I would think anyone on this forum would realize that volume precedes price. Think of it like this: -We all know that big guys move markets. -We all know that price movement is a battle between sellers and buyers. -So it makes sense that when a large buyer(s) come(s) in and take(s) a position that him/them doing that happens before the market will move and might make the market move a bit with him/them. -The additional volume is then made by the people forced out of their positions thus pushing the price futher. Creating a move and possible trend. With that said I only use price and volume to profitably trade. I also do not think that monitoring volume is necessary to make money trading.
The pitifully sad thing is, you probably think this is true. If you think books are where it is at, then you are somewhere between newbie and neophyte. Go back to the library, sonny. Your books are overdue and you owe them 6 cents.
Volume may "precede" price, but show the proof that it leads to outsized profitability beyond buy and hold. It is hard to find. Price is attested to by many in this forum as the key to trading.
Thats retarded. There are many examples of times that the buy and hold strategy was outpaced. If you cant figure out how to use an indicator that precedes price movements then all you should be doing is exactly what you said, BUY AND HOLD. No shit that price is a key in trading, but volume can easily be used as another.
3 key questions not being answered: *what time period is the volume being noted (1,5,10,15 minute bar etc.) *what contracts are you looking at?...does the volume theory hold only for high volume ES or others like YM and CL? *is volume being considered to enter "volume apex/peak reversal" trades only or to note direction of a trend and enter in driection of trend? Please answer and advise...thanks!
this question was asked: *is volume being considered to enter "volume apex/peak reversal" trades only or to note direction of a trend and enter in driection of trend? My response. Volume leads price and knowing this allows a person to assemble a powerful approach to trading. This has passed bighog by as you see. Don't go the route he has chosen if you can help it. Begin with the idea that sequences occur in markets and trading. Notice that each profit taking hole ends with an exit and it began with an entry. By seeing this is how profit segements re traded, you find that the exit at the end of one trend is at the same time as the entry at the beginning of the next trend. sequences of trends is what is used to continually take what the market offers. focus on the idea that the exit and next entry are a pair of opposite direction trades. To be clear a long exit leads to a short entry and also a short exit leads to a long entry. Each of these four terms are understandable in terms of what to punch on a trading platform. A long exit and a short entry are both sells placed on the Ask side of the market. A short exit and a long entry are both buys on the bid side of the market. this is reversal type trading as linked sequential trades over time passing as the market offers segemtns of profits. since volume leads price on all fractals this means you know in advance when a reversal (profit taking and reentry in the opposite direction). Fortunately in this advanced beginner level of trading, all trades look alike and what happens in between is a holding period. Hypostomous and a few others have said it all when it comes to not being sensitive to how the significant moment occurs at the end of a profit segment and coincides with the beginning of a new profit segement. Let say you are going to be different in choosing your future path once again. So far you stopped being bighog, then you stopped being hyp and similar others. You are sitting in a place of opportunity. Asking a key question is significant in that it opens the door to walking through into a new place. Look at the independent sequence of price movement and the independent sequence of volume movement. The movement of price through its sequence is slow compared to the movement of volume through its sequence. The ratio is one to two. Why? The reason is that whether a long or short price cycle is happening, volume goes through the same squence to achieve this. This is called an aha for a person who is learning purposefully. You may be able to accept having this happen to you. If you do you are now separating yourself from the herd. we can see that the hold part of a segment is important; it occurs before the end of the segment and starts right after the beginning of the opportunity to make money in the segment. So volume leading price is doing what it does during hold and this volume phenomena is something to look at for several reasons. The best example of a well worked out chart of this happening is what is used in tading stocks by position trading them. It is designed to make a profit every 2 1/2 days of 10% by using volume to trade stocks. 100turns of capital a year. The chart for this is called the unusual volume chart. Go get it. Do not expect to understand it but you can see normalized data and rules at least. For ES we use the same approach to do 20 to 40 trades a day where the segment profit is less than 10%, of course. To understand intraday trading requires drilling down a couple of levels and you will see why in my next post to continue this answer. We are a quarter of the way there. this is the first post of two
cool stuff. btw: If only people would open their eyes, the world would be such a nicer place to live on...unfortunately the herd is collectively so stubborn, it feeds itself. Anyways: "volume and price"- "hand and glove"
To astral. Cd seems to be another incarnation of Jack Hershey, Grob109. More apparently reasonable babble. Check out the other 100,000 posts if you want to know how well it works in reality.
