I see in your post and your video that you are successfully using volume and increase of volume as part of your trading system. But based on my observations I've always find that the most dynamic part of a trend is always in thin volume. To illustrate this you can see in the chart below that shows a 200 ticks intraday down trend (TFLOW bar 10 ticks range) that large volumes can be find during consolidation and at the end of the trend (for TFLOW the "fat and bright" bars = big volume and thin and dark one = small volume).
Volume is not a part of my system even if I know that I'm certainly missing an interesting piece of information but I'm confused because what I see contradict what I've always read about volume ? For me big volume = danger and potential reversal or end of trend while small volume with big price change = nice opportunity and higher probability of profit ?
Thanks in advance for your insights and opinions.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).
R.I.P. Olivier Terrier (aka "Okina"), 1969-2016.
Please visit this thread for more information.
The following user says Thank You to Okina for this post:
Yes, you are correct that often a large amount of accumulated volume can occur at the end of a trend. When I talk about volume..I am referring to looking for changes that are happening in almost real time.
For example, if I look at 1 minute or 5 minute timeframes for volume and see a fairly big reading, that is basically telling me that there was a lot of buying in selling in that timeframe. So, it's past tense...It doesn't mean much more than the fact that 5 minutes ago, a lot of volume came in. Does it mean more will continue to happen? Who knows?
I am looking more at changes in immediate order flow to be used to possibly confirm a setup I am about to enter or to help me decide whether to stay in a trade..and ride it out longer.
One of the first signals I get is from my indicator called tick strike. It will register increased order flow..by making an audible ticking sound along with a meter that has bars that light up. The faster the ticking sound and the more bars that light up..signal the increased order flow that is happening at that moment. Now just because it ticks and lights up isn't enough reason to take a trade..there can be a quick flurry and then nothing happens ..but if it continues strongly..there is usually some strong price movement. For example, yesterday when TF was crashing along with the Dow, the Tick Strike sounded like a machine gun and all the bars were flashing and lit up.
I also can see volume accumulating on a 10 second chart...You have to be able to read it..like what is called Tape Reading...but it does give some hints.
So the bottom line is I am looking for changes in volume that are happening in the moment..not so much what happened 5 minutes ago.
Failure is not an option
The following 7 users say Thank You to lancelottrader for this post:
very nice lance, please can u make small video only for 10 second volume just want to see how you look volume because in 10 second volume one bar with high volume next bars with small voume I mean some time volume bars are with low volume like 35 40 65 70 and then suddenly high volume 100 200 400 only one bar or two bar after that again small volume 40 50 70 like that you say you look for entry when volume change you look just one bar or two bar for high volume change?