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How to use volume in your trading
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How to use volume in your trading

  #311 (permalink)
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Hi,

on your chart (Post #20) that you are calling out as Hidden HVC there are low volume yellow bars with higher closes. Aren't the yellow bars "NO-Demand"? I know that is a VSA term, but it relates to volume. And what you are calling Hidden HVC could be supply entering the market and therefore price drops. Or am a Full of it?

David

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  #312 (permalink)
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David_R View Post
Hi,

on your chart (Post #20) that you are calling out as Hidden HVC there are low volume yellow bars with higher closes. Aren't the yellow bars "NO-Demand"? I know that is a VSA term, but it relates to volume. And what you are calling Hidden HVC could be supply entering the market and therefore price drops. Or am a Full of it?

David

I think your observations are correct. No demand is usually triggered when price makes a new high on lower volume and then closes off the high. That shows sellers came in and pushed price down before the close. If you imagine a higher timeframe and how it would combine 3 or 4 bars, you can see that it'd fit my description above and be a "no demand" bar. So good job on spotting this pattern split up amongst several bars.

I also call it a low volume pullback and usually price will reverse and go the other way.

What I called hidden HVC.. it would be an HVC if it were not for the monstrous volume bar a few bars earlier. Nothing will beat that so no more HVC during the lookback period (20 bars for me).

Was this supply or demand? My guess is demand came in and stopped price but supply overwhelmed the demand and drove price down. The demand then stopped out fueling the move down. So you are correct it was supply but we only know that based on the proceeding bars. At the time I would have thought it was demand.

Thanks for the question.


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  #313 (permalink)
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Volume



cunparis View Post
I think your observations are correct. No demand is usually triggered when price makes a new high on lower volume and then closes off the high. That shows sellers came in and pushed price down before the close. If you imagine a higher timeframe and how it would combine 3 or 4 bars, you can see that it'd fit my description above and be a "no demand" bar. So good job on spotting this pattern split up amongst several bars.

I also call it a low volume pullback and usually price will reverse and go the other way.

What I called hidden HVC.. it would be an HVC if it were not for the monstrous volume bar a few bars earlier. Nothing will beat that so no more HVC during the lookback period (20 bars for me).

Was this supply or demand? My guess is demand came in and stopped price but supply overwhelmed the demand and drove price down. The demand then stopped out fueling the move down. So you are correct it was supply but we only know that based on the proceeding bars. At the time I would have thought it was demand.

Thanks for the question.


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Cunapris, Thanks for replying.

You got me thinking some more. The reason why I would consider the "hidden" HVC to be supply is because in VSA terms they refer to the background. I've read that doing VSA without looking at the background could be meaningless. Maybe not completely, but probably not as valuable. Because at the far left of the chart there are HVC's "pros stopping the rally" that would be weakness in the background. Thats assuming my analysis is correct. With the low volume pullback I would be thinking that a move down is in order. I also tend to believe that if the big boys go short, and I'm assuming that HVC at a high would be just that then the probabilities of a sell off are fairly good.

I am a big believer in using volume in conjunction with support and resistance whatever that may be. I'm finding it tough to decide what methodology to use in my trading and with what indicators. I am on indicator overload on the forum. I find myself say "that looks good, ooh that looks good too". I found Emini-Watch Better volume indicator to complex for me with the colors and the patterns. I like the HVC or prof. and the low volume yellow (amature) bars for volume. I'm new to this website, but found your posting interesting. What do you currently use on your charts for volume as well as other indicators?

David

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  #314 (permalink)
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David_R View Post
Cunapris, Thanks for replying.

You got me thinking some more. The reason why I would consider the "hidden" HVC to be supply is because in VSA terms they refer to the background. I've read that doing VSA without looking at the background could be meaningless. Maybe not completely, but probably not as valuable. Because at the far left of the chart there are HVC's "pros stopping the rally" that would be weakness in the background. Thats assuming my analysis is correct. With the low volume pullback I would be thinking that a move down is in order. I also tend to believe that if the big boys go short, and I'm assuming that HVC at a high would be just that then the probabilities of a sell off are fairly good.

I agree with what you said, however what threw me is the HVC which stopped the decline and sent price back up to make a double top. That showed support. So when price went up on a LVPB and then came down a bit I was not sure if the pro's where buying it again or selling it.

Really the pro's don't all trade together. There are smart pro's and not-so-smart pro's. HVC can't distinguish between them, but what it does is highlight professional activity. Then if price breaks above we can say the bulls won and if price breaks below we can say the bears won. This doesn't always work but often price will move away from the HVC at least a pt or two, enough to get a small profit.

Also what was weird in that example is that usually the pro's will trade counter-trend. They need a lot of selling activity for them to buy a really large size without moving the market. So in the "hidden HVC", price moved down and sellers came in. That's actually unusual. Usually they would have sold the double top. But since there was low volume leading up to the double top there weren't enough buyers for the sellers to enter so I guess they waited until there was more volume and then went short.

All that is just speculation and really it's not necessary to make some money. Just knowing where the pro's are active and seeing how price reacts will put the odds on your side.


