how do you use exactly volume as an indicator when trading ES ?
what is it that you look for when using last price, inside bid & ask, market depth, the volume bars on charts etc ...
how is volume leading price ? etc ...
Hi paulus, there a lots of ways to use volume as an indicator.
I use it to give me a bias, rather than to trigger a trade. My trading methods are all price-based. Anyway, to the point: attached is the last 8 trading days of the ES on a 10-min chart. Notice how about 5 days ago, price started creeping up while the on-balance volume (OBV) kept creeping down. In other words a divergence between price and obv developed.
Sorry it's so dim, obv is the faint green line on the bottom.
After this morning's rally I aggressively took every short my methods had to offer. The first one broke even, but I smacked the second one down like a bad dawg.
Sometimes you will see obv break a trend line before price does. In that way it is sometimes a leading indicator. But again, price is king, I never let volume trigger a trade.
It makes sense as an indicator to me because it is a separate piece of information, unlike price based indicators which seem to serve as guides to point out particular price patterns.