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

  #321 (permalink)
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This has been THE most important thread I have ever read.

It dramatically changed my way of trading and looking at the markets and price behavior. I cannot emphasize enough the importance of the knowledge inside Tom Williams book, "Master the Markets".
From a once indicator-focused trader, I now trade on price and volume analysis, using indicators only to confirm my observations or open positions I otherwise wouldn't, by not feeling comfortable enough to pull the trigger.

This thread is worth reading every post and I'm still learning.

I want to thank cunparis and all the users that participated and contributed to the development of this topic.

Thank you all.

Braulio

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  #322 (permalink)
Trade with the flow
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For those who are donating members, I posted an important post in my cycles thread:

https://futures.io/elite-circle/1230-market-cycles-fun-profit-11.html#post19940

For those who are have not donated, I will copy it here:


Quoting 
I'm going to take some time off from continuing the discussion. I'm not even sure if anyone is with me or if anyone is interested.

First, I think a good progression of a trader is this:

- consistently profitable without any indicators, trading S&R

- add indicators one at a time, after verifying that they increase performance. this implies the indicator has some sort of edge.

The question I've been struggling with is this: Can a trader learn to trade with cycles without having already been consistently profitable without indicators?

I think the answer is yes because this is how I did it, although I'm not sure about the consistency part. I had 2 months "on" and then a month and a half "off" and that's when I wanted to learn about trading naked in order to reduce my dependence on the indicators. And since then I've been back "on".

So for people wondering if cycles are for them, you have a decision to make.

Now, in both cases, there is a lot of hard work involved. No indicators are going to say "enter here" and "exit here" and give consistent profitability with small drawdowns. Some will disagree with this but nothing has been shown to contradict my claim. I'm not saying automated systems can't do it, I'm just saying they're going to be incredibly complex and involve several factors. They're the type of systems that the big institutions pay millions of dollars to develop.

So back to the hard work part. It takes hours and hours of studying charts and coming up with a trading plan, testing the trading plan, updating it, optimizing entries & exits, etc.

Are you willing to do this work??

My experience leads me to believe that the majority of people in these forums are not willing to do the work. This is my second thread that I've created to show how I trade ES. First was the volume thread. In both threads initial interest was high, but then interest dropped off. In the volume thread I suggested (required?) reading a book. I didn't think anyone read it but I did get a reply yesterday from someone who had. So maybe 1 in 100 or 200 people who read the thread took the time to read the book. And people wonder why 95% of traders fail.

Also in both threads I ask people to post charts, identify setups, etc. Again, in the beginning there are some participants and then once we get to the point where there is no magic entry & exit signals, no more charts posted.

Very few people (zero?) take the time to go over a month of charts, identify setups, post the charts and ask for feedback.

So I thought maybe my threads are too complicated, or too extreme, too boring, whatever. Maybe I'm too demanding.

For a while I've been participating regularly in one other thread: Jeff's All You Need thread. In that thread, I observed the very same behavior. Although he had continuous stream of questions, most were from newcomers to the thread. They'd come in, ask for the template, ask about the indicators, maybe ask about an entry, and then .. disappear!

Very few people took the time to go over their charts, find setups, annotate them, post them in the thread for feedback. And of those I don't think any of them did it consistently.

So either a few people "got it" and just kept quiet, or no one got it at all. Well I "got it" so it's probably a combination of them.

All this has caused me to ponder the issue. Posting takes an incredible amount of time. If people aren't willing to take the ideas and work them out on their own, they're not going to be successful. And in that case does it make sense to continue the thread?

As Ringer would say, there needs to be a value for value relationship. The poster can get value from the reflection needed to post and also from the ideas, questions, and charts shared by the participants.

I have to admit I'm not receiving as much value here that I originally expected. I have the discipline to do the reflection myself, and I'm not getting much feedback from participants. I was hoping to work out some issues in a collaborative way. But so far that isn't happening. I spend hours working on a new trading plan for trading cycles and to be honest I'm a bit reluctant to just give it all away here.

Which got me thinking about coaching and also private collaboration. I've been collaborating privately via email with some other traders and it has been very rewarding. I even attempted a bit of coaching, only time will tell if the trader will do the work I ask.

I think private collaboration is more efficient for me. I've discussed naked breakout trading with two people privately. In both cases I asked them to read some material and then mark up a month of charts looking for a pattern. I asked them to contact me when they've done that, or if they have questions while doing it.

Here's the beauty of it: If they do not do the work, I don't waste any more of my time!

So I'm going to take a break from posting. If anyone is truly serious about learning to trade with cycles, go over the information in this thread and try to apply it on your own charts. Post them. Ask questions. If I see people are serious then we can continue. If there are only a few then we'll continue privately via email.

For coaching, I'm currently thinking on how I want to do this. One idea I have is to have a small private trading room where people can see my charts and my trades real time. But I have a lot of issues to work out before hand and I prefer to have a few more months of proven profitability (via account statements).

Finally, if you're not interested in cycles that's fine and certainly understandable. But be honest with yourself. Are you putting in the work to be successful in trading? Pick a method, spend 10-20 hours/week on it for several months. Annotate your charts. Share them if you can, even if privately. Ask for feedback. Ask questions. If you do this your chances of being successful are good. If you don't do this then quite frankly you have no chance.

I would wish everyone good luck but it's not about luck it's about working your ass off. So instead I will wish everyone "Good work".


