Day Trading and Your Life.

[Gogol]

Congestion Areas In Trend Trading.

In day trading there is no point to try to guess where the market will go next, it is impossible. Of course, you can try it but I bet you will blow out your account in no time. But there is a way that can give you an edge, that is waiting. Yes, you have to wait for the market to speak to you. usually when the trend is in place and you see a short pullback you can notice that there are price bars going up and down in a small narrow range (a congestion area), once a price bar closes over (for longs) or down (for shorts) the whole congestion area with high volume it is a sign that price will resume trend direction, you must act quickly and take your position. This is not 100% bulletproof but it has worked for me to reduce risk in my trades.

Hi,
Do you use accumulated volume at each price increment to determine high volume ? Or just watch it on the chart? If on chart what TF (ticks, vol, min.) do you look at?

 

[malaspina]

Hi,
Do you use accumulated volume at each price increment to determine high volume ? Or just watch it on the chart? If on chart what TF (ticks, vol, min.) do you look at?

Hello Gogol,

First, I only day trade the emini nasdaq 100 everyday, so, in someway I have learned how the volume behave daily in this contract, I know what low and high volume is depending on what I see on the charts. I day trade using two time frames, 5 min and 10 min, I look at volume bars in each time frame. If the market is going too fast I use my 5 min time frame and I base my volume observations on that 5 min time frame, if the market is moving slower I do the same volume observations in the 10 min time frame.

I hope this answers your question. I am glad to help.

Regards.

 

[Gogol]

Hello Gogol,

First, I only day trade the emini nasdaq 100 everyday, so, in someway I have learned how the volume behave daily in this contract, I know what low and high volume is depending on what I see on the charts. I day trade using two time frames, 5 min and 10 min, I look at volume bars in each time frame. If the market is going too fast I use my 5 min time frame and I base my volume observations on that 5 min time frame, if the market is moving slower I do the same volume observations in the 10 min time frame.

I hope this answers your question. I am glad to help.

Regards.

 

[EmotionIsTheBigEvel]

I saw the reactions on my question but still I don't have a clue in what way I can have an advantage in my trading descision if I should buy a contract or not looking at volume!

The point is, after the time period, 10 minutes for example I can conclude that there was a lot of volume the last 10 minutes and yes it moved the price during those minutes but I am still not in the trade at this moment! And at this moment, should I still enter a trade at this point? My method will decide what to do, but I have no clue how to incorporate volume! I often hear people say that volume is important but I haven't met anyone who can make it clear that you have an advantage using volume??

So if you can give an example, please!

Regards

 

[malaspina]

I saw the reactions on my question but still I don't have a clue in what way I can have an advantage in my trading descision if I should buy a contract or not looking at volume!

The point is, after the time period, 10 minutes for example I can conclude that there was a lot of volume the last 10 minutes and yes it moved the price during those minutes but I am still not in the trade at this moment! And at this moment, should I still enter a trade at this point? My method will decide what to do, but I have no clue how to incorporate volume! I often hear people say that volume is important but I haven't met anyone who can make it clear that you have an advantage using volume??

So if you can give an example, please!

Regards

Hello EmotionIsTheBigEvel,

I will answer your question in two parts, here you have PART 1, as soon as I get back home I will post PART 2. Part 1 was taken from my homepage (my blog).

PART 1: There are many ways to trade the markets, as I have said before my style is trend trading. From my point of view, it is vital that you can see where the trend is going and where the price has been and how it is behaving at the current time, based on that observation you can have an idea of the price structure. This overview of price behavior can give you a clue where the market will go from an specific price in time if something that is expected happens, once you have green light from the market you have to take the trade. My point is; “Price must be seen as a whole”, this is what I call “PRICE STRUCTURE”, this is a powerful concept in trading, once you get to understand this concept, you will be more selective in taking your trades, you will win more and lose less.

Again, I will post PART 2 shortly (including the volume topic and example chart ).

Take care.

 

[trading100]

Problem with trend trading is you only know after the event there was a trend.

 

[malaspina]

Problem with trend trading is you only know after the event there was a trend.

Hello trading100,

I know this is not easy. But there is a way, it takes time and effort, you must learn about price structure and volume. This gives you an edge to get in the market in the first stages of a trend, the goal is to ride just a part of a trend (the middle), it is impossible to call bottoms and tops. Of course, you won’t be 100% accurate always but in time you will lose less and win more.

