Is volume analysis useful in index futures?

Discussion in 'Index Futures' started by Laissez Faire, Dec 22, 2017.

  1. volpri

    volpri

    It could be of some value if it confirms price or probable price action. Take for instance a doji bar on extreme high volume. What does that tell you? What would the same doji bar without a peek at volume tell you? What if it is extremely low volume on the doji. What does that tell you?
     
    #111     Dec 24, 2017
  2. volpri

    volpri

    That is viable way to trade. I just prefer looking mostly at RTH as that is when most activity is present but i also look at the OVERNIGHT session especially before the open of the RTH. Usually i am looking for patterns formed during the overnight. It is kind of a prep for the open of the RTH. But my detailed analysis is usually only done in RTH because I ain't staying up all night to watch the overnight session.
     
    #112     Dec 24, 2017
  3. tommcginnis

    tommcginnis

    Leaning back on Ye Olde Price Theory... I always think in terms of the neighborhood farmer's market: can I tell a tale about what (price; volume) I see in front of me, that I might see in a farmer's market?

    So! Big spike in volume + [no] price movement = two converging, offsetting, agendas, executing simultaneous in the market. To wit: from a steady state, a rickety pick-up truck pulls up, loaded to the gunnels with *ripe* (read: "use-or-lose") tomatoes. Result?? Out come the Sharpies as everyone attacks their tomato price/pound signs to lower lower lower.

    Then suddenly! Up pulls an *empty* pickup truck, with the words "Jockamo Upper Crust Pizza*" on the side, and out comes a nervous-scared looking crew with orders to "Buy every tomato you can see" as they just got orders to serve 3,000 people, "if [they] can handle it."
    Result??
    Total offset to tomato truck; all the Sharpies get re-capped; no prices change; LOTS of tomatoes change hands.

    In the financial markets, it's an order to liquidate ("Sell down to x-minus-10points, then let it recover, unless you hear otherwise.") meeting an order to build ("Buy at x up to x+10, but if it drops, don't let that opportunity get away...")

    The discernment of offsetting agendas (via volume) is what lends confidence (or caution!) to notions of the market's near-term direction. Loss of selling pressure versus met/exceeded buying pressure? It's all right there, laid out.
     
    #113     Dec 24, 2017
    lcranston likes this.
  4. Nothing of value.
     
    #114     Dec 24, 2017
  5. Theoretically there can be a big volume spike with little change in price. If that occurs, then the volume means nothing. Then again, how often does that happen?
     
    #115     Dec 24, 2017
  6. lcranston

    lcranston

    Actually it tells you that a great many traders are involved in these trades and, presumably, their outcome. This phenomenon is common during churning. This may mean nothing to you, but that does not mean that the volume is of no importance in the absolute.
     
    #116     Dec 24, 2017
    Xela likes this.
  7. tommcginnis

    tommcginnis

    "
    As depicted above, three times on Friday by 12 noon.

    (But again, volume tells (at least half) the tale.)
     
    Last edited: Dec 24, 2017
    #117     Dec 24, 2017
  8. It can be "important as all get out in the absolute" (whatever the Heck that means)... but is it important to a trading decision? I say NOT!
     
    #118     Dec 24, 2017
  9. lcranston

    lcranston

    And for you it is not. That doesn't mean that it's of no importance to anyone.
     
    #119     Dec 24, 2017
  10. Not a matter of "for anyone". It's a matter of "is or isn't"
     
    #120     Dec 24, 2017