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Importance of Volume

  #9 (permalink)

London, UK
Trading Experience: Master
Platform: sierra chart, Jigsaw Trading, Bookmap
Favorite Futures: 6E futures, Cable
Posts: 93 since Aug 2012

Bladesmith View Post
A lot of traders focus only on price. But remember this - in order for a price to actually hit the tape, there must be volume.

Without volume, there is nothing.

Sounds kind of dumb to oversimplify things like that but it's true. Price is irrelevant if no one is willing to actually buy or sell there. And an astute observer can glean a lot of valuable information by watching volumes.

Try this for a simple experiment: look at your favorite instrument on a simple intraday chart, identify where the best reversals occurred, and then look at the volumes underneath those reversal bars. Notice anything

Very true.. I don't think it is dumb or over simplified. There is nothing such as "price". A "price" is an agreement of fair value for a given instrument at a given level and point in time. When buyers and sellers agree, they deal together, contracts are being sold/bought, this is called volume. Price doesn't create volume. Volume make the price and makes it become "alive" and causes the price to move up and down.

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