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

  #581 (permalink)
Trading Apprentice
Los Angeles
 
Futures Experience: Intermediate
Platform: TOS, NinjaTrader
Favorite Futures: ES
 
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Good Morning

Pretty straightforward today.

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  #582 (permalink)
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2nd Verse...

...Same as the first! Keep those rules simple and don't overthink it and you can make $$$ every day.

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  #583 (permalink)
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pinkieman View Post
Josh, you are totally right. To clear things up a bit:

I trade based on the assumption that volume will gradually decrease as a move starts to lose steam. A break of the current volume trend means that someone is intervening with what is happening at the moment. I know that it is a total assumption, but I tend to visualize that the volume increases at the end of moves symbolize the amount of passive buying / selling it takes to absorb the "active" community and change the trend. Additionally, if I see volume INCREASING as a trend ensues (where each "spike" is higher and higher), I have confidence that this is the dominant trend at the moment and I should be looking for a continuation trade as opposed to a reversal. My method only has a few steps....
1. Try to establish a meaningful trendline on the 512 tick chart
2. Take a look at volume to see if it is increasing or decreasing
3. If it's decreasing, I draw up a trendline on volume as well.
4. When that trendline breaks, I wait for the trendline on price to break.
5. Lastly, I look to see if the NYSE TICK agrees with my trade direction. Levels about +500 tend to be bullish and levels below -500 tend to be bearish.
6. If it all lines up, I'm in.

All in all, I pretty much only have one setup. Luckily it happens between 1-4 times a day, and through backtesting and stats tracking I have been able to lock my setups down to a minimum expected profit target. All the pieces have to line up or I sit out. If a volume trendline breaks, but I don't get the TICK confirmation, I will sometimes "test" with 1 contract just see if it pans out, but 9 times out of 10 it's a loser. It's funny how when I am out of the market, I can be unsure at times if the setup has promise or not, but as soon as I am in the market it because clear pretty quickly

EDIT: Also, I understand that the volume trendlines aren't always crystal clear, but the nuances come from the time I've spent looking at the ES in this way. I've stuck to the same chart for almost 2 years now, and I studied just the NYSE tick for about 8 months by itself, so by now I have a decent feel for what I should ignore and what I should take. Please let me know if you have any other questions, thanks!

Hi Pinkieman,
Thanks for sharing your trade set-up. I am beginning to use for volume with price for trading ES and have not found any suitable volume indicator/information. I am using 1min/512Tick chart on Ninjatrader and TOS charts.
Please tell me where to get the volume indicator, Volume_Avg_MFS(1) on TOS platform. Thanks in advance.

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  #584 (permalink)
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EK1288 View Post
Hi Pinkieman,
Thanks for sharing your trade set-up. I am beginning to use for volume with price for trading ES and have not found any suitable volume indicator/information. I am using 1min/512Tick chart on Ninjatrader and TOS charts.
Please tell me where to get the volume indicator, Volume_Avg_MFS(1) on TOS platform. Thanks in advance.

Hello,

I think I just took the a volume average indicator that is available in TOS and made some tweaks. I'll attach it.

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Register to download File Type: ts Volume_Avg_MFSSTUDY.ts (552 Bytes, 34 views)
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  #585 (permalink)
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pinkieman View Post
Hello,

I think I just took the a volume average indicator that is available in TOS and made some tweaks. I'll attach it.

Hi Pinkieman,

Thanks for the attachment.

Just like your set-up. It is simple concept.
1. What do you think of using 1min ES? Would there be more trade opportunities cause I trade only morning session.
I will be doing back testing (practice) for both 512Ticks & 1min charts.

2. When all 3 conditions line up, how do you make your entry?

3. What is your recommended STOP?

Cheers,
EK

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  #586 (permalink)
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EK1288 View Post
Hi Pinkieman,

Thanks for the attachment.

