Volume = useless
- Thread starter failed_trad3r
- Start date
cool, will do... thx
Not always. Sometimes, the futures lead stocks, i.e. when futures are up a lot in pre-market, then stock prices follow at the open (or down, same thing)
Even intraday the regular session, the arb-ing goes back forth. One hour the stocks might be dragging the futures along, other times the futures are moving on their own and stocks follow.
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Regarding the OP's contention about volume, he is correct (semantically, at least) that current volume alone at any given moment does not directly correlate to a trend or no trend
But it is the current volume+price in relation to past volume+price that gives clues as to trend continuation or reversals (i.e. divergences).
If you understand this pic you will know that you knowQuote from failed_trad3r:
I believe volume is useless in determining direction of a trend. All the adages incorporating volume, high volume indicates continuation of trend etc. are just useless! This rally happened on low volume, yet it continued!
Maybe there's a usefull component of volume in super high frequency scalping, but I don't know where.
Volume at best is just a gauge for volatility. High volume is more activity is higher volatility. If you look at charts higher volume usually indicates higher downside volatility. But it can't be used for trend analysis!
Another technical analysis myth busted!
Friday was the perfect example in the ES of just how critical tracking volume is! Friday we had trade eventually break below the 1050.50's after hours session lows, this during the cash session which caused a significant "supply & demand" effect.
The break below the 1050.50 level (initiated by equities sell program activity) in the ES had all previous significant held LONG inventory capitulate (market now completely VOID of those bigger players holding LONG inventory). New initiating sellers (chasing the equities sell program weakness) and the last LONG holders dumping out of their held positions dramatically increased the selling bias within the traded order flow.
Eventually, after a very swift downward movement of price, we tag the 1040.75 Low Of Day.......almost 10 point range extension to new lows! Now this exact "supply & demand" driven event was a key signal as I track VOLUME studies. This swift trade to the 1040.75's just cleaned out all the last LONG holders (LOSERS) and many of the SHORT holders from much higher pricing levels (WINNERS).......so the market just created that perfect "supply & demand" scenario I specifically look for as I track MAINLY volume (Cumulative Delta).
When you get a market where all the LOSERS and all the WINNERS start getting out of the market all at the same time.......watch out, big move ahead! So what happened just after this key "supply & demand" event in the ES market??? B O O M........ES takes off on a wondrous 23 point SHORT covering rally with a high before the close of the 1064.00 level.
Tracking volume information and seeing how out of balance this market was Friday (FAT with held SHORT inventory and eventually vacant of any last significant held LONG inventory) was the "tell" imo. Watching price only will never tell you about the status of the various participants in that market....how many are LONG, how many are SHORT, and when are imbalances expanding or contracting.
Commercials who trade much more liquidity than anyone here at ET specifically track this critical volume information....and you say VOLUME is useless, all I can say is.....LOL!!!
The break below the 1050.50 level (initiated by equities sell program activity) in the ES had all previous significant held LONG inventory capitulate (market now completely VOID of those bigger players holding LONG inventory). New initiating sellers (chasing the equities sell program weakness) and the last LONG holders dumping out of their held positions dramatically increased the selling bias within the traded order flow.
Eventually, after a very swift downward movement of price, we tag the 1040.75 Low Of Day.......almost 10 point range extension to new lows! Now this exact "supply & demand" driven event was a key signal as I track VOLUME studies. This swift trade to the 1040.75's just cleaned out all the last LONG holders (LOSERS) and many of the SHORT holders from much higher pricing levels (WINNERS).......so the market just created that perfect "supply & demand" scenario I specifically look for as I track MAINLY volume (Cumulative Delta).
When you get a market where all the LOSERS and all the WINNERS start getting out of the market all at the same time.......watch out, big move ahead! So what happened just after this key "supply & demand" event in the ES market??? B O O M........ES takes off on a wondrous 23 point SHORT covering rally with a high before the close of the 1064.00 level.
