Volume--- how to use it and WHY

Quote from Trader666:

Did you catch this in the link that was posted? ROTFLMAO!!!!!

"I was nominated by a Nobel committee in Switzerland in 2006 for my research in price movement as it realated to price bars and volume. That isn't the same as winning a Nobel but I wouldn't expect you to understand the difference."
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Yeah, I know. :p

It's shit like that, that made me just shake my head and realize he was one of the BIGGEST TOOLS who ever signed on to these Boards. :(

... the shit just boggles the mind!
 
While in ring #2 we have Jack Hershey posting about "cash cow." :p

And the beat goes on...
Quote from jack hershey:

The trading stategy of the Cash Cow is to build a basic core intraday trading core that trades channels on the 5 minute ES using reversal trading. Raw price/volume data (P, V) was converted to about 31 information components. These were assembled on four levels of logic and iteratively refined (five versions).

The basic core corresponds to beginner and in May version 1.3.3 was doing 25K/month with 5 contracts, 7,500/Month in all of June with 5 contracts.
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I feel so blessed to be in the midst of such great traders who take time out from making their vast fortunes to educate the unwashed masses out of the goodness of their hearts. Let's give thanks even though it's only July...
 
Hey Thunderdog and Aceholic,

It looks like this thread went to hell. I'll start a new thread (unless Surf or somebody beats me to it) and respond soon but not tonight, I am fried.

I was going to apologize for posting when tired and cranky last night but after seeing some of the other posts nevermind.


Quote from Thunderdog:

But that's the point, isn't it? Sometimes price continues on higher volume and sometimes it reverses. Sometimes price continues on relatively low volume and sometimes it reverses. Have you been able to distinguish in advance which is which? Personally, I have not been able to do so with any practicable reliability. So the question I had to ask myself was, what is the incremental value of this additional variable?

As an aside, let us exclude relatively large spikes in volume from consideration, since the writing is on the price wall as well when such outsized volume spikes occur, with outsized price bar ranges. So I don't think there is incremental informational value in such occurences as it relates to volume. As for notable increases in volume not accompanied by outsized price bar ranges, only the subsequent price action will tell you what's what, since I have found that it can go either way in my own experience with no practicable a priori bias that I, personally, can distinguish. So where, then, is the value in volume? Perhaps your perception is more nuanced in these matters.
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I replied on the "Volume analysis is to discarded as it is "too much information" thread.

Quote from black diamond:

Hey Thunderdog and Aceholic,

It looks like this thread went to hell. I'll start a new thread (unless Surf or somebody beats me to it) and respond soon but not tonight, I am fried.

I was going to apologize for posting when tired and cranky last night but after seeing some of the other posts nevermind.
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Quote from ProfLogic:

FOREX huh . . . you mean that market made up of manipulated bank currency transactions? Every wonder why there isn't any volume data only tick data? If you ever catch the ear of one of those high up bank execs in their currency departments and if you are really really lucky you might learn what really goes on inside FOREX.

Banks control the interbank feeds and they control the data you trade from. GLOBEX has tried for years to merge those feeds into a single stream to gain volume data. Not going to happen unless the banks are allowed to filter the data before they send it to GLOBEX. If you think that data is even remotely accurate to the actually trades that are taking place you are fooling yourself. I watched the transaction flow in Hong Kong one day at one of the largest banks there and it was a joke. I'll just say that a nice chunk of trades never got entered into the system. How's that for skewing your data pile?

Try making any accurate decision or try solving any problem when you only have part of the problem to create a solution from. It's impossible to get any kind of accurate or consistent solution from FOREX.
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Sadly you are very wrong and there is academic proof to show this. And what I notice a lot on this thread is a complete lack of rigor applied to the claims. There are entire bodies of academic work that use rigorous statistical treatments of these subjects that result in very compelling observations about volume, price and yes Forex.

What I see here is people saying: "i looked at the charts, bla bla bla". Unless you ran studies on a large volume of data and used proper statistical methods then you are talking about anecdotal information.
 
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