Price, (Volume), Support, Resistance, Demand, Supply . . .

[timsk]

That is the point that I was making to Tim – that the stock market is not exclusively demand driven or supply driven, but may turn very quickly as a result of the actions of the smart money.

Straightforward explanation requested; straightforward explanation received, thanks Charlton.

 

[ljyoung]

Anyone care to comment as to which chart is the one most traders would use. Both have been maximally "refreshed" (see late October postings). It is clear that after almost an hour into RTH there is still a "lag" of moving average data in the RTH-only chart. The interaction of price with the mA's is completely different (not surprisingly) in the two charts. How would one best draw a short term trend line for these charts?

[For book keeping only: top chart = Prophet, bottom = IB (which without bells and whistles is the same as SC)].

lj

 

[ljyoung]

Since there are no takers let me say then that I don't know what the "answer" is but even if there was a single answer, if most people didn't use it it wouldn't matter anyway.

The most straightforward approach would be to forget about using EMA's and stick rigorously to price and volume (hmmm, not a bad idea).

Alternatively one could treat it as a "big bar" and deal with the nasty jag in the EMA and in fact I think that's what most people would do. The problem is deciding when the gap is too big to justify the "deal with it" approach. The nice thing about using the premarket is that there is a more exact relation of RTH price to the EMA formed by the premarket activity instead of just a big lurch in the RTH chart.

As for drawing a trend line, I'll leave that one up to the experts but will note that, IMO, least squares data fits must have an "r" parameter and the greatest utility of the wretched methodology is the least squares fan. (LRC's are not included in this broad, sweeping, poorly supported statement).

lj

 

[dbphoenix]

Price & volume run hand in hand. Price movement or oscillations are the reflections of the sentiment or the emotions of the individuals that trade inside of any market IN REAL TIME. Volume shows the amount of that collective sentiment that is effecting the market at any given moment. Time is the monitor where we view a combination of price and that sentiment.

The most common viewing options for traders are Minute Charts, Ticks Charts, Range Bar Charts and Volume Bar Charts to use as that monitor.

1. Minute Charts - Varying number of shares or contracts traded per bar. (Volume unstable)
2. Tick Charts - Constant number of Ticks but still a varying number of shares or contracts traded per bar. (Volume unstable)
3. Range Bar Charts - User defined bar range but still varying number of shares or contracts traded per bar. (Volume unstable)
4. Volume Bar Charts - User defined number of shares or contracts traded per bar. (Volume Stable)

Price will always be stable because it can not be manipulated. It is a perfect reflection of any Market at any given moment (past & present). Volume Bar Charts then give stability to Volume and Time (Chart Increment). The user (YOU) define the number of contracts or shares that make up each bar. Less contracts or shares gives you faster charts and would be used for intraday or scalp trading. More contracts or shares traded per bar gives you slower charts and would be used for Swing, Position or Long Term trading. The environment is now perfectly viewable, stable and non-varying. You now need to choose the chart increment to best suit your trading style (Intraday, Swing, Position or Long Term) and as stated earlier, spend the screen time to learn just exactly what does price do consistently in the "time frame" that you wish to trade.

I don't use the term "interrupt" because it implies a subjective action. I prefer "read" because what the ultimate result of this environment is, is to be objective in your decision making process trading on price consistencies.

Price does move methodically. One just has to view it in a stable non-varying environment to see it.

ProfLogic

 

[dbphoenix]

I liked that post too.

Quote:
Volume Bar Charts then give stability to Volume and Time (Chart Increment).


But this bit slightly bothered me. Time charts show effort in lumps and pauses, whereas volume charts give "stability" to it, i.e. smooth out the lumps by standardising the volume into regular units; but in doing so the time scale becomes non-linear. e.g A set of vertical lines at 5 minute intervals on a volume chart will compress during low activity and expand as it increases. But perhaps this could still be described as stability of a sort? I think I'm nitpicking or more likely have not understood the Prof. correctly.

Time is always linear in a chart. However, it is not consistent in terms of the trading environment. The fact that your time intervals "compress" during periods of low activity and "expand" during periods of high activity is the point of the volume-bar chart. The VB chart frees the trader from focusing too much on time. Time becomes largely irrelevant, as with a P&F chart.

Db

 

[ljyoung]

ET being ET there is therefore no disparagement implied or intended in my question, but is this a wheat and chaff kind of thing, as your quotation would suggest? BTW, FWIW, it's nice to have you back from the front.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=49608&perpage=6&pagenumber=1

lj

 

[SOCRATES]

Time is always linear in a chart. However, it is not consistent in terms of the trading environment. The fact that your time intervals "compress" during periods of low activity and "expand" during periods of high activity is the point of the volume-bar chart. The VB chart frees the trader from focusing too much on time. Time becomes largely irrelevant, as with a P&F chart.

Db

Very good advice...very wise...

 

[blackcab]

Weak holders are easily flushed out of their positions ...

Thanks Charlton, much appreciated.

