Why look at volume ?

[Piptaker]

For me Volume is important. I added a volume criteria for entry about a year ago, I needed something to keep me out of trades and be more selective. Otherwise I over trade. So me I have found that unless the volume is over the running average that the trade has a lower probability of working out. In raw numbers I have found that the ES has good volume if over 8000 CT's per 3 minute bar. One of my early mentors was huge on the idea that price FOLLOWS volume. I find that trades for me that have low volume, while they do work out it is less likely and will take MUCH longer time wise. I like to think of it like a trade needs the volume to push price higher/lower.

anyway, this has worked for me...

It's good your beginning to use volume, the possibilities are endless and there is way more to price and volume than one might think and it's important to understand orders as the volume isn't always just purely opening of fresh buying and selling. I prefer to look at price and volume in the context of who's doing what ( is it the pro's or the amateurs) and the distinction is important.
Pro's only concern is to *complete their business* and they can be defined as traders who trade in size, understand the order flow and are right place right time. Amateurs defined as limited account size and so are already trading from a fear based mindset before they even start , most don't understand order flow and are sometimes right time-right place but mostly wrong time - wrong place and right place- wrong time.

So in the context of the chart it's important to understand the structure of the market and then look at the clues of what the price and volume is trying to tell you. Here's a chart, there is way more going on but I'll just point out a few clues to give you an idea of how I approach a market.What I'm talking about will be difficult for the uninitiated to understand and there's already too many ideas for this one short post.

In this chart I hope you see how even a low volume bar contains information given context and how traders make the mistake of looking at hundreds of charts and ignoring the detail, a price chart contains a wealth of information,not boring at all and you could spend literally weeks on one chart alone and still find new information.

 

[Gotcha]

It's good your beginning to use volume, the possibilities are endless and there is way more to price and volume than one might think and it's important to understand orders as the volume isn't always just purely opening of fresh buying and selling. I prefer to look at price and volume in the context of who's doing what ( is it the pro's or the amateurs) and the distinction is important.
Pro's only concern is to *complete their business* and they can be defined as traders who trade in size, understand the order flow and are right place right time. Amateurs defined as limited account size and so are already trading from a fear based mindset before they even start , most don't understand order flow and are sometimes right time-right place but mostly wrong time - wrong place and right place- wrong time.

So in the context of the chart it's important to understand the structure of the market and then look at the clues of what the price and volume is trying to tell you. Here's a chart, there is way more going on but I'll just point out a few clues to give you an idea of how I approach a market.What I'm talking about will be difficult for the uninitiated to understand and there's already too many ideas for this one short post.

In this chart I hope you see how even a low volume bar contains information given context and how traders make the mistake of looking at hundreds of charts and ignoring the detail, a price chart contains a wealth of information,not boring at all and you could spend literally weeks on one chart alone and still find new information. View attachment 175088

I'm sorry but your annotated just is a perfect example of classing hindsight bullshit. You make it sound like you can explain every move, as if you know who's buying and selling, but if that was the case, I would like to see the associated trades that go along with this analysis.

Here are some comments.

In 1, you talk about how amateurs are selling, yet you call this high volume. Then for 3-4, you say, increasing volume, pro buying. Why is high volume in the first example amateurs, and then high volume in the second example the pros? Either high volume means only pros and low volume means amateurs, but you cannot state something high volume is one side and sometimes the other because then you really have no idea who is doing the buying.

At number 6, you talk about how the up bar is just amateurs because of low volume. But shit, this is a weekly chart, each bar is a week, so you're telling me buying at 6 is a bad idea because its only amateurs? When it makes it to 7 and poked above, but drops below, you're telling me you couldn't sell what you bought at 6 for a nice profit? And then perhaps be ready to short?

Lastly, bar 2, which is a low volume bar, clearly leads to a very nice rally. All your analysis would make one think that low volume bars lead to fake moves, but in this case, its leads to a nice rally. You explain it by way of saying its lack of sellers, but, but I'm sure in other cases, had price gone down, you would say it was a lack of buyers.

I think you summary/analysis only works once you see what has happened.

 

[Piptaker]

I'm sorry but your annotated just is a perfect example of classing hindsight bullshit. You make it sound like you can explain every move, as if you know who's buying and selling, but if that was the case, I would like to see the associated trades that go along with this analysis.

Here are some comments.