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  #323 (permalink)
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Braulio View Post
This has been THE most important thread I have ever read.

Braulio,

Thank you very much for sharing your experience. As you can see in my previous post, I was losing faith in the participants of my threads but your testimony is really encouraging.

This thread has had 15,895 views. I'm not sure exactly what that means but I imagine hundreds of traders have read at least the beginning of this thread. Out of those hundreds, I'm only aware of a few who have read the Williams book(s). Those who do the work will be rewarded and I'm very glad to see you in the group who will achieve success.

Please feel free to post how you're using volume and to continue the discussion. I'd love for a few others to takeover leadership of this thread and keep it going.

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  #324 (permalink)
Trade with the flow
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One-Time Framing Technique

Sylvester,

I'm pretty lenient about off-topic posts as long as they're related to trading but I feel your post really does deserve its own topic. It seems to be more about price than volume, so I moved it into its own thread here:

https://futures.io/traders-hideout/2214-market-profile-one-time-framing-technique.html

Thanks for sharing, I'm sure some will find it of interest.

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  #325 (permalink)
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cunparis:
I haven't learned about market cycles so I don't know if it fits my profile, but I have already practiced what you suggest, adding indicators one at a time. I use different time windows (1,3,5,60 min) and a tick window(1151) but here's my general setup:

. ADX
. ADL
. Stochastics
. Volume Patterns
. LBR

I don't use them all at once when I trade; it depends on what the market is doing. I really like the LBR and I'm a fan of Linda's work.
There was a time when I was trying all the "better rated" and "most downloaded" indicators, trading on all the signals they gave me to open my positions but I have to admit that it was all fuzz because I just understood the indicators and not the market itself.

So now I have this setup where I focus on price and volume, the indicators are a secondary analysis I can do.

I also agree with you on one more thing: definitely, posting takes time. The reason why I do it and why I do it specifically here, on this forum, on this thread, is because I have learned so much by "wasting" my time to understand the valuable information that is being given.

It took me quite a few hours to do it but I "got it"! I will still be learning if I read it back again! Why? Because now I have experienced what was shown to me. I had the knowledge but now I have combined it with experience, I tried to apply everything I learned on the markets, and it's only then that you can fully understand all this work.

I'm glad that there are people willing to show their effort and share it with others; otherwise it would be so much more difficult.

This is of unmeasured value. It is for me and I only wish it could be for many others.
I'm on a learning curve and hopefully always will be.

So, cunparis, don't lose any faith. You have changed me and the way I trade and because of this you will continue to have the power to always change someone else, someone who is willing to "do the work" and "get it".

Braulio

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  #326 (permalink)
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Volume is the best foretelling indicator

Hi there,

I also believe that volume is the best foreteller of market intentions and movement,
if the big money isnt interested the market wont move and if they are it will move quick enough to make you miss the move, don't forget if the market didnt allow the big players to have an edge, the markets wouldnt simply exist, so always lok at volume and especially what the clever money is doing.

I will post here an idicator i have found to be ery good for judging volume.

Is called effective volume and i am using it a lot.

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  #327 (permalink)
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carohump View Post
Hi there,

I also believe that volume is the best foreteller of market intentions and movement,
if the big money isnt interested the market wont move and if they are it will move quick enough to make you miss the move, don't forget if the market didnt allow the big players to have an edge, the markets wouldnt simply exist, so always lok at volume and especially what the clever money is doing.

I will post here an idicator i have found to be ery good for judging volume.

Is called effective volume and i am using it a lot.

I couldn't agree more.

Can I ask you to also post a few charts along with the indicator and explain a bit how you use it?

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  #328 (permalink)
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Braulio View Post
I couldn't agree more.

Can I ask you to also post a few charts along with the indicator and explain a bit how you use it?

I second this request. I've become a bit obsessed with volume interpretation and would love to hear some different perspectives, including effective volume.

I've been looking at VPA but am getting the feeling you would need to use it on a 15 min chart or larger (probably a daily chart is most appropriate).

Blz

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  #329 (permalink)
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A Better Better Volume Indicator?

Suppose we start with the GomVolumeDelta indicator, which plots not only the total volume, but also shows, as a portion of the total volume bar, the volume delta, whether positive (green) or negative (red). (Jt's part of the superb GomIndicator Package available here, and on the Ninjatrader forums. Thanks Gomi!)

Then, to the GomVolumeDelta indicator we add the exact conditions from Barry Taylor's latest Better Volume Indicator, INCLUDING the conditions that require bid and ask volumes. If the churn, climax, or low volume conditions are met, we paint the total volume bar appropriately. So now we have Better Volume and Delta Volume in one indicator. And since the GomDeltaVolume code is a subclass of the GomRecorderIndicator, the bid ask data become persistent as long as we have enabled recording and set up a GomFolder with an environment variable. (Does everyone know how to do this?)

I started coding this for Ninjatrader 7 but it's not quite ready yet. Hope to upload it within a few days.

Maybe we can also add some more of Barry's conditions to this, such as "stopping volume" and "no demand". Feedback, anyone?

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  #330 (permalink)
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Better Better Volume Screenshot


Screenshot shows what I have so far.

Delta Volume: Red and Green
Total Volume: Blue
Total Volume, Climax Up: Light Blue
Total Volume, Climax Dn: Dark Red
Total Volume, Churn: White
Total Volume, Low Volume Bar: Yellow

Dashed line in Panel 1 is ADXVMA.

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