Trade Volume Analysis

[jasont]

Hi Guys,

Firstly, as this is my first post to the forum I would like to say thank you to everyone with their great posts and contributions.

Now on to business. I have been trading for quite some time now and scalping the S&P Minis contract. I trade according to price action and have held off including volume on any of my analysis. The reason being that total volume seems to be a zero sum calculation. If the market rises on high volume, does it mean the big players are selling or buying? Is the rise due to the smaller players attempting to breakout buy or the small players are panic selling?

Due to this conundrum, I never found much use for the total volume. However I have found over time that I seem to make my biggest losses during extremely volatile swings when I attempt to fade the move. It seems my assessment of how strong a particular move is, leaves much to be desired.

So my thoughts are that I would like to see the volume for each individual trade to assess the market strength. Of the belief that the big players rule the roost and the bottom feeders (being those that trade low contract volumes) are there to ride the waves of the big players. My idea is to track the big players as opposed to the smaller players in regards to volume. Often moves that become counter trends are made up of smaller players trying to pick a bottom or big players pushing the market down with small trades so they can load up on the long side.

After this lengthy explanation of what I'm looking for, can anyone recommend a good way to track this. I am currently using the Trade Navigator platform with TransAct. Not sure if I will need to switch platforms or whether they will have what I am after. Any help would be greatly appreciated guys.

Jason

 

[Trader333]

However I have found over time that I seem to make my biggest losses during extremely volatile swings when I attempt to fade the move

Don't trade like this then unless you have a highly reliable measure of when that move is over. It can be done but requires (as a minimum) a means that lets you know when the move is exhausted.


Paul

 

[jasont]

Don't trade like this then unless you have a highly reliable measure of when that move is over. It can be done but requires (as a minimum) a means that lets you know when the move is exhausted.


Paul

Hi Paul,

You are spot on. I initially decided to stay away from trading at that time but after further thought about the issue I decided that doing so would bring about a bit of a defeatist attitude on myself. I love the challenge of the markets and finding the way to make use of this period is a good challenge.

Obviously there are times in the market when you should stay out, that I am in no way disputing. However I look at the market as a way of assessing personal growth. The question arises, when something seems hard to do, should we shy away and admit defeat or should we accept it as a new challenge to overcome.

Your mention of the means to let me know when it is exhausted is exactly what I am looking for. I think I may be able to find it in the discrepancy between the big and small traders in their trade volumes. As I haven't really looked at volume in the past due to not really needing it, I am unsure where to look to find the information I need. I know there is the standard volume indicator and that is about it.