself.
 
Quote from David Hume:

The T&S you see is based on an algorithm to match the book against trades. For latency and other reasons (like a big trade going "upstairs"), T&S is highly unreliable as to whether a particular trade was at the bid or ask, or as to what either of those even were at the time of the trade. This is easy to see when you grab the data stream yourself.
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Exactamundo!
 
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