I totally agree Dustin. Since I have started to trade with volume my trading has gotten much better and I understand why the market moves and doesn't. The only thing I would add is to find areas of S/R the you believe are relevant and watch PV as it approaches there. I am using market profile for S/R and PV and the two compliment each other well IMO. Good trading to all.
Highly recommended reading is "Steidlmayer on Markets: Trading With Market Profile" if you don't have it already. A friend of mine who is a pit trader recommended it to me. Great book. I don't use MP but his concepts of how markets works and react were very helpful.
I own Dalton MOM and have read some of it. Right now I use MP just for S/R to supplement my price volume divergence set ups, but thanks just the same.
Dustin thanks very much for your advice in this thread, it's been real helpful. Could you please clarify: When you say: ">500k volume with >2 times relative volume would satisfy the strength criteria. " Do you mean that at your buying/selling point, the stock has already traded 2x the volume of its average daily volume, or that it has just traded 2x what it would normally trade at that time of day?
Yes I mean at that point in the day it is already 2x+ average volume. This weeds out the thin stuff. All we are trying to do is find volatile stocks that are thick enough to trade and have reason to move. You can do that many ways...find what suits you.
Regarding Relative Volume.......... I have been trying to get IB to add this to their screener. With this feature we would be able to scan for stocks that are trading at x times average volume early in the day. This would allow us to find the stocks that Dustin and others trade day in day out. If you have an IB account, please follow the link below to vote for this feature. Thanks! http://www.interactivebrokers.com/en/general/poll/poll.php?sid=2298#cat_search
Thanks, makes sense. I've been testing your strategy on some of the more active stocks this morning. short NVDA, long ADBE, short TMA (if it wasn't under $5), etc. I've noticed today that many of the active, trending stocks slowed down and/or reversed at lunchtime (around noon EST). Is this standard, and would you recommend looking to close out your positions as volume dries up around this time? Would it then be a good idea to find a new "batch" of stocks to repeat the process at around 2 PM?
I incorporate overbought/oversold from ES into this style. I buy strong when market is weak, and sell weakness when market is strong. It's more art than science. Stuff like CCOW INAP ABX worked well today. I prefer the lower priced stuff like this over NVDA type stocks. I'm currently watching SINT ABX AGP for further breakdowns, but won't be selling them unless I get an overbought reading on ES. Hope that makes sense. You can PM me if you have further questions as I would rather not get into more detail here.
Try thousands of hours. Just watch movement, volume, etc, and where it happens. When it happens is also important, and to some extent, size of prints on DOM (I find this is only marginally important in futures. Different in equities). I second the ES Journal thread. Good traders for the most part. They are all technical guys as opposed to fundamentalists, as most of em are day traders. You will see them selling when the market is going up, and visa versa. They do not often chase.