this question was asked: *is volume being considered to enter "volume apex/peak reversal" trades only or to note direction of a trend and enter in driection of trend? This is the second half of the response. Here we bring up the aspect of trading that involves having a neutral bias. We also address why the fact that trends overlap affects when reversals are taken to realize the whole profit segment going in both trend directions. We will also handle how volume leads price during non trending periods like when R and S are being tested. The underlying rule for advanced beginners is to reverse on peaking volume and to hold through volume troughs. How far ahead of the price movement extreme do you know that the leading volume signal has been provided? This is a key question and it can lead to getting into intermediate and advanced intermediate trading considerations....... We need to examine a couple of things at various times in the profit taking sequence. They are found in the interval between the beginning of trend overlap and the breakout of the first trend in the overlap period. All of this is a smoothing sort of thing in trading and it provides for eliminating the "freakout" part of trading some prevalent in ET postings. Look at the volume cycle: it has components where some are long and some are short in duration. Peaks and troughs are short (brief) and the rising and falling parts are long in duration. We hold through three of the four parts. Only the peak is used for doing exits and entries. The beginning of overlap starts on a peak and the beginning of BreakOut comes immediately after a trough. the reversal is at the peak time and the Breakout and trough we hold through and they both provide a "comfort" type feeling signal. Up to this point, I am transferring information and instructions to you. you are doing some choosing. and you are also doing what is called translating. This translating is a kind of mistake and for most people it is unavoidable based on the fact that they do not have the ability to think critically. Both Hyp and Big are victims of not understanding critical thinking. This is a thrid point in this conversation where you have to make a decision to part comany with these people's way of doing things. You have to begin to think critically. What I am pointing out is not usually part of conversations in ET. This is the difference between transference and translation. If comes down to two aspects: people add to what I say and they subtract from what I say. In critical thinking neither is done. In econometrics there are four components of theorems: direct, indirect, induced and substitution. In critical thinking processes, only direct applies. There is only one format, roughly speaking, for doing tranference among people and that, per se, is not available on ET since it is primarily a socializing system. What happens between what is put in the space and what anyone gives to it to create utitlity for the user is very important to be able to understand and process. Let me take this to an advanced beginner level so that you can give what I am saying some utility for your purposes. During all times other than critical turning points in price, a complex of occurances are happening. In a skill and knowledge progression, these things come into play to increase the money velocity on the non stationary time series. Basically, the time of holds involves two distinct market characteristic mutually exclusive sets. These sets are extant during the reversal and at that time they are not significant. trending is one of the sets and reversion is the other. Reversion is not a significant set for lesser skilled and lesser knowledgable people. And reversion is most often a period of time when significant amounts of money can be made. Ignoring periods of reversion is the best tactic. This is true for all fractals down to the limits of human perception. Use 100 milliseconds as a perception limit. Reps of viewing at 10 times a second is still imprintable and often a circumstance where things look relatively static. You now have the trading rule for using volume as a leading indicator of price. People generally cannot use it simply because they cannot handle the beginning of profit segments properly. A profit segment begins on declining volume just after peaking volume in a price direction that is opposite to the new trade. for most people this is difficult since they have a non critical thinking enter/exit mentality. The very next thing they get hit with is the end of the trends overlapping. This near past period is one where the MLR line is being extinguished as the moving window of the MLR in the non stationary time series moves into new territory where briefly there is almost always a failure to truncate the MLR automatically. You may have heard of whipsaw. It causes its victims to DO many things that are VERY counterproductive. When only one trend (no overlap) begins, things get relatively simple up and until the beginning of the first dominant reversion in the new trending hold. here a subjunctive flavor enter the picture due largely to the underdamper character of the reversion and it finally being extinguished in favor of a trend volatility expansion coming up. The dynamics of a trend really do not hatch until after the overlap ends.. As time passes you wil reevaluate your thesis or observation that three Q's were still not answered as the thread progressed. The asymptote of to get to completeness (knowing that you know) simply has not surfaced for you and most others. As you see it is not a necessary condition for being a trader.. Markets are counterintuitive. What makes this a true statement is mostly hidden from people. It goes back to their context for learning and acquiring skills. You can see this part of people being snuffed out by their successive translations of information being potentially transferred to them and they deny it's utility by their priority of focusing on translation instead.