Quoting 
I am a big believer in using volume in conjunction with support and resistance whatever that may be. I'm finding it tough to decide what methodology to use in my trading and with what indicators. I am on indicator overload on the forum. I find myself say "that looks good, ooh that looks good too". I found Emini-Watch Better volume indicator to complex for me with the colors and the patterns. I like the HVC or prof. and the low volume yellow (amature) bars for volume. I'm new to this website, but found your posting interesting. What do you currently use on your charts for volume as well as other indicators?

David

I use S/R a lot too. For indicators I find less is more and the sine wave / PSO is the only price indicator I use. I use the sine / PSO just to show me the cycles (which are also determined by S/R). I use price action & volume analysis for my entries. So if you're on indicator overload I suggest reducing them to the bare minimum and then adding an indicator only if you are sure it gives you an edge and then do it slowly one at a time. I've added many and taken them off as I couldn't be sure they had any edge. Plus the more indicators you have the more potential for conflicting signals. That leads to second guessing and that causes me to miss good trades and take bad ones.

Here's my current ES chart. I'm experimenting with a new volume indicator from Barry called "pro am" which shows professional and amateur volume patterns & activity. So the blue bars aren't just HVC but also this new indicator showing professional activity. So far it seems like it identifies too much and I may just stick with good old HVC.

I've also been trading CL and for that I use a range chart without any indicators and just trade breakouts. Actually I have an indicator but it's just to color a reversal bar grey (helps to identify chop) and that's it. Less is better for me.

Also on my ES chart you'll see only 2 timeframes. I cut out the middle one and that really reduces my second guessing. I have a thread about trading cycles in the VIP forum, that thread is really the extension of this one.

Thanks for your posts, it's good to discuss volume with others who have studied it. Feel free to post some charts showing some patterns you use, that would be helpful to all.

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  #315 (permalink)
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C,

What is the PSO?

The funny thing to me is that I used to use Tradestation and I bought Barry's stuff. I think its good, but I was lost with it, so it wasn't for me.

I will post some things that I've been looking at lately, but it will need to be later on. I have a day job too, unfortunately. I would rather do this for a living, but need to be consistent and profitable first.

David

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  #316 (permalink)
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David_R View Post
C,

What is the PSO?

The funny thing to me is that I used to use Tradestation and I bought Barry's stuff. I think its good, but I was lost with it, so it wasn't for me.

I will post some things that I've been looking at lately, but it will need to be later on. I have a day job too, unfortunately. I would rather do this for a living, but need to be consistent and profitable first.

David

PSO is Phase Shift Oscillator. it's very similar to barry's better sine wave. I use it exactly the same. It's free for donating members. There is a VIP forum for people who donate, I put my cycle thread there to keep it a bit more exclusive since I'm giving away all my secrets. hahaha (sarcasm)

Barry's stuff - I took 2 months of backtesting by hand months and months of charts in order to understand how it worked and get confidence in it, write up a trading plan and practice it. Then a few more weeks on simulator. Then I started real money. Did outstanding for my first 2 months and then fell off my rocker for 2 months. At that point I put it aside and started a quest. It was probably a problem with me and not his tools but I wanted to try some different things.

So I removed all indicators for 1 month and traded totally naked. Not even volume. It was profitable! Then I started learning to trade breakouts on range charts and playing with renko. Now I'm trying to tie all that together in my cycle thread. I'm now back to trading ES but I don't daytrade it, I go for swing trades. So far I've been near 100% on my trades which has totally blown my mind. And now I'm working on combining breakouts & cycles using CL. I'm already profitable with just breakouts, price only no indicators no volume. So adding cycles should only help. I think I'm real close.

I hear ya about trading full time. It's hard to be consistently profitable while working a full time job. I worked part time for 2 years while I worked on my trading. Fortunately for me the decision to go full time was made for me. I work as a consultant and my client informed me that due to budget cuts they will not renew my contract next year. So as of January 1 I'll be full time trader. It couldn't come at a better time. I've been profitable for the past 2 months and I've hit my daily goal for the past 3 weeks. I'm ready.

I look forward to seeing your charts. And I hope you'll check out my cycle thread. I need some participation to motivate me to post more. I think I lost everyone.

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  #317 (permalink)
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Does anyone have the CBOT handbook on Market Profile? I have googled it and come up with many dead links or torrent sites, which I don't use. Apparently it's very good and comes from something a while back which originally sold for mucho $$$.

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  #318 (permalink)
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cclsys View Post
Does anyone have the CBOT handbook on Market Profile? I have googled it and come up with many dead links or torrent sites, which I don't use. Apparently it's very good and comes from something a while back which originally sold for mucho $$$.

here's a link that should work:

http://www.cmegroup.com/education/interactive/marketprofile/handbook.pdf

got it from here:

TradeMaven, Futures and Options Broker, Trader Education, Charting, Alternative Investments, Navigator


and here's my favorite market profile software:

Final| Financial Algorithms

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  #319 (permalink)
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cclsys View Post
Does anyone have the CBOT handbook on Market Profile? I have googled it and come up with many dead links or torrent sites, which I don't use. Apparently it's very good and comes from something a while back which originally sold for mucho $$$.

https://futures.io/free_downloads/educational_manuals_ebooks_videos/225-download.html?view

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  #320 (permalink)
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great thread thanks.


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