I am re-thinking my Volume criteria. I set a "go" "no go" at a minimum of 2,000 CT's for NQ on 3 minute chart for 2 bars in a row. This was meant to decrease my number of trades and give higher potential success. I see in many days that I am missing trades that would give me a entry signal by way of my price criteria. The way I got to thinking of it was by studying the 2 hours before Chicago opens, there are terrific, very directional moves for the NQ and you sure can't pay attention to volume cause it is so low... In the chart I attached from my trading screen, I have circled 2 bars at approx 12:10CST that would signal a long for me, ATR was 3 so my target would have been 6 points... enter at 5864 exit at 5870 which it makes about 20 minutes later... BUT notice down below on my volume chart that my 3 minute average was not above my threshold of 2K contracts so I did not take the trade any thoughts?
That tend to be a slower time of the day..vol on emni more important on exhaustion moves. This was a small pb trend one of the strongest type trends. Way to trade it is long on pb ...scaling in..limit order longs after 1 or 2 bear bars..keep adding..or exit and start over.
Try it on MGC on a forward month and see how you fare with your fills. If it works for that, it should work for everything. Just saying.
View attachment 175732 that was just the example I pulled... there are the same instances on the busier times
Understood. What really matters is what price does..whether it does it on low vol or high vol. price can move up on low vol because sellers are backing away and price has to move up to find sellers. When demand swamps supply price can move up on high vol. what is more important for eminis is vol on exhaustion moves. Take ES today july 18. RTH. OPENS gap down lots of vol with big bear bar closes on it's low. But, no follow thru on the next bar. Instead it is a bull bar. That ended up being a rev back up to the ema. This first bar was exhaustive selling. If it weren't price on the next few bars would have continued on down. If you look at this on 24 hr chart it had been selling down for hours in the night session.
Yes, is the answer to the thread title question. One problem you have while using overnight volume as your basis, is number of trades. In the overnight, a single trade (made in whatever time frame used) of let's pull a number out of the air, 100 contracts, can skew. I call this drive-by volume. The same trade made during regular trading hours will have zero affect, except in rare circumstances. Even if there were multiple trades totaling a a few hundred or thousand contracts, the same drive-by volume variable is/can be applicable. My point is this.... using overnight volume as a basis for a regular hours volume criteria is akin to using say, a 9-WEEK ma, and trading off of a 3 minute chart. A 9wk-ma has no 3 minute trade criteria, except in rare circumstances. This is meant illustrative, not any sort of recommendation of any type of ma. Volume absolutely matters, but MUST be taken in the context/environment in which it occurs. Trade On!
I didn't see how I'm using overnight volume in my training. I'm only looking st 2 bars of three minutes each. That it's only the most recent six minutes of volume. What am I missing?
Where did you come up with 4000/cars in 6 min? Maybe you can try an n-period frequency distribution of volume (overnight and rth separately) and determine an upper quartile, useful for a specific session, perhaps useful in both sessions. Just an idea.
I'm asking this rhetorically (I cannot see signals in indexes or ETFs, but see them clearly in individual securities). I don't trade the ES or NQ, and I'm pretty sure that's because what I see as a bullishness or bearishness is dependent on volume. Would market cap weighted volume for the constituent parts of the S&P or Nasdaq not more accurately inform a volume based model of the futures? (Or total volume, or total turnover) The counter argument to that is also pretty straight forward...my view of the market presumes others react to the chart and base their decisions predictably on that...thus, any volume based reactive view of the market would also be reflected in ES volume.
Hmmm...something is missing from this story. The chart you've attached is a chart of regular trading hours. In contrast, you're actually talking about trading the 2 hours before the the regular trading hours. Lets start with the chart you posted. Its a simple question...why are you missing trade signals during the regular trading session so early into the regular trading hours ? Also, your question is basically comparing the few hours "before" the Open versus the time span "after" the Open. Therefore, due to the fact you're using "volume" as part of your trade method with a threshold needed to be 2k and above...maybe backtest any volume threshold changes instead of using "hindsight analysis" about price actions that "could have" generate nice profits considering you didn't mention any data tests about the impact on your trading results had you use volume thresholds LESS than 2k (e.g. 1k). Back to the missing trade signals story. Is it possible you meant to say if you were using a LESSER volume threshold...you wouldn't be missing those trades that "could have" resulted in nice profits ? If so, what about the trades with a LESSER volume threshold that resulted as a loss ? That's a question you can easily answer via backtesting instead of using "hindsight analysis" to say to yourself...wow, I could have got this and that. My point, you're NOT missing any trade signals as to imply you weren't at your computer or too busy doing something else while trading. Instead, your trade method specifically doesn't give you a trade signal that you see in "hindsight analysis" and you're using "hindsight analysis" to make adjustments to your method so that it can catch those good looking trades instead of just backtesting any volume adjustments as a criteria to give you a reality view of the "hindsight analysis". Last of all, due to the fact the volume "before" the Open tends to be lower than the volume of the regular trading session...have you consider using a different trade method with a LESSER volume criteria in the "before" the Open trading session ? If so, you can backtest that too to determine your trade results instead of asking strangers about adjustments to your trade method that they know very little about except that volume is a criteria in your trade method.