Newbie question perhaps, but... Let's say I'm wanting to trade the ES and I want to involve volume figures in my analysis. Is there a way to pull up a chart (ninjatrader) that would show the actual combined volume for the S&P 500 index stocks. Because if I just use the ES volume then that doesn't really give a good indication of institutional demand/supply etc... that's simply volume for the ES contracts right?
Perhaps this wasn't such a noobie question? I can't believe this doesn't exist, a chart showing the dow/s&p with combined trading volumes?
If you want to find an indication of institutional demand/supply, volume won't be it. Volume merely reflects trading activity. Whether demand outweighs supply or vice-versa will be seen by whether price rises or falls.
sure, but couldn't price rise on light volume and thus give a slight bearish signal or at least hint at caution?
What matters is that price is rising. The notion that rising price must be accompanied by rising volume is a common misconception. If rising price is accompanied by rising volume, then it is being accompanied by increasing selling. This is not necessarily a problem if demand outweighs supply. If so, price will rise regardless. If price stalls in the face of that rising volume, then supply is outweighing demand. A few minutes with a long-term chart of a popular stock such as GOOG will show that with a few exceptions, such as Oct '12, volume is steady or declining. If buyers had had to fight sellers every step of the way, GOOG would not have reached the levels it did. Oct '12, by the way, illustrates another common misconception, that this is heavy selling because price falls. But what it actually represents is heavy buying since price stops falling. If buyers weren't stepping up to the plate in force, price would have continued to drop. The heavy volume in combination with the halt in decline is then positive, not negative, one of the reasons I dislike candles.
dB, I'm a little confused by this. Perhaps you can elucidate. I've always considered the choice arbitrary since bars and candles both convey exactly the same information.
Depends in part on how they're displayed. If one uses black candles, there will be little difference between the candle and an OHLC bar. But candles go way beyond that into volumes of cherry-blossom terminology that encourages the trader to look for patterns and assign meanings and look outside the behavior itself for some parasignificance to what is unfolding. Instead of interpreting price behavior, he focuses on interpreting the candles. And if one adds color to the mix, the interpretation can become even more exotic, if the trader is able to make the interpretation at all. If this were a winning strategy, its superiority would have been demonstrated by now (it's been about twenty years since this was popularized). There is also the underlying but essential difference that price is continuous. When one considers this, the "little difference" I mentioned above becomes a crucial one. Price does not move in bars, much less candles. Bars and candles are merely a choice we make regarding illustration. But price moves continuously, in ticks. We may combine these ticks into tick bundles or time bars or range bars or volume bars or candles or whatever, but it's all ticks. And ticks can't be displayed in candle form. But then neither can they be displayed in OHLC form. The closest one can get to the print display is probably a line chart.
OK. Thanks for your views on this. It's boring, but I'm mainly stuck on support and resistance, and whether prices are going up, down, or sideways on different time scales. I'm ok with either bars or candles.