In general, the institutional boys and girls are most active from the open until 1130 ( i am referring to ES futures which up to about the 15th of this month is all i have traded for last few years). Then it is water cooler chit chat, lunch, meetings with risk management etc. Approx from 1400 est until 1500 is when you very possibly could get a reversal of the mornings PRICE action so be aware for that if PRICE has made a significant move prior to the usual midday local yocals range stuff. Late in the day the same reversal might be passed over for a continuation of the mornings PRICE action. Notice all the volume follows PRICE. Price is the reason for the season and volume reflects the players actions as they took notice of the PRICE action depending on their greed and or fear. Price ignites the players reaching for the mouse which is reflected in the volume after PRICE does what PRICE will do when PRICE does what PRICE will do. Any questions?
The 3:40 spike could be from Market Imbalance orders displayed each day at that exact time. The 3:50 is probably more of the day traders taking the last 10 minutes to work orders. The only thing this really shows is that mid day is slower and more prone to lower volume stocks getting jacked around to set up for the close.
cae I would like to throw in a few words about your chart. Your chart falls short in one respect because it falls short of being useful because it lacks something and yet it is a useful chart because it stresses a valuable point that many have been falsely brainwashed with. Keep up the good work. The chart you show has volume and volume only. The first question that entered my head was what possibly could a chart of volume only be used for? Volume itself has zero to do about the bottom line on the P/L statement for average retail futures traders. Volume alone shows the amount of activity and nothing more. Think of it this way: A volume only chart could show a upward move during the morning and during midday show a sideways narrow range bound market and in the afternoon volume shows another upward move. That is a volume chart in general but what good is it? A UP move in PRICE in the morning surely would show increased activity, a lull during midday is considered normal and ok, lets assume PRICE in afternoon continues on and adds to the morning PRICE increase with increased volume. A DOWN move in PRICE in the morning surely would show increased activity, a lull during midday is considered normal and ok, lets assume PRICE in afternoon continues on and adds to the mornings PRICE decrease with increased volume. The point of this is quite simple, volume is a reading of the players activity and has Zero forecasting value about where PRICES are going. Now a chart with PRICE only tells you all you need to know, nothing else in needed to distract the what is between your ears. In my simple KISS trading framework volume is mox-nix as long as there is another playing taking the other side of my trades. The myth about PRICE only has been proven once and for all by DA HOG. haha, just having fun . Good trading to us all, especially me.
I appreciate the feedback. I'm not looking for any holy grail in volume patterns. It's more about trying to educate myself on what's going on. Some thoughts about volume: Let's say you are watching a big village market. In the morning, lots of people come to buy stuff for their businesses/shops and restaurants and then leave shortly thereafter. One day, the growing popularity in the region of a new mango dish that is rumored to increase male virility causes the price of mangos to go up. The mango suppliers see this interest and enjoy record profits selling at high prices. After most of the villagers leave the market, the mango supplier's sales ebb to a trickle. Some merchants who observed the activity at the mango stands had decided to buy their own inventory that morning and try to turn a quick profit. However, after the morning rush, only a few mango buyers stroll leisurely through the market, trash talking the rumors and making low-ball bids. First, one merchant who had bought early on just before the frenzy starts to get nervous. He needs to move some mangos to pay for a gambling debt. He lowers his price. Every buyer left is coming to him for the best price. Other merchants and suppliers soon follow, lowering prices. In total, the mango price falls about 25% from it's high that morning. Ok, Ok, I'm bad at allegories. In the end I just want to understand more of what people are doing during the average day. The points about economic news and imbalance news have been very helpful. It's all common sense in the end, but I'll take all the common sense I can get.
Why not forget all this and just buy when the price is rising and short when the price is falling. Keep your stops in context with the price waves. And most importantly. When someone asks you why mangos are going up in price .... just answer 'because they are ... the price is rising and will continue to do so until it falls' regards f9