Volume

Discussion in 'Risk Management' started by accutrader, Mar 20, 2010.

  1. pma

    pma

    I see one thing that sticks out like a sore thumb on this chart. Look at where buyers bought the breakout of the 680.2 level.Now-where would a protective stop have been placed? Below 680.2-thats where the stops were hit and the selloff began. The trick is to use logic as to where traders have opened a position and where they might cover.:)
     
    #21     Mar 22, 2010
  2. speres

    speres





    Speres – The high volume bar came at 9:38:42 eastern on TF #F on Friday. TF had dropped a couple of points from opening. The high volume bar was not at either support or resistance. I agree that the high volume bar needs to be read in the context of where price is but in this case it was close to opening, no direction had been established and there was no sup/res near by.

    A - supp res don't need to be close by to get a high vol bar, and you didnt post a chart.

    The subsequent fast drop suggests the high volume was caused by big money going short on the bar which closed up. Waiting to see what happens means missing the move.

    A-couldnt agree more but you looked at the chart not me, like I say everthing is looked at in context, this is where price, time and vol come together

    Your reply poses a fundamental problem with volume. Is big money opening a position or closing an existing position?

    A- You will know smart money are closing because the target will have been reached

    You asked if the bar was a wrb. If you mean a wide range bar, that does not apply as I use constant range bars.

    A- .

    I still have my original question “How can big money enter so that they don’t overpower the direction of the bar/” [/B][/QUOTE]

    A- happy hunting :)
     
    #22     Mar 22, 2010
  3. ________________________________________
    Quote from accutrader:

    I use range bars. A common scenario is as follows: An index will say be moving down. There will then be a bar that closes up with substantially higher than normal volume. The next bar will be a down bar at much the same price as the prior bar. The index will then continue down.

    My interpretation is that the higher than normal volume on the one bar must be due to big money going short even though the bar closed up. Is my interpretation correct and, if so, how can big money control their entry so that they don’t overpower the direction of the bar?
    ________________________________________



    You entitled the thread "volume".

    The V. P relationship is such that volume leads price.

    In your display, you use, for your reasons constant volatility price bars and let Time and Volume follow this bar production scheme. Price has a fixed value for volatility and time and volume vary accordingly.

    In most efforts people make, they use price variation to make money by using market orders that allow them to take profit segments as time passes.

    As you see profit segments are price trends. Each segment has a beginning and an end.

    For a beginner using your chart, he would use volume signals to make money trading price. The long trade is followed by a short trade is followed by a long trade.

    Use volume to trade the constant volatility bars as follows:

    the trade window opens on peak volume and closes on the volume trough.

    Since you make constant volume bars a peak volume bar is the highest velocity of price transactions. Correspondingly, a trough volume bar is a minimum velocity of price transactions. These maxes and mins represent the way limits are reached in trending. As hard as the market tries it can go no further or with little effort the market makes a move.

    The space in between these two times is the end of one trend and the beginning of another.



    In the conventional P, V displays that have fixed durations for bars, one pattern exists. The above window mentioned is the part of the pattern from point 1 to the BO of the RTL.

    A beginner trades what he observes and takes profits and reenters during this window.

    [​IMG]

    The beginner's problem, however, is that he cannot see maximums and minimums in volume when they are occurring. In fact most traders cannot and therefore they do not use volume as a leading indicator of price.

    Below this problem will be eliminated if a person is capable of following the text and then doing the required drills to build, in his mind, the tooling. Reading this post is meaningless except that it contains how to trade all day long in any market with liquidity. The three trades on the chart total two times the range so far in the day. Trading a few more times in the day increases the multiple for the daily profits.

    It probably seems sloppy to have so much time to take profits and then reenter. It is just a fact that timing the markets does not require precision on the part of the trader.

    Putting a few pieces together will make this level of trading a smooth operation for a person just beginning. Note some carpenters say they have 20 years experience when, in fact, they have repeated their first year 19 more times.

    The drill is to DO what is suggested until it becomes automatic. A person becomes sensitive and he goes into a very coherent trading state. (use an EMwave pc to prove this to yourself as you do the drill over a few months. Here is an example of sensitivity. If an address has an east or west in it and a fuck off types it wrong, he gets the wrong picture of a house and those who know where my architect's studio is know it is not a picture of an architect's studio. We all laugh.

    The Drill.

    Upon open, draw three integral fractals of price and annotate the peaks and troughs of volume on all three fractals on the volume display. This is carpenter apprentice school.

    As soon as possible in the day label points 1, 2, 3 and the FTT on each and every fractal.

    After a few days, note the end of the day status on a debriefing log where the status is taken from the columns of the monitoring log. Begin the next day's annotations by continuing the order of events of the prior day.
    Remove the gap, if any.

    Only trade the signals of the middle fractal of the three fractals when the FTT begins the window and the BO of the RTL ends the window. As you learn, then trade sooner and @ the FTT instead of the BO.

