Volume Bar Analysis

Discussion in 'Technical Analysis' started by brownsfan019, Dec 13, 2006.

  1. In my journal, http://www.elitetrader.com/vb/showthread.php?s=&postid=1294405#post1294405 - a suggestion was made to look at volume bars vs. a set timeframe for a chart setup.

    This has really grabbed my interest, but not sure where to start. Hopefully someone that has used volume bars before can help me out....

    I currently mainly trade off of a 3 minute time based chart. This hasn't been bad, but during quick moves I am often left watching as I wait for a 3 minute candle to finish. By this time, it's sometimes too late to enter a trade.

    My questions are...
    1) Where can I read up more about this - websites, books, etc.

    2) How do I 'translate' from a 3 minute chart to a volume based chart? In other words, if I am trading the ES now on a 3 minute chart, what should I set my volume at? Is there a set ratio I should use based on how many contracts are traded on a particular market? Right now I trade the ES, NQ, ER2, EC, and QM. The QM has less than 100,000 traded daily, meanwhile the ES is around 1 million... so, not sure where to set my parameters at.

    Thanks everyone!!

    Special thanks to fearless9 for mentioning this to me in my journal.
  2. ProfLogic has made a number of posts relating to volume bars. Try a search using his name and "volume bar".

    Personally, I use 100, 1000 and 10000 volume bars to trade the NQ. I refer to the 10K during prep to define the macro trend, but I use only the 100 and 1K during the day for my trading. There is no "equivalent" for the 3m bar since a bar can take a few seconds to several minutes to complete. What matters is the volume and the "thrust" (or the complete disinterest). PL uses multiples of 7 (343, 2301, etc), but I don't find them as useful as the multiples of ten that I mentioned above. You just have to play with it and see which bar interval provides you with clear signals (which may not be signals which are clear to anyone else).

  3. RedDuke


  4. Thanks guys. When I first searched, it was misleading that the 'why do people use odd sized tic charts' was actually the thread about Volume Bars.