Just like your set-up. It is simple concept.
1. What do you think of using 1min ES? Would there be more trade opportunities cause I trade only morning session.
I will be doing back testing (practice) for both 512Ticks & 1min charts.

2. When all 3 conditions line up, how do you make your entry?

3. What is your recommended STOP?

Cheers,
EK

Hello! I won't say whether or not 1 min charts are better than tick based charts. What I will say is pick one and stick with it. Each chart has it's own patterns, and as long as you don't keep changing what you stare at, you will eventually see things that repeat. What I recommend is mark charts up at the end of every day and take screencaps. I did this for about 8 months, and I separated the charts up into day "types" as well as pattern "types". After that I looked at every pattern and then also analyzed everything I could about it. Time of day, volume conditions, TICK conditions, you name it! From there I was able to nail down what happened more often than not, and put together a plan.

As far as opportunities go, I recommend nailing the 1-3 setups that appear in the morning and leave it at that. The one thing that killed me in the beginning was that I was constantly giving back profits that I had made in the morning. To be 100% honest I don't trade for a living because mentally I don't do well when I up size, but I see how my strategy can be scaled up, and I prefer only trading the morning and then walking away.

After my "setup" criteria is met, I have other criteria for a "pullback" and I enter on that pullback. It's usually about 3-5 minutes after my setup is triggered.

My stop is usually 6 ticks on the ES, and never more than 7.

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  #587 (permalink)
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pinkieman View Post
Hello! I won't say whether or not 1 min charts are better than tick based charts. What I will say is pick one and stick with it. Each chart has it's own patterns, and as long as you don't keep changing what you stare at, you will eventually see things that repeat. What I recommend is mark charts up at the end of every day and take screencaps. I did this for about 8 months, and I separated the charts up into day "types" as well as pattern "types". After that I looked at every pattern and then also analyzed everything I could about it. Time of day, volume conditions, TICK conditions, you name it! From there I was able to nail down what happened more often than not, and put together a plan.

As far as opportunities go, I recommend nailing the 1-3 setups that appear in the morning and leave it at that. The one thing that killed me in the beginning was that I was constantly giving back profits that I had made in the morning. To be 100% honest I don't trade for a living because mentally I don't do well when I up size, but I see how my strategy can be scaled up, and I prefer only trading the morning and then walking away.

After my "setup" criteria is met, I have other criteria for a "pullback" and I enter on that pullback. It's usually about 3-5 minutes after my setup is triggered.

My stop is usually 6 ticks on the ES, and never more than 7.

Noted with Thanks.

I noted that it is difficult to draw Volume trendline especially with 512Tick chart.
Tick chart volume shows less variations. May be Tick chart is plotted with 512 contracts done and volume is time related.
1min chart volume has more variations but for the required set-up to appear it can take very long time.
I noted that there can be short-term trend and intermediate-term trend plays.
I am comparing both charts as I go along.

My normal morning session is from 10am to 12pm. During this session I hope to get the 1-3 set-ups if possible.
If you have more screen shots showing set-up please post them.

Thanks

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  #588 (permalink)
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EK1288 View Post
Noted with Thanks.

1min chart volume has more variations but for the required set-up to appear it can take very long time.
I noted that there can be short-term trend and intermediate-term trend plays.
I am comparing both charts as I go along.

Thanks

Patience is the name of the game! That can be a tough nut to crack. I still find myself falling victim to bored trades, although I'm getting better as I go.. That's one thing that the CL helps with, since there is rarely a dull moment on that contract

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  #589 (permalink)
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pinkieman View Post
Patience is the name of the game! That can be a tough nut to crack. I still find myself falling victim to bored trades, although I'm getting better as I go.. That's one thing that the CL helps with, since there is rarely a dull moment on that contract

What is CL?

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  #590 (permalink)
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EK1288 View Post
What is CL?

It is nothing to do with contaminated lubricants.

You can either look it up in your instrument manager or at the link below:

Light Sweet Crude Oil (WTI)

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