In 1, you talk about how amateurs are selling, yet you call this high volume. Then for 3-4, you say, increasing volume, pro buying. Why is high volume in the first example amateurs, and then high volume in the second example the pros? Either high volume means only pros and low volume means amateurs, but you cannot state something high volume is one side and sometimes the other because then you really have no idea who is doing the buying.

At number 6, you talk about how the up bar is just amateurs because of low volume. But shit, this is a weekly chart, each bar is a week, so you're telling me buying at 6 is a bad idea because its only amateurs? When it makes it to 7 and poked above, but drops below, you're telling me you couldn't sell what you bought at 6 for a nice profit? And then perhaps be ready to short?

Lastly, bar 2, which is a low volume bar, clearly leads to a very nice rally. All your analysis would make one think that low volume bars lead to fake moves, but in this case, its leads to a nice rally. You explain it by way of saying its lack of sellers, but, but I'm sure in other cases, had price gone down, you would say it was a lack of buyers.

I think you summary/analysis only works once you see what has happened.

Wrong, I said with bar 1 the amateurs are selling res and the pros are buying,re- read it properly.

bar 6 - I never told you what you could or couldn't do regarding buying or selling anything I commented on the bar and it's non professional buying, what is wrong with you ?

Lastly bar 2, You obviously don't understand that markets can go up on low volume and is in some cases an excellent indication of strength. I strongly suggest you go and do some reading and research on Wycoff, Zanger,Schwartz and VSA and get a better understanding of price and volume.

I know a couple of amazing traders who run their own funds and trade exactly this method which I've been learning myself for a few years and i've started to see some great results and seeing that this is a forum of traders sharing ideas I thought I would share this idea with similar interested people and I honestly don't care what you think or have any interest in convincing you of anything , do some research and come to your own conclusion you may actually learn and become a better trader, your negativity will inhibit your learning, fuck you can't even process what I wrote properly....

 

[Sprout]

It's good your beginning to use volume, the possibilities are endless and there is way more to price and volume than one might think and it's important to understand orders as the volume isn't always just purely opening of fresh buying and selling. I prefer to look at price and volume in the context of who's doing what ( is it the pro's or the amateurs) and the distinction is important.
Pro's only concern is to *complete their business* and they can be defined as traders who trade in size, understand the order flow and are right place right time. Amateurs defined as limited account size and so are already trading from a fear based mindset before they even start , most don't understand order flow and are sometimes right time-right place but mostly wrong time - wrong place and right place- wrong time.

So in the context of the chart it's important to understand the structure of the market and then look at the clues of what the price and volume is trying to tell you. Here's a chart, there is way more going on but I'll just point out a few clues to give you an idea of how I approach a market.What I'm talking about will be difficult for the uninitiated to understand and there's already too many ideas for this one short post.

In this chart I hope you see how even a low volume bar contains information given context and how traders make the mistake of looking at hundreds of charts and ignoring the detail, a price chart contains a wealth of information,not boring at all and you could spend literally weeks on one chart alone and still find new information. View attachment 175088

Would you be willing to share the color convention that you are using? When I look at the volume bars they do not correspond to the real body of the candlesticks in some places nor do they key off of the close of the prior bar.

Would you elaborate on order flow?

 

[Gotcha]

Wrong, I said with bar 1 the amateurs are selling res and the pros are buying,re- read it properly.

I said exactly what you said. High volume, amateurs selling. In other cases, you make it sound like high volume is pros.

Every single on your your quotes is how high volume is pros. Let me write out a few of the times you say this.

"3-4 increasing vol, pro buying"
"5. increasing vol on down bar, the pros are reversing"
"7. increase in vol up bar,.... pro selling"
"8. high vol down bar.... pro selling"

So every time volume is high, you say pros are doing it.

Contrast this with,

"6. low vol up bar, remember amateurs are..."

So your entire premise is high volume means pros, low volume means amateurs, but this doesn't work even 80 % of the time.

bar 6 - I never told you what you could or couldn't do regarding buying or selling anything I commented on the bar and it's non professional buying, what is wrong with you ?

You're telling me that on the big green up bar 6, there are no pros buying? How do you think price moves? You're telling me amateurs pushed price all the way up that high? Bar 7 even broke above the previous high, on once again, no institutional volume? Price made it even higher to bar 8, and yet, you continue to say that there was no pro buying? I haven't the foggiest idea who is buying but since these are weekly bars, much of this volume is institutional anyway.

