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

  #491 (permalink)
Trade with the flow
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josh View Post
Thank you so much for your reply (and so quick!) !!

It's very logical then--for every seller of huge contracts, there must be buyers, and vice versa--this makes SO much sense.

I am currently using NT, may try TradeStation, and will definitely try out this indicator to see if it can add just a slight edge. If I may ask, what is the histogram on the right side of your chart (is it in tradestation?)?

yes for every buyer there is a seller. I have lots of theories for how this pro bar indicator works but can't prove any of them. so I rely on my experience with it. I suggest putting it on a chart and just observing it and not trading based on it. Observe it for a while, it will start to make sense. This approach works for most things such as the DOM, time & sales, etc. After a while things start to become obvious.

If you really want to learn to use volume, I highly recommend reading Mind over Markets. The histogram on the right side is a volume profile. This is the best way to use volume.

I do not use tradestation any more. It's too expensive. You pay $99/month for the platform (and you have to deposit $5k into a brokerage account) and then you pay for data. I use market delta now. I still use ninja for an indicator I wrote but other than that I only use market delta. If you're on a budget Investor RT is the same as Market Delta but without the volume ladder and it's cheaper.

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  #492 (permalink)
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You still trade the Bund... Im looking into that since i live in the west coast, pacific time. I wouldn't mind trading at night. Are there any major differences between the fgbl, fgbs..... Does it have good volume?

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  #493 (permalink)
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Michael.H View Post
You still trade the Bund... Im looking into that since i live in the west coast, pacific time. I wouldn't mind trading at night. Are there any major differences between the fgbl, fgbs..... Does it have good volume?

I trade the bund with real money every day. For Nov & Dec it was my best market. I did much better on bund than ES. I really love it.

Over Christmas I wrote a new trading plan and I'm trading it this year. I also trade stoxx which I like as well.

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I don't trade the bobl & schatz, they move with the bund but are less volatile, they're more useful for spreading. Volume & volatility on bund are good from 8am - 10:30 am European time. I try to be done by 10:30am if volatility dries up. Bar from 9:00 - 10am are my best times so if you can trade it just for 1 hour I think it's worth it. Just don't stay up too late or you will be sleepy when ES opens.

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  #494 (permalink)
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cunparis View Post
yes for every buyer there is a seller. I have lots of theories for how this pro bar indicator works but can't prove any of them. so I rely on my experience with it. I suggest putting it on a chart and just observing it and not trading based on it. Observe it for a while, it will start to make sense. This approach works for most things such as the DOM, time & sales, etc. After a while things start to become obvious.

I do not use tradestation any more. It's too expensive. You pay $99/month for the platform (and you have to deposit $5k into a brokerage account) and then you pay for data. I use market delta now. I still use ninja for an indicator I wrote but other than that I only use market delta. If you're on a budget Investor RT is the same as Market Delta but without the volume ladder and it's cheaper.

Again, thanks for the valuable information!

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  #495 (permalink)
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Thank you for this thread. I'm slowly reading through it but I want to start my trading career using pure price and volume nothing more.

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  #496 (permalink)
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i also own barrys indicators and i am trying to incorporate them into my trading... however i still dont know if they are beneficial to me or not...

sure sometimes everything falls in line and looks great.. but other times those indicators are just confusing and mess up the chart... so im am thinking about going back to a plain candlestick chart... no better sinewave, no better pro am and no better momentum...

what experiences did you make with all or some/one of those indicators (better pro am most likely)?

my thoughts are those... if the indicator or actually volume interpretation is sometimes working and sometimes confusing - maybe working at 50 % of the time.. i could also remove it and look at pure price...

furthermore there might also be some issues with volume in general and volume at the bid or ask anyway... there is the cash and the futures market with lots of arbitrage going on... there are 4 major US stock indices (ES, NQ, YM, TF) where a lot of arbitrage between them is going on.. so where did the initial volume occur and which one is more accurate? furthermore tick charts and up/down tick volume is often times very different depending on the data feed provider... and large orders from professionals are split up anyway - so can you really say that there is a lot of action going on in one particular bar?

just wanted to know your thoughts...

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  #497 (permalink)
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ikeaboy View Post
i also own barrys indicators and i am trying to incorporate them into my trading... however i still dont know if they are beneficial to me or not...

All your points are certainly valid. Often we have to accept the limitations such as the ones you mention, as an approximation of what's happening and settle with it. For example, delta is not perfect. The bid/ask moves fast and often trades are reported as selling volume when in fact it was a buyer who initiated the trade. We have to live with these limitations if we use delta. I personally don't use delta that much, not as much as I used to, so these inaccuracies don't really matter to me.

I also agree if an indicator has a lot of false alerts then it's not useful. This is why I got rid of the sine waves. Too many false alerts. The sine wave can't predict when the market will turn. in fact if you analyze how the better sine wave works, you'll find that the sine cross has no predictive ability whatsoever. The reason it looks like it does is because the HH or LL which confirms it is responsible for more of "catching turns" than the sine wave itself. I hope that makes sense.

