In essence, nothing changes. It is cluttered thinking and irrational logic that makes this game harder than it need be. Volume is simply the accumulated activity of Traders as they enter on MO or their limits are triggered at price levels. The ES ( since this is the thread base) can be moved on light volume or heavy volume but generally that is as much a function of the time of day as anything else. It pays to be relative in this game rather than absolute, but each to their own. Remember that it takes 100 Traders at 1 lot to equal the volume of 1 Trader at 100 lots. This might sound obvious at first pass but to put it another way " 100 decisions versus 1 decision" That is why filters are so important. It is not because sub 10 lotters are stupid and 100+ are so wise. It is not that at all. It is simply to do with the sheer volume that it takes at the DOM to move the wall ( price) Much has been written here about price and volume. Many who cannot grasp the point, reject it out of hand. This dismissive attitude to the unknown is what makes ET is fascinating. Some people here use both volume and price to gauge their entries and exits and a few, a very few can tell you the state of volume as they read price. Personally I like to enter when volume is flat and exit on an opposing breakout point. This makes me contrary to the market as I am leaving the party when all the others are arriving usually by way of limit stops cleverly hidden in obvious places or horror of horrors, MO. This means that there will always be more volume for me to exit against than at my entry and as I am of the opinion that lot size rules the day, then this is important to me. The other thing to remember is that price goes where the auction takes it. It cares not about 5 min charts, C-V, candlesticks etc, it roams like a free range chicken but with a purpose. ie your 5 min chart may show C=H on heavy volume. Bullish you may say. Maybe. Or maybe it is the volume Traders dumping their longs into the face of the breakout merchants. It is all very well being a squillion lots long, but you are going to have to palm them off to other people in order to book a profit. And even if you are only a little lot Trader you still cannot escape the game Anyway, that is one way of viewing volume on any chart.
I agree with using other senses for intelligence gathering... and thought that tying a string to your toe to an indicator of the frequency of trades... the rate of the speed of the NUMBER of trades at any one time that are taking place... or more seriously i thought of having a object under my feet to ping me about the frequency/the speed of trades taking place... a prickly feeling constantly increasing or decreasing or spiking... like feeling the DOM executing... seeing the market, hearing the market, feeling the market... total 3D intelligent feedback... so Visual, Aural, Tactile... <img src="http://www.enflow.com/p.gif">
Now you are entering into the spirit of things. The next step is to enter and more importantly, EXIT at levels you can live with....... no easy task on the ES under heavy volume.
I guess the market is optimistic. Period! Even with a good jobs report ... And the volatility readings haven't lied!
You seem to be moving towards ProfLogic. Communicate with him, he might be able to give you some insight that will improve your trading. Best Regards Oddi