This whole premise of pro or amateur buying is just wrong in my opinion. The important thing is what is price doing. And since you clearly say price can rise on low volume, and have this be the beginning of a big move like bar 2, then what is the logic here? Price rise on low and high volume, prices fall on low and high volume.

When you get around to looking for trades, you're fucked because you don't know if the move is real or not since the volume can sometimes be a leading indicator, and sometimes not. Add in trying to figure out who the buying is from, and then you're really fucked.

 

[Zodiac4u]

Volume by itself is useless. In order for volume to have a purpose, it needs to be combined with other elements like time of day or eve, length of Bar, strength or weakness of the Bar close, Volume quantity and many many others...... Do you need all of them? No, but the more you have on your side the probabilities will increase.

 

[Piptaker]

I said exactly what you said. High volume, amateurs selling. In other cases, you make it sound like high volume is pros.

Every single on your your quotes is how high volume is pros. Let me write out a few of the times you say this.

"3-4 increasing vol, pro buying"
"5. increasing vol on down bar, the pros are reversing"
"7. increase in vol up bar,.... pro selling"
"8. high vol down bar.... pro selling"

So every time volume is high, you say pros are doing it.

Contrast this with,

"6. low vol up bar, remember amateurs are..."

So your entire premise is high volume means pros, low volume means amateurs, but this doesn't work even 80 % of the time.


You're telling me that on the big green up bar 6, there are no pros buying? How do you think price moves? You're telling me amateurs pushed price all the way up that high? Bar 7 even broke above the previous high, on once again, no institutional volume? Price made it even higher to bar 8, and yet, you continue to say that there was no pro buying? I haven't the foggiest idea who is buying but since these are weekly bars, much of this volume is institutional anyway.

This whole premise of pro or amateur buying is just wrong in my opinion. The important thing is what is price doing. And since you clearly say price can rise on low volume, and have this be the beginning of a big move like bar 2, then what is the logic here? Price rise on low and high volume, prices fall on low and high volume.

When you get around to looking for trades, you're fucked because you don't know if the move is real or not since the volume can sometimes be a leading indicator, and sometimes not. Add in trying to figure out who the buying is from, and then you're really fucked.

"Amateurs"is just the name I call people who don't understand order flow or what makes a market and they could be and are hedge fund traders, managers or at home traders I also call them weak hands.

"Pros" are the participants who do understand order flow and what it takes to make a market and how liquidity is created, they could also be hedge fund traders, managers or at home traders.

Do you see the distinction now?

 

[Piptaker]

I said exactly what you said. High volume, amateurs selling. In other cases, you make it sound like high volume is pros.

You originally said

"In 1, you talk about how amateurs are selling, yet you call this high volume."

I said in the chart that bar 1 is - Amateurs are selling the res and the pros are buying so expect higher prices.

 

[Piptaker]

"3-4 increasing vol, pro buying"
"5. increasing vol on down bar, the pros are reversing"
"7. increase in vol up bar,.... pro selling"
"8. high vol down bar.... pro selling"

So every time volume is high, you say pros are doing it.

Contrast this with,

"6. low vol up bar, remember amateurs are..."

So your entire premise is high volume means pros, low volume means amateurs, but this doesn't work even 80 % of the time.

Yes increase in vol means pro activity. Do you understand the different order types in a market ?

Wrong I already explained low vol doesn't always mean amateurs.

 

[Piptaker]

Would you be willing to share the color convention that you are using? When I look at the volume bars they do not correspond to the real body of the candlesticks in some places nor do they key off of the close of the prior bar.

Would you elaborate on order flow?

That chart is from the c trader platform and the volume is an added custom indicator which I don't mind sharing if you can use it. Bar color no's - bull 72C472 bear DB2128 outline-B3B3B3

Order flow is basically the participants coming together in the price chart and price moving.The idea is to first have an understanding of who is in control the buyers or sellers (are the pros-smart money long or short or flat) and then deciphering the current action (order types will be reflected in the price action, to open buying-selling, profit taking or stops taken out) and then knowing where the future demand and supply is going to appear and by whom. (pros-smart money or amateurs-weak hands-dumb money). So you can see understanding order flow will give you an edge if price will continue or reverse.