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Thanks man! I have been using it today with pretty good results. Until I have more practice reading it I have only been using it to determine when not to trade as opposed to using it as an entry signal, but so far it has kept me out of 2 bad trades. Good work.
Excellent information and indicator!! thanks for the suggestion. I'm not a programmer myself but I know of a few that I can use to play around with this idea. Great to run into this!
The average volume function is interesting... seems to sometimes work well for identifying low volume retracements. Similar concept to VSA but using swings instead of bars.
Looking back at a charts, low volume retracements seem to be worth noting, but since I'm looking at completed swings with 20/20 hindsight, I may be overestimating their usefulness.
A signal might go something like this:
1) a just-completed swing has a lower average volume than either of the previous 2 swings, and at least 30% less volume than the most recent swing in that same direction
2) the current unfinished swing has a higher average volume than the just-completed low volome swing
3) generate continuation signal in direction of current unfinished swing
I think sometimes you may get a clue about the potential trend reversal if you monitor volume at high nodes in uptrend (and vice versa for downtrend) ...... in the middle of your chart you have several highs with ~vol=4500 and the last high had 2800 .... at this point you may want to reconsider long trades until you get confirmation that uptrend is still live and kickin' .....
Hi FR5050 - thanks for the reminder. Yes, Ord appears to be one of the first to talk about relative volume on swings. He doesn't seem to do a lot with the concept any more though, at least not in his recently posted charts and articles.
His criteria of re-testing an important hi/lo on less than 50% average volume seems to produce some OK setups according to the limited amount eyeball backtesting I have done reviewing charts, but it happens very infrequently.
I think measuring relative volume on swings could be useful in more situations, and on smaller timescales than Ord uses. Maybe not as a setup by itself, but perhaps as a filter in combination with other factors to identify good candidates for pullback trades.
I suspect that a low volume pullback swing followed by higher volume move in the trend direction would offer a measurable advantage, but it would take some coding to find out.
I was actually hoping I could entice Dorschden or another reader of this thread into adding this to PriceActionSwing so we could do some visual backtesting with it.
In any event, the volumes by themselves are useful. An extremely weak or strong average volume swing is definitely worth paying attention to.