Better momentum compares what's happening now to what happened recently. But anything can happen in the next few minutes. Too many false alerts for me. We can see divergences and price turns. But often there are many divergences before price turns.

I still use some ideas I got from pro am but I have made my own and taken it quite a bit farther than the original pro am. It's the most useful of the better indicators in my opinion.

Also question multiple timeframes while you're at it. They're an illusion.

Once you remove all that, you get down to the basics. Price & volume & support & resistance. And that's what is most important. The rest just takes your eyes off what's most important.

open in 5 minutes. Cheers

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  #498 (permalink)
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thanks for your reply cunparis...

what exactly do you understand by delta?

yes i agree... i also find pro am the most useful one... however... really interpreting the bars as the market unfolds is tricky... in hindsight all seems so obvious... but thats actually the case with any indicator... what exactly did you change with pro am?

the big issue for me is now whether i should ignore volume... thats the biggest question for me since ever.... then i stumbled across barrys site and i never saw anyone incorporating it in such a great way... first better volume then better pro am... but since using it in my own trading or trying to use it in my trading it seems to be as everything else... sometimes it works fine sometimes it doesnt... so i really consider just looking at a plain vanilla price chart... and interpret price action without any other confusion...

i dont get it what you mean with multiple timeframes??? dont you use several charts with a different timeframe?

what i am now trying in my trading is some kind of intermarket analysis with ES, NQ and YM... i lay them next to each other and look for confirming price action...

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  #499 (permalink)
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ikeaboy View Post
thanks for your reply cunparis...

what exactly do you understand by delta?

Not sure what you mean. I'm just saying that delta is just one way of assigning volume into "buying" and "selling" buckets. But that's misleading because a buyer can use both market & limit orders and more importantly a combination of both.


Quoting 
yes i agree... i also find pro am the most useful one... however... really interpreting the bars as the market unfolds is tricky... in hindsight all seems so obvious... but thats actually the case with any indicator... what exactly did you change with pro am?

I just continued brainstorming of other ways to detect professional activity. Large orders, large orders split into small ones, specific patterns, absorption on the bid/offer, etc. This is all things that one would see on Time & Sales and the DOM. It's nice to have an indicator signal an audio alert but it's not necesssary.


Quoting 
the big issue for me is now whether i should ignore volume... thats the biggest question for me since ever.... then i stumbled across barrys site and i never saw anyone incorporating it in such a great way... first better volume then better pro am... but since using it in my own trading or trying to use it in my trading it seems to be as everything else... sometimes it works fine sometimes it doesnt... so i really consider just looking at a plain vanilla price chart... and interpret price action without any other confusion...

Volume is more important than price. Price is just an advertising mechanism to bring in volume. Volume measures participation and acceptance & rejection of price. I highly recommend studying market profile.


Quoting 
i dont get it what you mean with multiple timeframes??? dont you use several charts with a different timeframe?

I was referring to putting indicators on multiple timeframes and trying to get them to line up. All timeframes show the same thing - where price is and where it was. Anything with a lookback has serious limitations and multiple-timeframes is one way to try to get around this limitation.

I watch daily, 30min, 1min & a fast volume ladder. Only the 1 min has indicators, the others are just to show the big picture or in the case of the ladder, visualize time & sales to time my entry.


Quoting 
what i am now trying in my trading is some kind of intermarket analysis with ES, NQ and YM... i lay them next to each other and look for confirming price action...

NQ & YM are very correlated with ES. I think watching the dollar/euro is helpful but I try to focus on the market(s) I'm trading everything is there.

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  #500 (permalink)
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cunparis View Post
The bid/ask moves fast and often trades are reported as selling volume when in fact it was a buyer who initiated the trade. We have to live with these limitations if we use delta.

I have also taken a step back from delta. It seems so promising but like every thing else, simplicity is probably the best route, as over-interpreting delta can be dangerous, at least the data I've been looking at over the last month or so.

But I must say, if it's reported as selling volume (at the bid), then it was definitely a seller-initiated trade, with the seller being aggressive and the buyer being the passive limit-order-holder. I think what you mean is that price can rise even though delta was negative. But even in this case, what it means is that there were simply more market-order sellers than market-order buyers. This is my understanding anyway, please correct me if I'm wrong.

For example, say there are resting buy limit orders: 100 at 1, 200 at 2, and 400 at 3. Now say there are resting limit sell orders: 100 at 4, 100 at 5, and 100 at 6. If 300 sellers step in and hit the bid at 3, price doesn't move. Now all it takes is 200 buyers to lift the offer to 6. So price went up, while delta was negative 100 contracts. Maybe sellers were more aggressive, but buyers wanted to buy that level, so ultimately there were not enough sellers compared to buyers--hence why delta can be misleading IMO. I'm talking this out for my own benefit by the way, I know that you know all this, but maybe someone else new such as I am can benefit from hearing it talked out this way.

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