 

[imahippi]

Hi Dbphoenix
Obviously I can post here!
I have been buying stocks with the help of IBD resourses. I usually go through weekly stocks on the move, top supply and demand stocks and the daily screeners.
Two years ago I sold a small business and organized myself so I could be on the markets full time and see how it went. I have managed to stay afloat. My point is I too love the markets and just feel I need some concrete direction to move to the next level.
I've read most of your suggested reading list.
I would like to learn' to trade more proficiently.
At this point I usually buy something I feel is strong ( by watching it's chart) on a pullback and then selling at a predetermined point. I have great success but many times the trade takes way way longer than I had hoped.

Also, I try to stay away from message boards and anything that involves alot of fancy indicators. I basically use the IBD charts (50 +200 dma). I seem to make better decisions without a lot of "noise".

How can I learn to trade the NQ?
jay

 

[dbphoenix]

Hi Dbphoenix
Obviously I can post here!
I have been buying stocks with the help of IBD resourses. I usually go through weekly stocks on the move, top supply and demand stocks and the daily screeners.
Two years ago I sold a small business and organized myself so I could be on the markets full time and see how it went. I have managed to stay afloat. My point is I too love the markets and just feel I need some concrete direction to move to the next level.
I've read most of your suggested reading list.
I would like to learn' to trade more proficiently.
At this point I usually buy something I feel is strong ( by watching it's chart) on a pullback and then selling at a predetermined point. I have great success but many times the trade takes way way longer than I had hoped.

Also, I try to stay away from message boards and anything that involves alot of fancy indicators. I basically use the IBD charts (50 +200 dma). I seem to make better decisions without a lot of "noise".

How can I learn to trade the NQ?
jay

I can't answer your question in a single post, but you are listed as a member of my group. Click Community in the toolbar, then User Control Panel, then Group Memberships. You'll see a list of the groups of which you are a member.

Db

 

[imahippi]

good

thanks Db.
As far as the NQ, how can I watch it? I have level two with Ameritrade.
jay

 

[dbphoenix]

thanks Db.
As far as the NQ, how can I watch it? I have level two with Ameritrade.
jay

Have you been able to find the group?

 

[NASFUT]

Time is always linear in a chart. However, it is not consistent in terms of the trading environment. The fact that your time intervals "compress" during periods of low activity and "expand" during periods of high activity is the point of the volume-bar chart. The VB chart frees the trader from focusing too much on time. Time becomes largely irrelevant, as with a P&F chart.

Db

Are they on about this on that other thread? :idea:

 

[dbphoenix]

Are they on about this on that other thread? :idea:

God knows. Some people will go to any lengths to make the simple complicated. Makes them feel superior to all those who don't understand the piffle.

The above was in response to a comment that volume charts made time non-linear, which is not the case.

Of course, trading would be a lot simpler if time were not linear. Then we could go back and take that short that we wish we'd taken . . .

Db

 

[imahippi]

Have you been able to find the group?

Hi again Db
I am a member of the following groups:


-Price, (Volume), Support, Resistance, Demand, Supply . . .

-The Basics of Trading ( 1 2 3 4 5 ... Last Page )

- M = Market Direction ( 1 2 )

Jay

 

[dbphoenix]

Hi again Db
I am a member of the following groups:


-Price, (Volume), Support, Resistance, Demand, Supply . . .

-The Basics of Trading ( 1 2 3 4 5 ... Last Page )

- M = Market Direction ( 1 2 )

Jay

Those are threads in the public forums. Click "Mapping the Territory" beneath my name. If that still doesn't do it, contact a moderator. Perhaps one of them can help you.

Db

 

[investforwealth]

The Hidden Strength of Volume Analysis

Nick Radge, author of Adaptive Analysis and publisher of The Chartist, has written two articles on volume analysis that readers of this thread may find useful and/or interesting.

The Hidden Strength of Volume Analysis I
The Hidden Strength of Volume Analysis II

If you find these articles of value, it may be worthwhile visiting Nick's site and seeing what else is on offer, although much of his more valuable content is available only to subscribers.

 

[bracke]

investforwealth

Many thanks for the article links. They are very useful and interesting.

Regards

bracke

 

[Patrik]

Yes thanks for the links!

 

[Anna Coulling]

Volume Spread Analysis

As a student of Albert Labos I was trained to use volume spread analysis and I believe it is the only way to trade, having used it ever since. Whilst I know the name may be like a red rag to a bull ( and yes I paid £5,000 too ), the actual techniques he taught were perfectly valid. Whether he 'borrowed' them from Tom Williams is another matter!!!

Volume tells you the activity of the professional money in the market, and the price actions tells you what the result is based on that activity. A move up on low volume is clearly a trap up move. Combine the above with an in depth knowlegde of candlestick analysis, and you have the only way of trading which forecasts likley future price movement. It has taken me years to learn how to trade using these techniques, but I personally would not trade in any other way. Ironically I now trade currency full time so to rely on my candle reading skills alone with no volume to confirm the move!!

If you would like further information there is a page on my personal web site which explains the principles in more detail - yes it is all free - at www.making-bread.co.uk