Youre definitely not an a**. Comparing disparate views to arrive at something new is what learning is all about. The problem with the first instance you mention is that you had no warning. It broke then fell back. You had a volume spike followed by a lower bar which was a warning that it wasnt ready. The gradual volume rise following 2 dryup bars gives you a chance to enter before the break. This happens over and over again. One thing I have learned is to wait for the really pretty setups. Not trying to push anything on anybody. Just mentioning things that I have found to work. P.S. What a great thread!!This is important stuff.
================== Babok; Prefer stair stepping up daily volume for uptrends; clearly plenty of good probabliities uptrends/downtrends happen , without it. Most of the stocks i watch,record volume/price on have a better follow thru, say increasing volume for uptrends. But having checked much on this ,would NOT insist on it because that would miss way too many excellant moves . Clearly voulme is secondary to price; volume spikes stop trends, but they start trends also Have noticed sometimes, great care is taken & it couldnt be random; buyers aim at keeping volume close to average on uptrends, & to a lessor degree for downtrends.
My use of volume is probably less conventional. I use a sample lookback period to compute a distribution of volume across the entire trading day. Then, I compare the pro-rated volume of the current day against its empirical distribution -- it's just a ratio. Based on this ratio, the system makes a decision about whether or not to fade the various support and resistance levels (albeit there are other factors such as the price distribution as well, e.g., what is the expected ATR % versus the actual ATR %). The volume is like an accelerant; it can be used to project short-term price targets. The trick of course is to figure out the combustible mix which turns a ho-hum day into a wide-range day -- perhaps a spike in volume when there is a big gap between the expected ATR % and the actual ATR %.
I am suggesting stuff about effectiveness and efficiency. Saying that you are mistaken about volume is limited to your viewpoint on volume. I am not speaking to you vis a vis your historical record. I am not speaking about the wizards and their relationship to volume and how this connection gets their trading done. My view is that volume is a powerful addition to what anyone may be doing and if a person is using volume to advance his effectiveness and efficiency, then that person will be in a high velocity money making setting in all likelihood. This is a positive pro active viewpoint in the context of the substantive content of yourself and two others that share your mindset. There is never any reason to believe many people see what I espouse and why should they even care about it. I am, personally, am unimportant. My views and their basis are pragmatically derived. That is a consideration, it turns out. You are speaking of right and wrong. I am speaking of persons gaining more depth of understanding and as a consequence doing better in making money. I also feel that it is true that by not considering volume, either logically or at all, a person can be stymied in his quest whatever it may be. When a person considers volume, by some standard (they can certainly choose it and I do not choose it), then I feel that they will advance their understanding of the market. Your common standard with Babak and davelansing, however, is not one for anyone to choose. Making millions as a wizard is the normal routine for them. If you look at all the posters in this thread, perhaps not many of them have had the experience. I have been a lucky person in my trading efforts. So I have operated within the realm of success that is only across part of the range possible. I lack understanding of much of the range that people chat about here in their experience base. Because what I do has definite volume related limitations and because I am an amateur and limited to handling funds of others by part 208 E of NFA ,I cannot speak for the whole range of money velocities and absolute large values. I have never done over 7 digit one day net in my life but I have done 7 digit one day net operating at my volume limitations. I know I have limitations and I know what they are. See if you can get off the black/white right/wrong perch for this thread. It is possible to look at opportunities in other than a go/no go manner. When I suggest that you are making mistakes in your views on volume what I mean is that you are excluding yourself from opportunities that you cannot recognize by coming to faulty premature conclusions and sticking with them. Why would I mention it? Certainly it is not important to mention to others what they have overlooked as it is to mention it to you. You are different from them. If you, as well as Babak and davelansing, do consider some things, then you will have a new viewpoint that prepares you for going much further in your efforts. Some of what I have stated here in this thread includes the following (in order of importance of potential application): 1. Volume determines the quality of a universe for making money in swing and position trading. 2. Daily volume ranges allows you to calibrate all the stocks in your universe with respect to their money velocity effectiveness and efficiency when they make movements. 3. Volume, as calibrated in your universe, gives you the timing for making trades in your universe ("Tomorrow's Newspaper Today" as it is named). 4. Volume, as an indicator, precedes price. 5. Monitoring potential volume defines where the control of price lies. This is the place to do analysis for decision making as a result of monitoring. 6. Ommissions of expected volume factors in cyclical sequences are flags that demand immediate trading attention. (What wasn't that?) There are many more not mentioned. I have not commented on anything to enlarge the scope of this thread. I am relying on others to scope and bound the thread for the benefit of Babak. What if there was a discussion of other facets? All I am saying to you, a person with outstanding potential, is to maybe consider two things: rethinking what you have as a viewpoint (and how you got there) and secondly, consider various other or new factors to replace those you now hold in your belief system. It is my belief that the above paragraph applies to me as well and to anyone else on the path to success. For making money, being right is not the most important thing. More often than is commonly realized "being right" often interfears with improving effectiveness, efficiency, and making the right decision at the right time. Most of the ET thread content is about people assert that they are right and others are wrong. I believe that it is a different thing to comment on viewpoints that suggest something is not worth considering when in fact there are many reason to give consideration. It is better to consider and to come to the understanding that you do know what you know. To consider and not know what is going on is not a good way of operating. As always it is necessary for a person to mentally digest and allign or reallign what they are considering. Knowing about and making proper use of the six items above will improve anyone's efforts. It is not right or wrong to do so.
Changes in volume evoke the same rear-view after-the-fact reasoning as changes in price; when all is said and done, it's last price which ultimately determines what "evidence" changes in volume actually "yield" (a blow-off top, a paradigm shift, a sudden acquistion rumor -- what differentiates price/volume action amongst these?). But usually by the time a conclusion can be reached, you either have already made your profit by anticipating the volume/price change before it happens, or have missed the moved altogether. In either case, like with most technical indicators, the conclusion drawn will have very little to do with profits extracted from the given move. Accumulation, distribution, exhaustion, etc -- these will be 'obvious' volume clues confirmed only following price action. So for eod/swing trading where one is not considering pace or velocity at all but just cumulative numbers, past volume is equally important/(non)predicitve as past price. Fwiw, I trade currency and index futures where the significance of volume is much more opaque than in the realm of individual equities.
one of my instantaneous indicators of volume inequalities for trading the es is watching the nyse tick. when program buying/selling takes place in the nyse cash equities market, there is an "at that moment" increase in the total volume and imbalance of the volume for the nyse equities. this market breadth indicator can be used to help determine how to manage existing positions or if used properly enter new positions trading the es. i have also found that several of the volume analysis tools from trademaven pro and marketdelta have very solid information to enhance strategies for intraday trading. http://www.trademavenllc.com/tm_pages/professional.html http://www.marketdelta.com/