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The market constantly changes. BUT What stays the same??
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The market constantly changes. BUT What stays the same??

  #21 (permalink)
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Consider the virgin being tossed into the volcano: sometimes it results in a great crop, sometimes it doesn't. Maybe tossing her in earlier or later will change the probability of a healthy crop. Maybe two virgins are better than one. Maybe six. Maybe tall virgins are more effective than short ones. And surely age is important. But does the robustness of the crop really have anything to do with tossing the virgin into the volcano in the first place?

That's why ancient Mayans were smarter about this, keeping the virgins for themselves and sacrificing boys instead.
I would personally argue that 2 virgins are better than 1, but that's just me.

Thank you for enlightening analogies.

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  #22 (permalink)
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A favorite recurring topic is that of volume (on it's own, as a bar indicator).

If the volume is spiking, and price is still chopping, well that means the auction is balanced, even if there's ten million trades going on. 5 million are buys, 5 million are sells.

For price to go anywhere, one needs to overcome the other, and even at that, the other side needs to agree with them somewhere. I suppose that's where gaps occur.

PLEASE correct me if I'm wrong (seriously). I don't want to perpetuate false understanding.

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FABRICATORX View Post
A favorite recurring topic is that of volume (on it's own, as a bar indicator).

If the volume is spiking, and price is still chopping, well that means the auction is balanced, even if there's ten million trades going on. 5 million are buys, 5 million are sells.

For price to go anywhere, one needs to overcome the other, and even at that, the other side needs to agree with them somewhere. I suppose that's where gaps occur.

PLEASE correct me if I'm wrong (seriously). I don't want to perpetuate false understanding.

You're not wrong, exactly, but the volume has nothing to do with it. The chop is defined by the price movement, not the volume. Given that for every transaction there must be both a buyer and a seller, there is no such thing as "buy volume" or "sell volume", though some use those terms to define resting orders. Until the transaction is completed, however, there's no print.

At its simplest, price moves up because buyers are willing to pay the ask. It moves down because sellers have to lower the ask to make a deal. The number of traders may have something to do with whether or not an advance continues and is sustainable, but it has nothing to do with the advance -- or decline -- itself.

As for gaps, you ought to look at a 1t chart sometime. You'd be surprised at the number and extent of the gaps in that bar or candle that appears to be whole.

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  #24 (permalink)
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Also, I just read this (https://www.mathsisfun.com/data/correlation.html)

...which states that correlations CAN exist, but not in all conditions. Sometimes a third variable is involved that once it is met, throws the rest of the correlation out the window.

In this example (from the mathisfun website) we see a correlation between outside temperature, and ice cream sales. But once the temp got too high, ice cream sales dropped, because people stooped going out to buy.

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DbPhoenix View Post
You're not wrong, exactly, but the volume has nothing to do with it. The chop is defined by the price movement, not the volume. Given that for every transaction there must be both a buyer and a seller, there is no such thing as "buy volume" or "sell volume", though some use those terms to define resting orders. Until the transaction is completed, however, there's no print.

At its simplest, price moves up because buyers are willing to pay the ask. It moves down because sellers have to lower the ask to make a deal. The number of traders may have something to do with whether or not an advance continues and is sustainable, but it has nothing to do with the advance -- or decline -- itself.

As for gaps, you ought to look at a 1t chart sometime. You'd be surprised at the number and extent of the gaps in that bar or candle that appears to be whole.

I will do that, good idea!

So is volume only completed transactions then? Or is it standing orders just sitting there, anywhere on the print? I feel like I'm so close to wrapping my head around market internals, but you know how it goes, the more you know, the more you know you don't know.


Last edited by FABRICATORX; July 15th, 2015 at 01:39 PM. Reason: Consolidate posts.
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So is volume only completed transactions then? Or is it standing orders just sitting there, anywhere on the print? I feel like I'm so close to wrapping my head around market internals, but you know how it goes, the more you know, the more you know you don't know.

Volume is only the number of shares/whatever changing hands.

Volume matters at extremes. It can help the trader determine whether or not a move is climactic and, if so, what he should do about it. Otherwise, it's irrelevant. What matters is the price movement itself: either it's doing what you expected it to do or it isn't. If it is, fine. If it isn't, then you need to do whatever you planned to do in this circumstance.

We may be venturing off the topic here, though.

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My trading improved once I started to include volume in my analysis. The subject is too big for a post, but do check out:

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My trading improved once I started to include volume in my analysis. The subject is too big for a post, but do check out:

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Yeah I just totally downloaded that. $5 on Amazon Kindle.

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I like her contextual use of volume as a validation tool for price action. Volume is not always important or relevant, but there are times when it is. It is crucial to know when there is a large participation on a move.

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  #29 (permalink)
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I like her contextual use of volume as a validation tool for price action. Volume is not always important or relevant, but there are times when it is. It is crucial to know when there is a large participation on a move.

Would you call that the herd/mob/bandwagon mentality?

Or are those the laggards, and the initial oomph comes from big money movement?

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FABRICATORX View Post
Would you call that the herd/mob/bandwagon mentality?

Or are those the laggards, and the initial oomph comes from big money movement?

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Big volume does not always have the same meaning. There is stopping volume, where the move hits significant resistance on large volume but price does not move much.

I personally focus on what I call inception volume, an increase in volume at the beginning of moves (in the right price action context). This is where the odds are the best for a strong continuation.

I never enter on weak volume, unless it is a choice pullback... but if there is a trend, I am typically in it already.

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