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Importance of Volume

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Pretoria Gauteng
 
Trading Experience: Intermediate
Platform: NinjaTrader
Favorite Futures: Emini ES, Crude CL
 
Popsicle's Avatar
 
Posts: 238 since May 2016
Thanks: 2,332 given, 517 received

Volume : The other dimension

As @dom64 already mentioned, even if you are not consciously using volume in your trading strategy, you are actually using it without knowing it. Volume indicates the places where prices are either accepted or rejected in the auction process. Do yourself a favor, if you are using Ninjatrader, just add the standard volume profile indicator to one of your charts and see how the market 'respects' the volume levels on it. Support and resistance, which most traders use in some way or form, is created by the volume traded at those levels.

My personal take on using volume in your strategy is that I would rather like to know more about why prices are moving than less. If you crack open just one bar on your chart to see the volume within it, you will be amazed at how much information you can glean from the volume in that bar.

Having said all of that, I think that trading is a very personal thing. You have to find a strategy that works with your personality and how you process information. As previously mentioned there are many traders that are profitable without using volume in their strategies. I can bet you though they are aware of volume and how it influences the market.

If you would like to learn more about using volume in your strategy, FIO is a great place to learn about it. Journals like @SoftSoap and @JonnyBoy would get you well on your way on using volume to be a profitable trader.

Good luck with your journey,
Popsicle

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