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Importance of Volume

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dariuszszyc View Post
For most people it is hard to understand volume. I am one of them. That's it.
How much time would it take you to understand moving average? Or MACD ? Or RSI? We all learned how to use new indicators in matter of hours, however volume is not something as obvious.
It's not that people don't want to learn it. It is just so much harder to learn it than any other technical indicator.

What is needed is a short description about meaning of volume (not 1000 page books) and tons of examples how volume should affect our decision

Hi darius

I'd like to offer a straightforward volume scenario. I am sure there are others but to me there is at least this one that should provide a relatively simple avenue to learn.


Suppose you are trading using the Depth of Market. Suppose you got comfortable with a certain product (e.g. the ES or the Bund). Suppose also, because you got comfortable, that you now have a pretty good idea what the average size traded at each level is.

Now suppose that at one point you start seeing trades taking place that are 3 times as big as the average size that you know usually take place.

That's the first indication that something may be happening. It could be that somebody is trying to 'defend' a specific level. It could be that that specific price is of interest to many people. Or it could be other things.



Clearly, 'something' happening is not enough of a description, but if you haven't already done so and if you're interested, I would recommend 2 sets of videos that delve into this concept and, again, in my view provide enough of a starting point to be able to build your own understanding on the subject of volume.

The first set of videos you can find on Jigsaw Trading - Day Trading tools, day trading methods,day trading community - they are free.

The other ones are by a guy called John Grady and they are more to do with scalping. You should be able to find a few free ones on YouTube.


Hope it helps.

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