What’s your approach when a clean setup appears, but volume is slightly off? Do you wait for confirmation, or enter based on bias?
Enter based on price action, not volume. I used to preach volume like the apocalypses was coming. Not I rarely, rarely, look at it
I luv volume but hardly ever trade stocks now. Since am mainly against trend trades, lack of volume is best.
It depends if scalping or swing trading. For me volume means little but I scalp. Spread between high and low of a bar are more important to me. I know a large bar was likely made on higher volume without looking at volume. For scalping I like to keep decisions simple and binary. Long or short? Entry or exit? What side is winning bears or bulls?
Use chart based on volume, not time based. Low confidence trade - enter with smaller quantity High confidence trade - enter based on the quantity as specified in your trade plan.
Personally, if the setup is clean but volume is off, I’d wait for confirmation. I know, it’s tempting to jump in based on bias, but I prefer not to chase trades.
Since I primarily trade against trend, I will use volume divergences and lack of volume on highs or lows I will add more contracts. Todays' highs and lows were on less volume from few bars ago.
I would say if you can see a clean setup, you want to go for at least 2 v 1 reward to risk and / or increase contract size. To achieve a clean setup. 1) Have or find an edge which means that say on statistically high sample size, overall your clean setup trades have a higher than 55% win vs loss. 2) If you want to achieve a higher return per trade, you win% can actually be say 40% if you are willing to let your winners ride longer and cut your losses quickly. For me a clean setup means that price is closer to a support level if I want to go long so I would not need a wide stop. Patience comes into play when waiting for these types of setups and just sitting and doing nothing. Or say you use a 15 min chart, just do something else for awhile then check back on the chart. Mistakes are made when traders try to find patterns in 1 min charts and don't have patience to wait for clean setups. I don't use volume only PA and TA. Other ways to reduce risk is to do other things with your time that produce 0 risk income. For example having a current job. Also, please note even if you have a contract job, if you work for more than 90 days on w-2, you actually are entiled to sick leave with pay in most states. That is free money no risk and you make more in a day then most day traders.
Most here are short term Traders, but Volume has significance on larger time frames eg Daily Weekly. Even CMT program teaches that.
But if you're waiting for volume confirmation, are you then not going to have to chase the trade you could have gotten into earlier without that confirmation?