Float Analysis: Price, Volume, and the Missing Key...?

Discussion in 'Technical Analysis' started by JT47319, Apr 13, 2003.

  1. JT47319


    I just came across the "Woods Floating Indicator" and I have to admit, its very intriguing and potentially beneficial. It seems to me that this helps to bridge the gap between price movements and volume. I've always paid a great deal of attention to volume, probably moreso than other traders so I was pretty excited when I learned about these tools. They say volume leads price.

    Basically, his idea is that there are "turnovers" at the tops and bottoms. Obvious, right? He uses three different indicators (rather cumbersome admittedly) to keep a running total between different points of shares traded. You can see at consolidation points where the weak hands have sold into the strong hands and vice versa at the top by looking at the relationship between the outstanding float, shares traded, and resulting price action due to the flux between supply and demand.

    I think its more useful to swing traders (keeping track of how long it tacks for the majority of float shares to be accumulated before price action follows) in equity markets (no futures) and in established companies (no IPOs). His indicators are kind of cumbersome (he uses lines and dots), but it seems to me that his indicators (if he could condense them into a more sensible approach) could conceivably gain as much stature as candlesticks vis a vis bar charts. Of course, I also think its bullshit that he's charging a fee for his indicators for use on Tradestation, Metastock, etc. and thus limiting its widespread distribution.

    Any thoughts?

    P.S. Here's a link to some info: It isn't widespread right now so info is harder to find. Be nice if the indicators were free, but I suppose he can make as much $ on royalties as through trading.

  2. and its gathering dust in my bookshelf

  3. agrau


    I guess you have seen the article called "Detecting Breakouts" in the April 2003 issue of TASC? The author introduces a volume indicator called FVE that also claims to be often earlier than price.

    FVE is measuring volume flow, thus being similar to On Balance Volume, Chaikin's Money Flow, Money Flow Index etc.

    As almost always in TASC, the indicator has been programmed by the suppliers of the different software packages, so you should find the exact formula on the web.

  4. Funny how people lose the origin of things. Float Analysis is the VERY FUNDATION of TA I mean the rational fundation of Dow Theory. That's why in fact I have made a link to it in "theorical econometric model" link

    Nevertheless current models are rather qualitative or semi-quantitative so that they still belong to stochastic models family whereas mine is deterministic.

  5. Babak


    After all the mumbo jumbo it is simply a break out system very similar to Donchian's. A while back the author was on ET and I asked him several times to tell me the difference in signals generated by a simply break out system and his 'float analysis'. Didn't get a reply after several repeated attempts.
  6. Traditional float analysis is not very precise (I don' t talk of mine which is a laser that's why it is suitable for intraday :D ) so it is normal that it is not perhaps superior to a break out system on short term scale but on higher scale it should be superior since it is based on a more fundamental approach. They should also be able to detect the exit point whereas breakout system gives you an entry but no exit. Now I can't speak for them since I don't know exactly what they offer. I just speak of float analysis in general. Normally traditional float analysis is not to be used alone because it is rather qualitative so that it can be complemented by breakout system for monitoring a more precise entry and stop level. So FA is used in this case as filtering market context which is much more difficult to apprehend because it concerns long term trend.

  7. maxpi


    The newest ver of Qcharts has a float turnover channel, I can't figure out how to interpret it yet.