Hi JJ, Happy 4th to you, hope you have an enjoyable day. The volume I am refering to in the quote above is the volume that allows you to trade a large number of contracts with each order placed. ie If you are trading 100 contracts per entry, you may decide to break this down into multiple orders, but you still have to find 100 takers at that level in order to be filled. The decision mechanism of how you enter and exit the market is yours and yours alone. Whether you use indicators containing volume or not is your decision, it matters nothing to anyone else. Many thanks for the article on RC, obviously a thoughtful guy. I couldnt understand what he meant by trading $10,000 per contract. Do you think that he meant $10,000 margin per order.
JJ, Happy 4th of July. I think volume is important depending on methodology. With mine being a breakout system low volume leading to a breakout is normal but when at the point of breakout I need volume to push through. But yes volume is another lagging indicator. It just happens to be one that I use. Reading the RC interview he goes against a lot of my opinions anyway. That is what makes the markets work. And both systems can and do work. He does say some things that I totally agree with. I do think, like he says that a person can take a small account and make it a big one if done properly. A lot of people here on ET disagree with me on this. Hardyard: What RC was saying is for 10K in your account you can trade 1 contract. 4re
Top of the day to you 4re. I agree. When price is compressed into a narrow range, volume drops off and the average strike size drops then something is about to happen. In fact it cannot not happen since none of us make money when we are flat and so volume must return to the ES. On the subject of growing a small account, quite frankly I cannot think of any other way of begining. I bet that there are plenty of Traders who never really gave this game their full attention until their 50K account was almost gone. I would be a bitter disappointment to RC with his self imposed margin of 10k per contract. It is so foreign to my thinking that I just could not understand his statement until you kindly pointed it out.
A big Howdy to you Hardyards. I agree with you. For me I would rather have Bollinger Bands and volume on my chart than any other indicators. I love the days when I see we are in a continuation pennant and BB's are getting tight. And as soon as volume starts coming in, it is going to pop. In and out in a couple of minutes. And with my money management strategy and a 10K account I would be allowed to 2 trades of 5 contracts each day. On the other hand I see where JJ and others are coming from with the volume thing. I posted an article from Mark Douglas about trading like a casino. A casino has to take any bet on a hand blackjack even if there are only a couple of five dollar players in whole place. They play the odds every time big or small, crowded or not. That is how they make money daily. 4re
I thought that I would follow through with a few more ramblings about volume because it took me years to figure it out and I use it to enter and exit once I have established the likely tipping points of the ES by other means. I prefer not to discuss my software, my account, my broker etc, since I consider this is confidential. However in a general manner I am happy to share my thoughts and conclusions thus far in the most incredible journey of my business life ... namely trading. My Wife and I are New Zealanders, in or late fifties or in my case late late late fifties. We have lived in the US, Aust and Italy and 3 years ago on a trip from NZ to Spain we swung by Buenos Aires for our first taste of latin america. Well, we got off the plane bought some beautiful property in BA and we are still here ... never did the 2nd leg to spain. We find latin/centro america just fascinating and we have arrived at a great time, but then timing is what it is all about. Back to ES. Once you have established your tipping point you need an entry. Remember, the better your entries and exits the better your confidence. The better your confidence, the more lots you will trade and that is where the real money lies. Now, imagine that the ES is long with good volume on the bid and the delta is positive. All of a sudden the price runs out of steam. The brave longs try to lift it once more with heavy buying, this good be buyers on longer time frames, could be buyers scaling in, could be within a few seconds of an important TF rollover ie 3 minute, 5M, 13M,15M etc Whatever the reason, there is very heavy activity on the bid at that price. The very next moment the sellers jump in with massive action at that price or 1 tic below and that is the end of that upward leg and down she comes. If you have learned to read the bid/ask activity, particularly failure under heavy pressure and average size of orders printed, and if there appears to be a clear 6 points back to the last TP, you will be onboard at the exact extreme of the price that you can trade at. Maybe there will be a MAE of 1 point, but that is all that I would expect. When the price approaches the last TP, you can expect some indecision and so you take some points of the board, bring your hard stop up to BE+1 and repeat the investigation exercise all over again knowing that what ever the outcome, it will be be profitable. Now, I know that I miss some of the best action of the day because I have made my target within 60/90 minutes ... well quite frankly I just do not care because I do not go back to the screen until tomorrow morning ... mañana a la mañana. For me, it is the number of lots traded that is doing all the work. The net points are simply there as a vehicle in which to load the trade volume. If you trade solely price action, you will not see the epic struggles between longs and shorts as clearly as I do and therefore your MAE´s will be greater. In the case of the above action that I have described you would see a white candle ( or bar) with better than average volume. To a novice this is bullish, to a good price trader it is a warning that something could happen. I must come clean and admit that I have posted to this thread under "commanderco" This was an accidental login as I changed my call sign as a result of changing my trading style to include volume ... a fresh start and all that. I will have the Mods strike ComCo from the books. Let us all have a great day.
Great post, I can visualize it as I read it...Sounds like you you and your wife get around to some very nice places in this world. 4re
Excellent comment 4re ... if you can visualize it, you can trade it. It took me years to see it. Even though intellectually I knew that volume had to be important I could not see how it fitted into my trading. Did I read somewhere that you are in Texas. That being the case we are practically neighbours.
Sorry for not getting my numbers in earlier. Took family to the Ranger game last night. Sat in the rain for 1 1/2 hours waiting for the game to start (and it hasn't rained here in 6 months). So I didn't get home last night until 1:00 A.M. Anyway here are my S/R numbers for today. Long 1291 Short 1278 Good trading to everyone today 4re
I believe that this support at 1278 is a strong pivot and once broken the rally will be done. Especially if we close below that today. We should have some fighting going to level though.