I just found this setting on QuoteTracker and it took me while to get the other settings changed until I had some decent looking charts. Are there any viable trading strategies using volume candlesticks? It creates a new candle every time x number of shares have been traded, right? So that's why the time across the bottom is no longer linear, correct? It confused me so I went back to regular candlesticks. I figured I'd ask here.
Yes I used them in Sierra Chart. I found too often they didn't cut at the right volume threshold. I would have some with 4 volume over some at 146 volume over because block trades would come in at the last minute and SC as well as E signal can't break up block trades. Check Pro Logic's thread. He is the master of them.
Start with that thread. http://www.elitetrader.com/vb/showthread.php?s=&threadid=80582&highlight=sized+tick+charts I stumbled across that thread and it has made an AMAZING impact on my trading and I use candlestick analysis. Here's an example - a doji that forms on a minute chart may be showing nothing is really going on, yet you received a possible candle formation. With a volume chart, I now know that thousands of contracts traded in order to produce that doji. That tells me that there was some serious fighting going on with the bulls and bears and now I take notice. With a minute chart, I had no idea if there was good fighting going on or if for that 1, 3, etc minute timeframe or if everyone just took a breather. The other thing that has been great on volume charts with candles is that when it takes minutes and minutes for 1 candle to form, I again realize and see that the candles are taking a very long time to form. In that situation, I realize the action is slow and I probably want to just watch from the sidelines. Lastly, the impact it had for me was the ability to trade during fast moving markets. On minute charts, before/during/after econ news, I would just sit and watch b/c all I had was a giant candle. A candle that moves points before it finishes is useless to me. With a volume chart, I am getting candle formations firing off repeatedly in many instances and now I can participate in these moves, which are often the move of the day. In a nutshell, I would strongly recommend that you examine volume charts more with your candlestick analysis.
Nice summary. Something else you may want to look at is overlaying a time grid on your chart, say 5m. It won't interfere with your volume bars, but you'll see how "time" expands and contracts, like an accordion. When volume expands, there will be many bars printed in five minutes. When it contracts, there will be fewer. Your "time grid" will give you a visual representation of that expansion and contraction. LC