I'll repeat... It's a Hint for you to correlate it with the cause. Volatility isn't the only hint...there's also market seasonal tendencies (patterns). Simply, I intentionally did not mention any causes and its for him (elit) to do his research because I have discussed the causes here in the past at ET and so have other ET members. The causes more often than not...occur the same time volatility is either rising or declining. This repeats every trading day. Therefore, I agree, volatility is not the cause...it is a symptom of the cause. Regardless, if your a price action only trader (no indicators)...this is a great place to start (volatility analysis and market seasonal pattern analysis). However, if your an indicator trader (ADX or whatever)... Your still going to need to understand what causes trends and what causes sideways markets to prevent becoming too dependent upon an indicator. Mark
CBOT releases market capping information to my knowledge, they are the ONLY exchange that releases that information
NihabaAshi, I have found a post where you say the following: * A rising volume and a rising volatility are confirmation of a trend. * A rising volume and a falling volatility suggest position liquidation. * A falling volume and a rising volatility point to a period of slow accumulation. * A falling volume and a falling volatility depict a congestion phase. I would be vary happy if you could post some charts with examples of the phases. I will do your "5 day challenge" without any indicators like you had suggested in a thread I read, in fact I will look through all my charts, but I'd appreciate some examples so I know what I should be looking for. I admit I'm blind to things like this, I have concentrated too much on trying to figure out what some indicators do and try to have indicators do all the job for me; it's always easy for a newbie to seek help in mathematics and not do the effort of really understand what is going on behind all the indicators. Also I would appreciate any suggestions about litterature or websites with useful information on this. Also on seasonal patterns if available, but can I understand that might be something one needs to experience and discover on his own after years of experience. And regarding the causes. you say the causes occur the same time as the volatility is rising or declining. I have not found what specifically are the causes for trends, but I think the causes for trends must come from some external fundamental event; demand for a product, good outlook, crisis.. Sometimes there is causes that you just cannot know of. Maybe it is not important to know the cause as long as you see the symptom?? Thanks!
ET has most of the info you need although its scatter everywhere. Check out Dbphoenix Price Volume threads and pretend he's talking about volatility instead of volume. http://www.elitetrader.com/vb/showthread.php?s=&threadid=29005 http://www.elitetrader.com/vb/showthread.php?s=&threadid=33766 Both threads have a ton of chart examples. As for books...read some of Wyckoff stuff as hcour suggested. I highly recommend it prior to getting deep into Volatility Analysis. As for info on market seasonal patterns...you can read some here... http://www.mrci.com/ http://www.stocktradersalmanac.com http://www.spectrumcommodities.com/education/commodity/charts/ If your trading instrument isn't listed or you have access to at least 10 years of back data along with historical data of key economic report releases... You can began the painstaking process of keeping your own personal database and then coming up with your own market seasonal tendencies that's probably better than any website. The purpose with the three links above is to give you a strong basic understanding of what exactly is "market seasonal tendencies". Yes...the causes are key economic reports, key market events, key world events, key political events et cetera... Document these and build your own valuable database that's far superior than any website. I also agree that if the causes seem too demanding or complicated... Concentrate on the symptoms until you develop an understanding of the causes and how/when they impact the markets. Mark
Right. But I noticed that when ADX shows strong trend, this trend is very often already mature and is coming to it's end. Good trending days are rare and for me method of finding a possible trend in early stages, by analyzing price action (pivot highs/lows and trendlines) and MA slope as a secondary confirmation. It's not to say ADX is useless, just to share own experience of comparing it with other tools.
Some interesting points have been made here. This is a key point made by mr whister. Volatility is "lumpy" - ie: periods of high volatility generally appear in clusters. Plot daily returns for ANY market over a multi-year period and this will be readily apparent. A couple other points I would make in passing here: 1. What ADX measures and volatility are not interchangable terms. 2. Markets are asymmetrical. They behave differently with respect to volatlity when trending up versus down. 3. Financial markets are subject to demand shocks, whereas commodity markets are subject to supply shocks. Again impacting the behaviour of volatility. Food for thought. bolter
NihabaAshi, Hcour and others, I enjoy getting deeper into these principles about price, volume, volatility.. I'm beginning to wish I had found interest in it the number of years ago when I got interested in trading. Are these principles valid for all markets, most of the time? Are stock prices in Germany (DAX) following the same principles as for instance NYSE and futures? Or is one market particulary prone to these principles? I'm interested in swing trading and thus watching EOD-data, I assume this might possibly be the best timeframe, since the "big players" probably also follow EOD rather than intraday. But I could also suspect that everything is valid for every timeframe...
Well, I can't speak to other methodologies but Wyckoff pv analysis is built on the principles of supply and demand, which are inherent to all auction mkts. So if there are buyers and sellers, the principles apply. Of course, some mkts, just like some stocks, are better than others, they should be liquid for one thing. And some mkts are just too volatile, while others are not volatile enough. H