Continue reading...A view of the forest (from the top of the tallest tree)
There was a time when volume data wasn’t available until a day or days after a trade. But in today’s electronic age, live volume is at our fingertips. The beauty of volume as an indicator in live trading is the fact that it is the ONLY leading indicator among the hundreds of possibles. Everything else derives value from what price is doing, lagging the price action. That means changes in volume can impact what price will do before it happens.
Volume plays such an important role in our trading, we mustn’t neglect the messages it sends. For example, one key to this important strategy is the function of volume spikes. It is these spikes that suggest possible market turns. The chart below is a shot of the SP-500 index, clearly demonstrating how volume spikes foretell changes in the very recent trends. This is a weekly chart providing a larger picture of the action.
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