Google Wyckoff - there are several courses but takes about 2 years to learn. It often allows anticipation of change before price is giving any indication. Here's a summary with some links that will help if you are serious. It will require hard work over time but the rewards are real. http://ezinearticles.com/?Stock-Mar...s---Step-One-of-the-Wyckoff-Method&id=1325454
The short answer is I am not trading on now but I have built models I expect to trade on at some point where volume is important. I think the paper I posted in the other thread is a good example of how I think about it. The author's basic strategy is that large weekly price moves tend to reverse. He has a story about how volume might be related to the probability a reveral happens and how strong it is. Two stories actually but only one seems true. Then he tests it in historical data for a large number of stocks by making portfolios of winner and loser stocks with different levels of volume increases/decreases in the prior week. I have repeated this exercise in a different timeframe and stock universe with good results. Like your experience it is not a guarantee and might be hard to see trade by trade, but comparing a portfolio formed on the basic signal to a portfolio formed on the basic signal plus a volume rule it looks like a real edge. If your trade setups are rule based and you have the data, you could just compare you P&L distribuions over subsets of trades taken with different volume conditions, maybe it matters and maybe it doesn't. But I like the idea of starting with a plausible story of why volume might be related to future returns for a particular type of stock and then testing it. In the paper, the story is that reversals are stronger if the initial move was not based on information and trading volume increases when information is in the market. I can think of two other volume stories that are out there. One is that if you can start with a set of price moves that are not information based (probably not as easy as it sounds), larger volume moves are liquidity based and will have stronger reversals. The other one is a bit more complicated - people make decisions differently if their position is in a gain or a loss, and looking at past trading volume at different prices can help identify stocks with large unrealized gains or losses. <B> -------------------------------------------------------------------------------- Quote from Thunderdog: But that's the point, isn't it? Sometimes price continues on higher volume and sometimes it reverses. Sometimes price continues on relatively low volume and sometimes it reverses. Have you been able to distinguish in advance which is which? Personally, I have not been able to do so with any practicable reliability. So the question I had to ask myself was, what is the incremental value of this additional variable? As an aside, let us exclude relatively large spikes in volume from consideration, since the writing is on the price wall as well when such outsized volume spikes occur, with outsized price bar ranges. So I don't think there is incremental informational value in such occurences as it relates to volume. As for notable increases in volume not accompanied by outsized price bar ranges, only the subsequent price action will tell you what's what, since I have found that it can go either way in my own experience with no practicable a priori bias that I, personally, can distinguish. So where, then, is the value in volume? Perhaps your perception is more nuanced in these matters. --------------------------------------------------------------------------------</B>
Price can move up with little or no volume. Price can move down with little or no volume. Price can move up with a lot of volume. Price can move down with a lot of volume. Price can move up with average volume. Price can move down with average volume. Price can move up with a little above average volume. Price can move down with a little above average volume. Price can move up with a little below average volume. Price can move down with a little below average volume. Price can move up with a little less than a lot of volume. Price can move down with a little less than a lot of volume. Price can remain unchanged with little or no volume. Price can remain unchanged with a lot of volume. Price can remain unchanged with average volume. Price can remain unchanged with a little above average volume. Price can remain unchanged with a little below average volume. Price can remain unchanged with a little less than a lot of volume. Price can -----
It's not a matter of being "too much info". The Price-to-Volume correlation is low. Therefore not only is it irrelevant, considering it is detrimental. If your trades are "in tune with price", they are IN TUNE! Nothing else matters!!!!! OK... I'm going to try to not make this comment any more. It's like the "Obama dealy".... No matter how many times and how much info thinking minds present that he's a LYING, PATHOLOGICAL NARCISSISTIC FUCKHEAD... BRINGING GREAT HARM TO THE USA, kool-aid drinkers turn a blind eye... same with trading facts.
Years ago, I read both How I Trade and Invest in Stocks & Bonds by Richard D. Wyckoff as well as Studies in Tape Reading by Rollo Tape a.k.a. Richard D. Wyckoff. And while I enjoyed both books, in the fullness of time, I neveretheless do not see a meaningful contribution provided by the volume histogram on a price chart, no matter how I try to interpret it, as I had explained elsewhere.
That's the part that never really came to fruition for me, despite repeated effort on my part over a period of years. For a while, I even thought I "got it" but eventually decided that my volume epiphany was illusory. Perhaps you work smarter than I do, in which case you will have an "edge" that continues to escape me. But that's the thing. Since I presently only look at price, I will already be in the trade if the price formation meets my predefined criteria, irrespective of whether it was news-based or volume assisted. As for how far the price may move, that part is secondary to getting in at a good, low risk price point. We never know how a move will play out. Never. And if price retraces against me and reaches my exit point, be it the initial protective stop or a subsequent trailing exit point, then I will exit irrespective of what volume has to say, because my risk is in dollars as measured by price. For these reasons, I fail to see the practical relevance of volume analysis.
You're starting to lose it again, Scatty. Perhaps you should vote with your feet and move. You've got the money.
Why should anything be considered without any proof or track record? I used to get constant spams from MarketVolume, and never saw evidence that volume or their stuff worked. They would give "example" trades or only spam me after good periods. It does not matter if people consider Volume valuable or important or other people "high recommend it to them." We should be able to take a randomly selected sample of several hundred "volume based" only trades into a spreadsheet, and see significant outperformance edge with reasonably good statistics (Profit Factor, Sharpe, max DD, Calmar, etc.) over a sufficiently long period overa diversity of instruments. Otherwise, it is like the Tooth Fairy and Easter Bunny. No much how much someone believed in them or anticipated them, that person still needs to grow up.
I don't know if it's too much info as much as unknown info. A lot goes on behind the scenes that doesn't show up on official volume numbers.