 

[EmotionIsTheBigEvel]

Hi Malaspina,

Good to read your posts! I am always looking to improve my skills. And while I hear folks speak over volume all the time, I can't make anything out of it. So I'm looking forward to your posts! Keep 'm going

 

[malaspina]

Hi Malaspina,

Good to read your posts! I am always looking to improve my skills. And while I hear folks speak over volume all the time, I can't make anything out of it. So I'm looking forward to your posts! Keep 'm going

Hello EmotionIsTheBigEvel,

Thanks for getting back to me, I am glad to help. You can also find some of my posts in my home page.

Ok, here is the PART 2 of my previous post to try to answer your question. It is all explained in the chart, it is not easy to make it all clear in one post but I tried my best to help you.

I trade with thinkorswim platform and I only day trade the emini nasdaq-100 index future. I use 10 min time frame to spot trends (I also use it during slow market movements), and I use 5 min time frame to select entry and exit areas (I also use it during fast market movements). The active emini nasdaq-100 index future now is NQZ0. The chart I attached here is from a 5 min time frame, here I am explaining what I see in volume & trends, my interpretation, and where I selected my entry and exit points and why. You can see that I only took profit from the middle of the trend, sometimes the market gives you more profits some time it only gives you a small profit, there is no way to know how far it will go. Notice that my trade is purely based on price structure, trend and volume analysis. That is all I use.

By the way, I do not like to post after the fact charts, but I think it is a good way to give an example.

 

[malaspina]

Here is another example of price structure... (taken from my homepage).

 

[malaspina]

Taken from my home page:

Many moons ago, in my firsts days of trading I found myself reading many topics about playing the markets, I always found these two; Support and resistance. Nowadays, the internet is full of material about how to trade off support and resistance levels, if fact, many of you know by now a lot about it. BUT, how well we, the general public, can really play those areas of money power. I have an observation that has been seen all over and over again in the trading world, no matter what you trade, oil, gold, corn or stocks, the key is always there and it is called volume.

In the next chart I will leave at your interpretation how volume define those key levels and how we should place our trades around those areas. Please, drop me any ideas based on your interpretation.

 

[meanreversion]

Hello! I'm a new one here. I use volume as my trading strategy and just want to poin out that it is always necessary to wait when big boys accumulate a big amount of volume. They never lose their money.

No, big boys never lose money, which is why between them they required a few trillion dollars to be bailed out in 2008.

 

[Hoggums]

It´s all about VOLUME and his friend named “PRICE”.

Yes, that is a clear statement. The market move, yes it does, but it needs gas to move, where do you think that gas come from ?. Well, I can assure you is not coming from retail orders. When the market moves is because the BIG BOYS (Banks, Investment Houses and Big Broker Houses) are buying or selling in huge quantities. All that action creates big volume and you can see that volume very clear in your computer screen. Well, you need a trained eye to detect it, but once you have the practice, you can read the market volume as if you were reading the newspaper. Now, it is your skill as a trader that will help you to make money following the trend that is pushed by big institutional volume.

Please, I BEG YOU, do not be fooled by those GURUS who talk about using magical technical indicators, I have seen novice traders using like 10 indicators at the same time, IT IS CRAZY!!. Please follow my advice, do not do that. You have to keep your trading strategy as simple as possible. Price, Volume, and trend lines is all you need to trade any market.

If you want to learn how to trade and to make money, please follow the advice above, in time you will know that I am writing the truth here.

Until next time.

This is the most uneducated drivel I have read in a long time.

I have seen markets swing wildly on tiny volumes, Markets move when sellers or buyers match the last orders at a particular price and you can no longer get a trade at that price. This can be done on low volumes or high volumes.

 

[meanreversion]

Drivel on t2w? Say it ain't so..

 

[DionysusToast]

Sorry guys - but I called 'drivel' on this way back.

Thus far, nothing has been said on here but "I have a website"

 

[meanreversion]

Is it just me, or is t2w getting a bit flotty these days?

 

[DionysusToast]

What I see here is a chart that over an 8 hour period you have managed to draw 14 horizontal lines.

The chances of a bar with a higher than average volume intersecting one of these lines is obviously high for no reason other than the fact that there's very little chance of any bar not hitting a line.

Why not actually give something substantive on volume analysis.

 

[meanreversion]

You actually counted all those lines, wow.

 

[malaspina]

This is the most uneducated drivel I have read in a long time.

I have seen markets swing wildly on tiny volumes, Markets move when sellers or buyers match the last orders at a particular price and you can no longer get a trade at that price. This can be done on low volumes or high volumes.

Mr. Hoggums, With your opinion your have shown to the public that you are the most uneducated mind on earth.

 

[malaspina]

You actually counted all those lines, wow.

Mr. meanreversion, the idea is to read the message behind those lines based on volume.