Why does Volume matter? Isn't non-involvement from institutional buyers itself a signal?

[tommcginnis]

Years ago I "considered volume". Then one day it dawned upon me that there no longer was (and perhaps never was) a correlation to price.

Nor should there be, *going*forward* --
it's to *direction* of price that past quantity(s) steer us.

All transactions are a nexus of bid price+volume and ask price+volume. There is little in that mix that portends what might happen to transaction numbers should the market price return there. Those actors/interests/orders have been filled.

What quantity *does* tell us is the interest in buying AND selling was, at that price.
And when there are *changes* to the general path of quantity, changes to the prices that follow are bound to occur.

In implicit form, it's not

Pt = f[Qt]

but

Pt = f[deltaQt-1]

 

[lawrence-lugar]

I sometimes wonder with all these "talks" during market hours,

if anyone on ET really trade at all

There's alot of downtime during the trading day, while you wait for your position to move and play along the chart and unfold and reveal itself ,

It's like being a sniper, you wait patiently...calmly...establish the inflection point, and then you Wait,...to either close it, and/or reverse it,

 

[jinxu]

There's alot of downtime during the trading day, while you wait for your position to move and play along the chart and unfold and reveal itself ,

It's like being a sniper, you wait patiently...calmly...for that inflection point, and then you Wait,

It's not the frequency of posts that concern me. It's the overall length of posts that does. Hehe.

 

[bone]

There's alot of downtime during the trading day, while you wait for your position to move and play along the chart and unfold and reveal itself ,

Having gone from schizoid high volume prop futures spread day trader to position trader was tough. ET has helped in that regard.

 

[jinxu]

There's alot of downtime during the trading day, while you wait for your position to move and play along the chart and unfold and reveal itself ,

It's like being a sniper, you wait patiently...calmly...establish the inflection point, and then you Wait,...to either close it, and/or reverse it,

Also, I'm more like a bomber. I prefer to wait for someone to step on the Mine and then hit the PUSH button. Hehe.

 

[CyJackX]

I think the best analogy is fishing. Drop limit orders hoping for a bite instead of jumping in and chasing the fish with your hands...

 

[Sprout]

I'm not trading live yet, in the researching phase so take this for what it's worth which is probably less than zero.

I look at volume from the perspective of market makers, who want high volume because for them volume = orders = $$$. If there is high volume at a given price level it is unlikely that a market maker would be inclined to move price from there, not guaranteed but just likely/unlikely mind you, because they're filling orders. Thus conversely if there is a low volume period there is lower activity at that price level, thus MMs are more inclined to move price either up or down to hit more orders.

If this is dumb please tear me apart if you're more experienced, I'm trying to figure this thing out at this stage.

There are many types of traders who participate with the markets (Taxonomy of Traders). Refer to Trading and Exchanges by Harris to get a more robust picture of who is taking the other side of your trades, their motivations, benefits, costs and what they do to avoid being taken advantage of.

Market makers offer standing limit orders not market orders. Market orders are what moves a market. Contrary to popular belief, it's the minority who take control at market turning points, by submitting market orders opposite the current Dominant price direction. At these points, the majority of standing limit orders go unfilled by price reversing in the opposite direction.

 

[SunTrader]

I sometimes wonder with all these "talks" during market hours, if anyone on ET really trade at all.

post: 4637727

I joined May 2008 and have 1547 posts or 155 per year, you joined May 2010 and have 960 or 120 per year. Which then means I roughly post 0.425 times a day and you 0.329 times a day. Wow such a Yuuge difference!

But I suppose you only posts during itchy finger Trumpie Twitter time 3 am?

 

[Starspa]

It amazes me that on a forum, full of expert traders that have been posting on ET for many years, there is not a consensus on the importance of volume, when analyzing and trading a chart. I'm finding this, lack of consensus, involves almost all aspects of trading technique and theory. Someone has to be right? Is this lack of consensus the real reason all traders aren't millionaire and 95% of new traders fail?

 

[sss12]

It amazes me that on a forum, full of expert traders that have been posting on ET for many years, there is not a consensus on the importance of volume, when analyzing and trading a chart. I'm finding this, lack of consensus, involves almost all aspects of trading technique and theory. Someone has to be right? Is this lack of consensus the real reason all traders aren't millionaire and 95% of new traders fail?

By definition, if you had true consensus you would not have a functioning market of any type.