Volume Price Question

This is a discussion on Volume Price Question within the Technical Analysis forums, part of the Methods category; Hi. Im new to this forum. Ive been reading a bit about technical analysis but there seems to be contradiction ...

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Old Aug 20, 2016, 7:11am   #1
 
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Volume Price Question

Hi. Im new to this forum. Ive been reading a bit about technical analysis but there seems to be contradiction depending on the sources

When you see a price spike accompanied by high volume, some say it's buying. Cause the long up bar is supported by volume.

WHile some tape reading books by vadym graifer which says that a spike in volume with an up bar indicates smart money selling into the crowd and he says to look to sell into such a bar.

So i'm a bit confuse here. Can anyone help?? Thanks
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Old Aug 20, 2016, 12:51pm   #2
 
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Whether or not price advances has to do with demand, not volume. Price can advance, or decline, just fine on very little volume. "Volume" is trading activity. As such it involves both buying and selling as a transaction cannot take place without both. Therefore, heavy buying is accompanied by heavy selling. One cannot exist without the other. So Vad is correct, though perhaps you have oversimplified his advice.

For example, when price breaks out of a base, the breakout is to a large extent engineered, and those who engineered it are going to sell into it because the potential profits are the reason why it was engineered in the first place. This selling on the part of those who bought before the breakout is why so many breakouts "fail". If there is genuine interest in whatever it is, demand will continue and price will continue to rise after a retracement, though volume will often diminish. When buyers thin out and demand trails off, price will lose its momentum and begin to drift sideways.

In short, it's demand that moves price, not volume per se. In this particular case, unless you were among those who bought before the breakout, it doesn't make sense to sell into it as demand may carry price higher and you're in the position of trying to short a rising price.
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Old Aug 20, 2016, 1:52pm   #3
 
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Originally Posted by dbphoenix View Post
Whether or not price advances has to do with demand, not volume. Price can advance, or decline, just fine on very little volume. "Volume" is trading activity. As such it involves both buying and selling as a transaction cannot take place without both. Therefore, heavy buying is accompanied by heavy selling. One cannot exist without the other. So Vad is correct, though perhaps you have oversimplified his advice.

For example, when price breaks out of a base, the breakout is to a large extent engineered, and those who engineered it are going to sell into it because the potential profits are the reason why it was engineered in the first place. This selling on the part of those who bought before the breakout is why so many breakouts "fail". If there is genuine interest in whatever it is, demand will continue and price will continue to rise after a retracement, though volume will often diminish. When buyers thin out and demand trails off, price will lose its momentum and begin to drift sideways.

In short, it's demand that moves price, not volume per se. In this particular case, unless you were among those who bought before the breakout, it doesn't make sense to sell into it as demand may carry price higher and you're in the position of trying to short a rising price.
But Vad is saying in terms of smart monies. Of course there's heavy buying and heavy selling. Cause his rationale is that when the price goes up, it is where the smart monies can unload the stocks. And with spike in volume it means smart monies are involved
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Old Aug 20, 2016, 3:33pm   #4
 
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Originally Posted by kenlee6 View Post
But Vad is saying in terms of smart monies. Of course there's heavy buying and heavy selling. Cause his rationale is that when the price goes up, it is where the smart monies can unload the stocks. And with spike in volume it means smart monies are involved
As I said, it is big money that engineered the breakout in the first place (whether the money is smart or not is another topic). So naturally they will sell into it. That's the whole point of engineering the breakout.

I suggest you ask him. He wouldn't mind. If you do, tell him I said hello.
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Old Aug 20, 2016, 3:37pm   #5
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Originally Posted by kenlee6 View Post
Hi. Im new to this forum. Ive been reading a bit about technical analysis but there seems to be contradiction depending on the sources

When you see a price spike accompanied by high volume, some say it's buying. Cause the long up bar is supported by volume.

WHile some tape reading books by vadym graifer which says that a spike in volume with an up bar indicates smart money selling into the crowd and he says to look to sell into such a bar.

So i'm a bit confuse here. Can anyone help?? Thanks
Everything is personal opinion, here, ok?

Having said that, mine is that the market has figured out where the stops are and slowly, but surely, creeps to it until-- Bang!. In a flash, all that area is cleaned out and price retreats back to where it was before. It is so fast that volume, even if it was relevant, cannot be watched or studied. This all planned beforehand.

There is a school of thought that says that, instead of entering the market and putting a stop x points away, the entry should be where you think the stops are going to be. Also, trading houses know where their clients have the stops.

Another point is that orders to buy or sell are, just, that. Until they are triggered there is no volume attached to them.

I don't know what else to say. I hope it helps.
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Old Aug 20, 2016, 4:05pm   #6
 
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Everything is personal opinion, here, ok?

Having said that, mine is that the market has figured out where the stops are and slowly, but surely, creeps to it until-- Bang!. In a flash, all that area is cleaned out and price retreats back to where it was before. It is so fast that volume, even if it was relevant, cannot be watched or studied. This all planned beforehand.

There is a school of thought that says that, instead of entering the market and putting a stop x points away, the entry should be where you think the stops are going to be. Also, trading houses know where their clients have the stops.

Another point is that orders to buy or sell are, just, that. Until they are triggered there is no volume attached to them.

I don't know what else to say. I hope it helps.
Yea thanks it help
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Old Aug 20, 2016, 4:10pm   #7
 
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Originally Posted by dbphoenix View Post
As I said, it is big money that engineered the breakout in the first place (whether the money is smart or not is another topic). So naturally they will sell into it. That's the whole point of engineering the breakout.

I suggest you ask him. He wouldn't mind. If you do, tell him I said hello.
Yea i did ask Vad. Thanks for the suggestion.
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Old Aug 20, 2016, 4:48pm   #8
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Originally Posted by kenlee6 View Post
Hi. Im new to this forum. Ive been reading a bit about technical analysis but there seems to be contradiction depending on the sources

When you see a price spike accompanied by high volume, some say it's buying. Cause the long up bar is supported by volume.

WHile some tape reading books by vadym graifer which says that a spike in volume with an up bar indicates smart money selling into the crowd and he says to look to sell into such a bar.

So i'm a bit confuse here. Can anyone help?? Thanks

It is impossible to interpret volume without CONTEXT.

Without CONTEXT you will not know what the volume on the upbar really represents.

If the smart money and the crowd are on the same side (say short for your example) then how can the upbar (a large one) represent smart money selling?

If it was a small bar with huge volume, then that will tell you something else

You have to be very precise with regards to volume, and what you want to gain from the information. If you are not clear, then stay well away from the subject, as it will cause more confusion than you need.
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