Couldn't volume represent participants that might also be wrong? Meaning, instead of assuming that large players are always right, could we use that information to try and see when those people are not right?
One doesn't really know and it doesn't really matter. The only thing that matters is being in personal partnership with the market and reading the signals of change or continuation in the context of one's trading timeframe. The only people who are always right are the ones who took a position prior to the current bar that are now taking profits. Most people underestimate the power of now, large players included. A larger player could enter at any time and change the dominant trend. The way to know is to filter T&S for large lot sizes being transacted in the present moment.
How useful can that really be, when large orders are almost always broken up into smaller blocks? That seems like a very limited view of what's happening as a whole.
True. Of itself, it is a limited view and doesn't offer much. When taken as an element in a larger dataset it provides greater clarity of context. Look at an extreme bar, the order flow has different characteristics than the other times that you are describing. Let's say one is at a turning point. Volume has been declining, we are in the convergence of two trendlines both long and short. We are anticipating a volatility expansion and a directional move. Which move would you like to be already positioned in? Where T&S are showing an increase of small transactions or T&S showing an increase in large blocks being transacted?
I think if you are going to get so specific, its very important to talk about the exact market you're trading. The order flow characteristics for ES and NQ are quite different, just as an example. Whereas some trading might be using the DOM for ES trading, doing this with the NQ is practically impossible given that your entire 10 levels up or down can be wiped out in a second. If watching T&S, I've seen it written before that funds will actually do a string of 1 lot trader each 1 millisecond apart (perhaps it was even a smaller unit of measure, I don't remember). This way, there is nothing to filter as these are all 1 lots that would flash by your screen without you even knowing. Furthermore, I've looked into cumulative delta, another useless tool you could say that is part of order flow, and this too comes up short. Sounds simple enough to assume more traders done on the offer, hence positive delta, hence price going up. And yet, there were just far too many examples of the opposite happening. I remember watching one day seeing the delta drop lower and lower, and price just kept creeping up higher. When you have all this shit in your head, its impossible to make a decision. If you're watching and analyzing volume and waiting for something, it might not look quite right. Perhaps you're watching the cumulative delta, and it too doesn't look right, or maybe it looks perfect, and yet your move still doesn't happen. Then maybe you're watching T&S too, and trying to make all of this match up with whatever price is doing and whatever levels you have on your chart. It just turns out to be one big mess. Volume and orderflow in my opinion are not the holy grail. They may add little pieces, yes, but you can't build a strategy around this in my opinion.
By looking at his chart it is quite clear to me that the volume histogram's color coding is based on rising/falling volume, not rising/falling price. Check out your charting platform options for that option.
That's a confusing display for me. Bars over candles any day. Having volume colored that way on the histogram hides essential detail on price direction when sweeping volume.
Not that I agree with OP's views on the market but I disagree with your claim. The price direction you can get by looking at price bars. You can't get all the info from volume histogram alone regardless the way you decide to display it. If his method actively looks for increase/decrease of volume on following bars (which it does) then this type of presentation (again, an option in the charting platform) makes a lot of sense. Of course you can always make the colors different but the idea here wad that the color scheme follows rising/falling volume, not rising/falling price which you already get by looking at the price chart (bars, candles etc)
While it is true, NOTIONAL and/or EXACT price, and MAGNITUDE of price movement CAN NOT be ascertained from volume, price DIRECTION can be ascertained by volume alone. To do so, one must understand there is an order of events that occurs within the volume, and where within that order of events the market is trading. None of that is to say your opinion is wrong. Just that it is opinion. Myself, I use volume, and price, in that order. I believe Sprout does the same. If I was forced to choose only one, price or volume, I would choose volume. But I don't have to make that choice. I have price and volume and I use both.
%% Exactly bigSnack + sure can LOL. NOT just Citicorp-Citibank LOL. Even some bull elephants , or bears do not have enough sense not to charge a PH[ProHunter] with a .458 Winchester magnum[ bull elephant+ bear killer]. But @ the end of the day even a big order broken up [ assume its thru exchange]will total up, or total down@ end of day........................................................................................................ Besides, bigSnack, big selling or big buying could be because of fund redemption$, or fund inflows , fat finger, mistake..... not because its a good buy or a good sell..............................................................................................................