    The illustration just shows two fractals (by line weight). Notice the volume trough @ the BO of the RTL on this constant volatility chart. Notice before this occurs there is an FTT in price @ the peaking volume.

    Final comment: Smart and big money is NOT observable on this chart. This is not debatable. Anyone who thinks they can see this on this chart is fucked up. There are 7 other places where what the smart or big money is doing are displayed.

    To check out the single pattern of trends, read elsewhere. the long pattern is B2B 2R 2B; the short pattern is R2R 2B 2R. the chart in the illustration has the color coding all messed up so the pattern cannot be seen on this chart by color sensing. The peaks are @ B, B and B. The troughs are @ 2 (first one) and R for the long.

    Don't worry if you cannot understand this post. the mind has to have inference to match the sensing to achieve perception. If there is no inference, then there is no perception. you are still a carpenter's apprentice and cannot see the market as yet. this thread is about a person asking how to begin to see the markets. Most people cannot see the markets.

    Trading instills feelings of support, comfort and confidence. If a person is considering learning to trade and he is active, he may have feelings of anxiety. fear and anger. This is simply a symptom of what is going on; what is going on foir that person is learning repeated failure. It can lead to becoming OCD and posting information that is incorrect and inaccurate.
     
    #23     Mar 23, 2010
  4. .
     
    #24     Mar 23, 2010
  5. volume is almost not useful for trading except as gauge for volatility.

    the only volume that is useful is volume-at-price/market profile etc, that use volume to determine order flow or support and resistance. at SPECIFIC levels

    the basic volume bar is useless.
     
    #25     Mar 23, 2010
  6. Hi Jack:

    Thank you for taking time to reply. However, I am not familar with your terms. What do the following mean:

    FTT
    RTL
    BO
    B2B
    2R
    2B
     
    #26     Mar 23, 2010
  7. I learned all of these from mark brown and as he pointed out, I get paid to post. So thank you for your question.

    The Pool Extraction Paradigm (PEP) has two hypotheses (HS) and they are measured bt a parametric set(PM).

    What happpens is that the granularity of information (ticks, contracts, and print time) dictates that 9 cases of adjacency determine the foundation and building blocks of a system. To measure these, binary vectors are used as the parametric measure. this means the Hypotheses set is used to build logic just like that used in digital computers as hard or software. In all binary systems there is no uncertainty since there are only one of two answers possible.

    People use drills to build their minds and trade with unconscious competence by following the binary logic orientation.

    The tricky part was how the market dictated the hypotheses and their measure.

    The resulting glossary is like a foreign language to most and most cannot understand that using CW to test a paradigm that is not in CW language cannot be done. CW works on betting, risk control and money management. The character of CW trading is measured by segements of scales (See TZ for his list) that do not contain the range of values used by this paradigm and its trading. CW people, therefore, conclude that what the system does is not possible. they prove to themselves that what we do, doesn't work. This level of logic the CW people use is irrational by the standards of those who use logic (Carnap).

    It turns out by market granularity that the envelopes of price movement can be defined. The container is a parallelogram. To get to this conclusion logic is used and a caveat is that there is no noise and no anomaties in the binary logic used in PEP and its four applications.

    A parallelogram is determined by the pattern which is described in shorthand using B for Black and R for Red. Point 1, 2 and 3 in geometry applied to a two variable orthogonal matirx (chart to most) gives lines of slopes described by a linear equation. The m's sign in the linear equation determines the B or R with one caveat, 0 slope is colored by market sentiment which is defined by the leading indicator of price. Technically, the sign of m precipitates from the parametric measurement of the volume as stated just above.

    I learned all of this from mark brown at age 24 about 53 years ago.

    So B2B means Black 2 Black and that is a description of the price and volume move from point 1 to point 2 of the parallelogram that forms the analytical container used for decision making to continually extract money from the markets. Point 1 is beginning of B @ a peak in volume. The volume reaches a trough at 2, the BO of the RTL. So the trader "reads" this as increasing price and decreasing volume. A more general term is used for price;from H1 (Hypothesis 1) the term is continuing. The trough of volume coincides with the BO of the RTL. Price is B as it goes frther outside the old trend to a point 2 where volume is increasing to its peak.

    we trde this as one profit segment from point 1 to point 2. The eact timing of everything is always known and the values are also known in advance. This is all accomplished by using panes set up for those purposes. Nothing (nada) is left to chance or guessing anything.

    The general concept involved is that by using a binary logic system, you always know that you know since there are only two possible answers and one of them is always present for you to see and add the mind's inference to and get "perception". You can see this is not possible for you because you do not have the inferrence to call upon from your mind.
    we upped the ante with the binary concept by using vectors. Above you see three of the four so far: increasing, decreasing, continuing.

    At point 2 of the parallelogram we have reached the end of B2B. volume has gone through two moves defined by P, T, P where going from P to T is decreasing volume and going from T to P is increasing volume.