Tracking volume information and seeing how out of balance this market was Friday (FAT with held SHORT inventory and eventually vacant of any last significant held LONG inventory) was the "tell" imo. Watching price only will never tell you about the status of the various participants in that market....how many are LONG, how many are SHORT, and when are imbalances expanding or contracting.
Commercials who trade much more liquidity than anyone here at ET specifically track this critical volume information....and you say VOLUME is useless, all I can say is.....LOL!!!
Quote from Mr_Black:
If you understand this pic you will know that you know
This is probably more helpful than what others are doing...
What do you mean?
Quote from AMT4SWA:
Friday was the perfect example in the ES of just how critical tracking volume is! Friday we had trade eventually break below the 1050.50's after hours session lows, this during the cash session which caused a significant "supply & demand" effect.
The break below the 1050.50 level (initiated by equities sell program activity) in the ES had all previous significant held LONG inventory capitulate (market now completely VOID of those bigger players holding LONG inventory). New initiating sellers (chasing the equities sell program weakness) and the last LONG holders dumping out of their held positions dramatically increased the selling bias within the traded order flow.
Eventually, after a very swift downward movement of price, we tag the 1040.75 Low Of Day.......almost 10 point range extension to new lows! Now this exact "supply & demand" driven event was a key signal as I track VOLUME studies. This swift trade to the 1040.75's just cleaned out all the last LONG holders (LOSERS) and many of the SHORT holders from much higher pricing levels (WINNERS).......so the market just created that perfect "supply & demand" scenario I specifically look for as I track MAINLY volume (Cumulative Delta).
When you get a market where all the LOSERS and all the WINNERS start getting out of the market all at the same time.......watch out, big move ahead! So what happened just after this key "supply & demand" event in the ES market??? B O O M........ES takes off on a wondrous 23 point SHORT covering rally with a high before the close of the 1064.00 level.
Tracking volume information and seeing how out of balance this market was Friday (FAT with held SHORT inventory and eventually vacant of any last significant held LONG inventory) was the "tell" imo. Watching price only will never tell you about the status of the various participants in that market....how many are LONG, how many are SHORT, and when are imbalances expanding or contracting.
Commercials who trade much more liquidity than anyone here at ET specifically track this critical volume information....and you say VOLUME is useless, all I can say is.....LOL!!!
what is CVD?
Cumulative (Delta).......... http://www.linnsoft.com/tour/techind/vb.htm
Agreed. I made a huge thread about this:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=134773
I've also made all sorts of Volume Delta indicators, ask, bid, analyzing them in every manner you can imagine, combining them, throwing them through every equation you can think of, etc., and none of it was helpful. It was about as useful as MACD or any other indicator (read: not effective).
Sure, it has some great divergences in hindsight, but I've never met anyone who uses volume delta (or any other volume derivative indicator) profitably. There are also tons of divergences that don't work out, and every other way you can use an indicator doesn't work either. Well, it's about as consistent as MACD or any of the other ones. Sometimes it works, sometimes it doesn't.
Maybe you can make it work for you.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=134773
I've also made all sorts of Volume Delta indicators, ask, bid, analyzing them in every manner you can imagine, combining them, throwing them through every equation you can think of, etc., and none of it was helpful. It was about as useful as MACD or any other indicator (read: not effective).
Sure, it has some great divergences in hindsight, but I've never met anyone who uses volume delta (or any other volume derivative indicator) profitably. There are also tons of divergences that don't work out, and every other way you can use an indicator doesn't work either. Well, it's about as consistent as MACD or any of the other ones. Sometimes it works, sometimes it doesn't.
Maybe you can make it work for you.
Poor Jack and Spyder, still squiggling their little lines AFTER THE FACT
These two clowns keep wanting to believe there is a holy grail out there and fail to realize this belief is exactly what has stopped them from being profitable all these years
These two clowns keep wanting to believe there is a holy grail out there and fail to realize this belief is exactly what has stopped them from being profitable all these years