Directional
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natural growth of a derivative market will mean that many contracts will very often make all time new volume peaks.
Volume does not mean more buyers necessarily, because for every buyer there is a seller - 50% of all trades will be sellers. New volume peaks are just natural growth of the marketplace meaning extra liquidity from more or bigger participation.
You see ICE markets making new peaks nearly every month. the CBOT ag futures will also be doing the same for a while to come I would imagine.
Volume does not mean more buyers necessarily, because for every buyer there is a seller - 50% of all trades will be sellers. New volume peaks are just natural growth of the marketplace meaning extra liquidity from more or bigger participation.
You see ICE markets making new peaks nearly every month. the CBOT ag futures will also be doing the same for a while to come I would imagine.
Arbitrageur said:
true, those who buy, bid the market higher though because of the interest in a particular market and the lack of sellers, so those who stand as sellers sell those buyers much higher, then another group of buyers come and the circle repeats itself . Correct me if I'm wrong
The Baptist
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Amplify that Volume. Short Version
Volume is not a directional indicator on its own.
Extreme relative volume associated with a price move of some significance, however could be an additional validator to the price move.
By this I mean it is more significant than, the same price move with light volume.
In short high volume is an amplifier, it does not make sound on its own, it just mutlipliers the significance of what moves are already made.
It is like Alcohol, if you are happy, adding drink makes you very happy, if you are sad you will become a driveling wreck when alcohol is added. :cheesy:
A caveat to the price significance is also to do a detailed assessment, of the intraday move itself experienced on the high volume day.
The additional significance implied on the high Volume day, is at it 's best if a price opens at one extreme and closes at the other ie. open is high and close is low on high volume is additionally bearish and Vice Versa is bullish. (in Candles what we call Belt Hold days)
Essentially in the first example, aggressive selling throughout theday sought out all the lower levels of buy stops on the way down and the mass opinion of the market gave in to the assessment of the primary bearish view. (belt hold days often occur after news releases or new fundamental info becoming available)
If a big indecision day (high volatility, no price change) took place ie. the price opened, ran up higher extensively intraday, then charged down past the open to an extreme low and came back up to the open level to close for the day (in Candles a Doji) all this represents is extreme indecision and no natural direction is necessary implied and hence the volume has no strict opinion to amplify the significance of.
In short there may have been an intraday overeaction in either/both directions and value based investors either sold at the extended highs or were confident enough to buy with some force at the extended lows at a significant enough way to counter the original move(s).
The only exclusion for any opinion being drawn from the above Doji example, being if the Doji came after an extended trend (up/down) or followed a Gap opening (either up/down).
In which case significance on account of larger context may still be impled.
Hidden Volume often occurs when pricing congests at a fairly tight range over a number of time frames compared to previously in an underlyings behaviour, this means without any exceptional single volume period an immense amount of trade (collective volume) has taken place over a tight price range over time.
This means the market has voted many times for the justification of current pricing and it may have more validity for now with the current information available than other price levels. This hidden Volume value can be captured, when not normally easily spotted, by looking at longer term charts.
This is the foundation for Support and Resistance (S&R). People remember the level at which they traded and the current level all other prices are less important to an investor.
The greater volume that traded at a certain level the more inclined they will be to trade at that level again ( As they may just be going from profit to loss or Vice versa at that level). Thereby creating 'levels of significance' = S&R especially when accompanied by turning or reflex points.
Physcologically many people seem to see the level they traded at as the point of 'truth' and when falls occur they automatically expect it to return like a homing pigeon, a failed phallacy.
A price on any given day is merely the markets best guess on that particular day and will be dictated by the macroeconomic environment and view of the world currently in force on the day in question. However if 'Voted for' by many (High Volume) it is better supported as a relevant price level.
Thats about as conclusive an opinion I can muster. Next time for the long version
Volume is not a directional indicator on its own.
Extreme relative volume associated with a price move of some significance, however could be an additional validator to the price move.
By this I mean it is more significant than, the same price move with light volume.
In short high volume is an amplifier, it does not make sound on its own, it just mutlipliers the significance of what moves are already made.
It is like Alcohol, if you are happy, adding drink makes you very happy, if you are sad you will become a driveling wreck when alcohol is added. :cheesy:
A caveat to the price significance is also to do a detailed assessment, of the intraday move itself experienced on the high volume day.
The additional significance implied on the high Volume day, is at it 's best if a price opens at one extreme and closes at the other ie. open is high and close is low on high volume is additionally bearish and Vice Versa is bullish. (in Candles what we call Belt Hold days)
Essentially in the first example, aggressive selling throughout theday sought out all the lower levels of buy stops on the way down and the mass opinion of the market gave in to the assessment of the primary bearish view. (belt hold days often occur after news releases or new fundamental info becoming available)
If a big indecision day (high volatility, no price change) took place ie. the price opened, ran up higher extensively intraday, then charged down past the open to an extreme low and came back up to the open level to close for the day (in Candles a Doji) all this represents is extreme indecision and no natural direction is necessary implied and hence the volume has no strict opinion to amplify the significance of.
In short there may have been an intraday overeaction in either/both directions and value based investors either sold at the extended highs or were confident enough to buy with some force at the extended lows at a significant enough way to counter the original move(s).
The only exclusion for any opinion being drawn from the above Doji example, being if the Doji came after an extended trend (up/down) or followed a Gap opening (either up/down).
In which case significance on account of larger context may still be impled.
Hidden Volume often occurs when pricing congests at a fairly tight range over a number of time frames compared to previously in an underlyings behaviour, this means without any exceptional single volume period an immense amount of trade (collective volume) has taken place over a tight price range over time.
This means the market has voted many times for the justification of current pricing and it may have more validity for now with the current information available than other price levels. This hidden Volume value can be captured, when not normally easily spotted, by looking at longer term charts.
This is the foundation for Support and Resistance (S&R). People remember the level at which they traded and the current level all other prices are less important to an investor.
The greater volume that traded at a certain level the more inclined they will be to trade at that level again ( As they may just be going from profit to loss or Vice versa at that level). Thereby creating 'levels of significance' = S&R especially when accompanied by turning or reflex points.
Physcologically many people seem to see the level they traded at as the point of 'truth' and when falls occur they automatically expect it to return like a homing pigeon, a failed phallacy.
A price on any given day is merely the markets best guess on that particular day and will be dictated by the macroeconomic environment and view of the world currently in force on the day in question. However if 'Voted for' by many (High Volume) it is better supported as a relevant price level.
Thats about as conclusive an opinion I can muster. Next time for the long version
The Baptist
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ergon said:
Not sure of your question here? But The higher the number of people and volume traded at a certain level, the greater the significance of this level, when compared to lessor volume underlined areas.
Sometimes occurring at key perceived number as well ie. round no's etc..
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