Using volume to predict direction

Discussion in 'Trading' started by 1a2b3cppp, Apr 7, 2013.

  1. I've been looking into volume recently to try and see if there's anything I can learn from it.

    I made the following indicators based only on volume and price.

    Obviously this is not a trading system. I just made these "indicators" to try and visualize what is happening with volume.

    Green dot = long signal

    Red dot = short signal

    Yellow star = trying to call tops and bottoms but as you see it doesn't work very well.

    This is an April 5 150 volume YM chart.


    Seems about the same as anything else TBH. Sometimes it's right and sometimes it's wrong and there doesn't seem to be any predictive power whatsoever, just like all the other indicators.
  2. Here is an April 3 YM chart.

  3. Let's have a discussion how to use volume as it relates to trading signals.

    I meant to put this in the first post.
  4. Everything and anything but especially volume, must be applied to context, or you will find yourself wasting your time.
  5. ofthomas


    ok, so posting a chart without explaining what your indications were and then stating that volume & price have no relationship seems to not have purpose...

    the only way for others to argue for one or the other would be for you to explain what your stand is based on the indications or what the indications are... wouldnt you agree?
  6. ofthomas


  7. Could you be any more vague?
  8. ofthomas


    I will elaborate based on my understanding.... volume is nothing more than confirmation of a given expectation of the market participants... unless you are dealing with been able to se OB sweeps and react to such events.... anyhow, like I was saying... volume will be present wherever there is a lot of interest... or as prices approach interest (depending on your timeframe) ...

    so the context is important... if I see a lot of volume at 14400 lets say as either the market approaches that level or that level is rejected by the market, then to me that level is "relevant" and of interest... I want to watch it again and see what happens the next time the market approaches the same... if I see the same volume levels, assuming the market sold off, then I want to "join" that slide with a tight stop just above... if the volume is less and buying is pushing instead, then I want to see what happens next... it comes down from there the volume pressure was exerted...

    context... like in anything...

    IMO of course... that is how I use volume... to provide me context, which is why I like TFLOW bars (quick visualization of that volume)...
  9. I want to know if and how people use volume to determine direction (or, if you prefer, likelihood of direction).
  10. Sorry for posting those wide images that are throwing off the width of all the posts on the page.
    #10     Apr 7, 2013