Just curious. How, exactly, would your trading differ if you disregarded volume in the manner you describe? Would it actually change where or how you enter and exit?
Fearless, Of course you are right relative to the timeframe you are looking at (Trend down- price will go lower till it doesnt), but here is the subtle difference.....I saw volume dry up at the bottom of bracket, therefore I was "expecting" a big move from initiating from this area. This is very different from price that is now trending below this area, and I no longer have these same expectations. Instead my expectations, are focused on how the patient sellers and buyers react as price moves down. If the sellers cannot regain control on pullbacks, it makes sense that price will continue to swing lower, and I will continue to trade with the trend, and as soon as they gain control, I may want to cut back on taking trades with the trend from a probabaility standpoint, even though price can still move lower. So I agree you can always look at a trend in your chosen timeframe, and simply stick with it, but if you want to try to be more selective in your trading, volume is one way to place things into a higher probability context
Thunder Very good question. Here are the ways this type of volume analysis helps me in actual day trading. Since I primaraly look to trade with the trend with a faily nmechanical way of generating setups, I will only take these setups if my bigger picture volume analysis and structure confirms. Therefore, without volume, and big picture structure I would be less selective with the same trade setups over an over again. NOw these trade setups have a context for me. A short set up breaking below a key bracket , is a lot different from a short trade setup after volume has dried up in a logical pullback to swing area. Second, I use volume as a signal on how to trail my exits on the shorter timeframe. As long as volume is confirming my move on a winning trade, I stay with it. When volume is not confriming my trade, I look to tighten up my exits. So, volume for me is used as a trade selction tool for higher probabilities, and as a way to manage winning trades from an exit standpoint. I would be less selective trading without volume, and I would have a harder time gauging winning momentum trades when I am in them.
Perhaps I missed the description but would you advise what the indicator is on your graphs? Thanks in advance, T_182
Gracias No matter what I try, I cannot milk more out of each price wave than I am currently getting without increasing my risk and having followed VA closely (or maybe not closely enough perhaps) nothing has changed. As far as I am concerned your dry zones are reflected in my volume bars. As I may have mentioned, I think that this game is won or lost before looking at the charts. To offer an example I believe stops need to be a tic or two ahead of the large orders ( in the correct direction of course, but then direction and distance to run are the most important factors) If you agree with this and think VA offers an edge, I would be more than receptive to your opinion. I just cannot see how to get closer to the edge without jeopardizing the trade. regards f9
Fair enough. The only question remaining (for me) is whether this volume analysis has actually enhanced your overall bottom-line trading performance. I generally understand the theory you have described, and I had my own theories in the past about volume as a meaningful variable. Unfortunately, in my own case, the theory did not pan out all that well in tangible dollar figures. And so, to restate my question: How would your recent perormance have compared had you ignored volume? Have you ever scrolled back and objectively identified where your entries and exits would have been without volume? And if so, how does it compare? I'm genuinely curious.
Here's the intraday strength as it was created between Friday and this morning. When the intraday played into the direction of the long term strength it is a simple decision to make trading decision in that direction (see previous chart posted) . . . regardless of what the talking heads may say.