    2R comes next after B2B. 2R is going short from point 2 to point 3 all on decreasing volume running from a P to a T. This is a one to one correspondence of P and V. At point 3 a line is drawn to point 1 and it is extended into the futre to the right. as statd a parallelogram is drawn using point 2 where a line segment originates and goes into the future.

    Price fills the parallelogram with the last move of the trnd: 2B. 2B is a long move and volume goes from trough to peak. The point is between the two lines drawn and it is called FTT because price did not get a cross to the LTL (the parallel line drawn from point 2.

    A person versed in the PEP and its applications takes three trades as you see. If it is the beginning of a day he has traded much more price movement than the ATR.

    What is next For him is to trade the R2R 2B 2R which follows the long trend's three moves. You can reread theabove "long" description" and replace it with the descrription for the short R2R 2B 2R. Writing it out word for word will be helpful to your inference of your mind.

    Suppose this post made sense to you. for example it has made sense to four generations of people so far (my definition of the four generations in the last 53 years). At EOP my ponytail made me a person of a particular generation. My pin striped suits I wore and my Hickey Freeman tweeds made me parts of two other generations at EOP. The bronze plaques on the present buildings on the leased land of our pre-colonial dairy farm adjacent to Wall street made me a member of another generation.

    You can look at the S&P chart of the Bull retrace elsewhere to see the RTL's of three levels of parallelograms that make up the nested fractal of the PEP system.

    By building your mind in a given system (this one is based on science and deduction and the null hypothsis approach), you obtain inference. Collectively the inference of the system is known as differentiation. When you acquire differentiation you arrive at trading described as unconscious competence. This is a place where you feel support, comfort and confidence. Unconscious competence is a knowledge and skill combo that is just like how you drive a car. Driving through the B2B taking profits; driving through 2r; taking profits; driving through 2B; taking profits is how every day opens with the first three trades. The next three follow suit, profit, profit, profit. Wash and rinse as they say.

    CW trading doesn't allow this and 4 out of 5 reject this post as a possiblilty. So people just skim it or pass up on reding it. some ignore it. most reject what they read by applying their beliefs which are not compatible. Without any inference, it is not even redable. mostly I post in CW language to make points.

    Most people will say but this doesn't always happen. It doesn't happen on a trending day!!!! they say.

    A system always happens. All systems are built from the ground up. In markets, the data flow dictates the system and its content. CW pleasantly ignores this concept and goes its own way using tools that come from academia and the business of the FI. Making money from commissions and fees provided by clients. Fiancial advisors do not extract capital from the markets. The PEP does orient to taking the market's offer.

    As you see, there is the concept of market dominance and non dominance in the three moves of the parallelogram that is the trend envelope. you also found out trends over lap during a brief non dominant perios after the FTT and up to the BO of the RTL.

    You also found out the difference between a retrace (point 2 to point 3) and a reversal (point 1 to point 2). Most CW traders will never figure out the difference which is available for differentiation with in a few seconds of either's beginning.

    Don't worry if you do not understand this. The mind has the potential to trade to take the offer continually but it has to be built first to be able to do that. I was just kidding about markbrown. I didn't learn anything from him. Once I kidded him about getting pad to post here; I think he didn't get the humor as yet. Maybe someday.

    Any New Yorkers old enough to remember when the fence was taken down around the treasury building??? That was fun time, especially the plays on Wednesdays at lunch time. Remember the first one? 1, 2, 3, 4 Dump the Tea and Start the War........ the music sessions were more popular..... It was after Whoopi gave the check to the nuns....lol

    Good luck to you.
     
    #27     Mar 24, 2010
  8. Well Jack, I am glad to see that the reports of your demise were inaccurate.
     
    #28     Mar 24, 2010
  9. TY.....

    Of course, it was touch and go as the reports came to ET.....

    Mark Twain was just a fortunate a while back

    i would hate to have to give up my posting on ET income for any reason....
     
    #29     Mar 24, 2010
  10. You have been given some very good input regarding volume, but here is another way to look at the chart in question from a "structural" standpoint:

    The previous day RTH session had a value area (market profile=volume value area=the area where 70% of the trading occured) as follows : High Value =68140 and a Low Value = 67840........

    The overnight action of the 18th/19th had a value area as follows: HV = 67900 and LV = 67790.

    Prior to the floor open, the overnight traded through the HV @ 67900 which would indicate a target of the previous RTH HV @ 68140.

    The floor open was 68130 which then traded up to 68160 and then back through the 68140 (previous day RTH HV). This is a classic short set-up which can be taken with the tightest of stops.

    Keeping an eye on the structure of the market in addition to volume is one way to have confidence in your trading.

    The volume on the prints shows the following:

    the open @ 68130 had 465 trades, 68150 had 44 and the high @ 68160 had 4 ! This is another classic indication of a turn..the low volume print.

    Good luck with your trading
     
    #30     Mar 24, 2010