Can i give a trading analogy? Two people playing chess, both have the same books, both know how the pieces move both like playing the game. One player is good the other doesnt know his arse from his elbow. Its probably true to say that some traders are just naturals, some...well.
Mr. Charts
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Volume going UP Price going UP Then BULLISH SIGNAL
Unless it's a price/volume spike - which is quite common - in which case a reversal might be imminent.
Volume going DOWN Price going UP Then BEARISH SIGNAL
Agreed
Volume going UP Price going down Then BEARISH SIGNAL
Agreed
Volume going DOWN Price Going down Then BULLISH SIGNAL
Especially if it's a price/volume spike - which is quite common - in which case a reversal might be imminent.
Two factors which should generally be borne in mind with volume:
a) Extreme pressure from large sells or buys temporarily distort markets as price rises/falls. They often revert to the mean.
When a very large trade prints people often make the mistake of assuming that indicates larger size from multiple participants.
b) Volume falls can mean much lower liquidity for a longer period of time due to lack of participants which weakens the validity of the reversal "signal" as there are fewer participants to effect a price reversal.
Unless it's a price/volume spike - which is quite common - in which case a reversal might be imminent.
Volume going DOWN Price going UP Then BEARISH SIGNAL
Agreed
Volume going UP Price going down Then BEARISH SIGNAL
Agreed
Volume going DOWN Price Going down Then BULLISH SIGNAL
Especially if it's a price/volume spike - which is quite common - in which case a reversal might be imminent.
Two factors which should generally be borne in mind with volume:
a) Extreme pressure from large sells or buys temporarily distort markets as price rises/falls. They often revert to the mean.
When a very large trade prints people often make the mistake of assuming that indicates larger size from multiple participants.
b) Volume falls can mean much lower liquidity for a longer period of time due to lack of participants which weakens the validity of the reversal "signal" as there are fewer participants to effect a price reversal.
Grey1
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The above rules I mentioned are basics of Volume trading ... I have said in the past that volume is the only variable which can't be faked and I think those traders who trade the price only action will eventually pay a hefty price..
PS:--
Falling price along side falling Volume should be seen as sign of strength than weakness
PS:--
Falling price along side falling Volume should be seen as sign of strength than weakness
Last edited:
Mr. Charts
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"Falling price along side falling Volume should be seen as sign of strength than weakness"
...........provided the rate of fall has decelerated, in which case the probabilities of an area of consolidation or reversal increase.
Strength only arises if there is increased buying; it is possible merely that the sellers are, at least temporarily, finished.
...........provided the rate of fall has decelerated, in which case the probabilities of an area of consolidation or reversal increase.
Strength only arises if there is increased buying; it is possible merely that the sellers are, at least temporarily, finished.
Volume it seems to me is not a universal indicator.
Much depends on which market you are trading.
The rules of the game in the far east can be quite different.
The rules in tightly controlled markets can be plainly misleading.
Know your market and know who the players are is always a first priority.
Much depends on which market you are trading.
The rules of the game in the far east can be quite different.
The rules in tightly controlled markets can be plainly misleading.
Know your market and know who the players are is always a first priority.
Correct Mr.C and Mr. G. I just love the lower price and lower vol. confirmation of a bottom ! These appear as a group of 3 confirming anPD bottom on the DOW. Not sure I agree about the decreased slope, but I hear where you're coming from. Perhaps that is your secondary confirmation. The other one I love is the "blow off bottom/top" where there is a single volume sipke of perhaps 3x current average. My observations are strictly limited to ES, although they are probably valid in general terms as well...
Mr. Charts
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Good afternoon, Grey1,
Do you agree with the comments I've made on these two posts today, or are you saying I'm wrong?
If the latter, would you care to explain why, please?
Your responses so far leave me unsure of your thought processes on this subject ;-)
Do you agree with the comments I've made on these two posts today, or are you saying I'm wrong?
If the latter, would you care to explain why, please?
Your responses so far leave me unsure of your thought processes on this subject ;-)
Grey1
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MR Chart,
The two posts you made was a confirmation of the basic rules in volume analysis which I outlined in my post.. So you are not wrong .. How ever regarding the rate of fall , you have included a parameter which is irrelevant to rational expectation equilibrium which is part of study of volume in finer aspects of technical Analysis..
How ever if you feel rate of price fall some how affects the equilibrium status of volume of share traded then I am all ears..
Regards
The two posts you made was a confirmation of the basic rules in volume analysis which I outlined in my post.. So you are not wrong .. How ever regarding the rate of fall , you have included a parameter which is irrelevant to rational expectation equilibrium which is part of study of volume in finer aspects of technical Analysis..
How ever if you feel rate of price fall some how affects the equilibrium status of volume of share traded then I am all ears..
Regards
Mr. Charts
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Thank you for your response, Grey1.
On an empirical, logical and rational basis, when selling/shorting slows down, the probability of consolidation and/or reversal increases.
I am not suggesting that there is some sort of significant or measurable "slope" which should be used as some sort of parameter, what I am saying is that actually reading, (as in tape reading), what is happening and marrying that with TA leads to a much higher probability of accurately assessing an imminent move.
I assume you would agree with the caveats I mentioned about volume.
I'm confident you would agree with me that the markets are multi-factorial and dynamic and over reliance on a single element or technique can lead to over simplification and distortion.
I do in fact broadly agree with you, but your statement,
"Falling price along side falling Volume should be seen as sign of strength than weakness" would, perhaps, have benefited from a little clarification.
Please don't think that is meant in any way as a criticism.
Far from it.
I'm sure there are quite a few occasions in the past when I could have explained things better ;-)))
On an empirical, logical and rational basis, when selling/shorting slows down, the probability of consolidation and/or reversal increases.
I am not suggesting that there is some sort of significant or measurable "slope" which should be used as some sort of parameter, what I am saying is that actually reading, (as in tape reading), what is happening and marrying that with TA leads to a much higher probability of accurately assessing an imminent move.
I assume you would agree with the caveats I mentioned about volume.
I'm confident you would agree with me that the markets are multi-factorial and dynamic and over reliance on a single element or technique can lead to over simplification and distortion.
I do in fact broadly agree with you, but your statement,
"Falling price along side falling Volume should be seen as sign of strength than weakness" would, perhaps, have benefited from a little clarification.
Please don't think that is meant in any way as a criticism.
Far from it.
I'm sure there are quite a few occasions in the past when I could have explained things better ;-)))
Grey1
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Mr Chart,
It is always healthy to have a discussion.. I think one has to distinguish between price analysis and volume analysis of stocks and how the combination of these two indicators can give an edge to our traders..
Price analysis and how a candle is opened and closed can be faked to create liquidity but an expert eye can see the bigger picture should he watch the volume of share traded on L2 Screen..
regards
It is always healthy to have a discussion.. I think one has to distinguish between price analysis and volume analysis of stocks and how the combination of these two indicators can give an edge to our traders..
Price analysis and how a candle is opened and closed can be faked to create liquidity but an expert eye can see the bigger picture should he watch the volume of share traded on L2 Screen..
regards
