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

  #81 (permalink)
Trade with the flow
Paris, France
 
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RodS View Post
The second is a ZB chart that I have marked for the LVPB exercise that Cunparis had. ZB was very slow last week!

For people posting charts with better volume, I think it'd be helpful if possible to turn on only low volume bars (yellow) and high volume churn bars (blue in paintbar, green or blue in the volume panel). This way we can see them more clearly. If they're mixed in with white & red & magenta then it gets harder to read them. In my trading I only use low volume & HVC on tick charts, and I use everything on daily charts.

Thanks Rod for doing the exercise. For your 2nd chart. I've never traded ZB but it seems to be that 3 range is too small. I say this because the volume is spikey and the bars go up and down without a lot of rhythm to them. I tried a 233 tick chart and the volume was pretty steady, not a lot of volume patterns either. this is pretty interesting. I attach my chart below even though it's not really useful.

Your first LVPB is correct and one would expect the downtrend to continue but then there is an HVC bar which shows a lot of buyers coming in and that stops the decline. BTW his is one example of how a volume splitter often fails (IMHO). If we had a volume splitter running that day (they work realtime only so too late now) we probably would have seen the 1 lot traders going long on your LVPB bar. But they were actually right, just a little early.

The second one is a LVPB too but the bar before it is white which is a high volume down bar. So most likely what happened is the sellers exhausted themselves and the few sellers who came in late couldn't keep price down. This is useful information.

Also one more thing, I use OHLC with the paintbar because if you use candlesticks you can't tell whether it was an up bar or down bar.

Attached Thumbnails
How to use volume in your trading-20090902-zb-lvpb.jpg  
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  #82 (permalink)
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RJay View Post
cunparis,

I can tell your anxious to get this indicator.

Well, here is my latest version.

Give it a go!!!

RJay

Hi RJay, I tested it but it appears to have a lot of problems. I'm attaching a chart with yours and with Barry's on Tradestation. See if you can tweak yours to have similar results.

Yours has a lot of blue bars, too many to be useful.

You also have a lot of yellow bars. Usually a yellow bar will be the lowest volume of the last 20 bars. if you see a big volume bar then it can't be yellow.

When I turn on all the colors, I get only 2 HVC bars and quite a few high volume yellow bars.

Attached Thumbnails
How to use volume in your trading-rj-bvnt2.jpg   How to use volume in your trading-20090904-ts-bv.jpg  
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  #83 (permalink)
Trade with the flow
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GarryM View Post
Cunparis,

"Ask and ye shall receive...."

By the way, the Better volume is starting to make since to me, I had not studied it hard enough. I primarily watch the BV paint bar.

The volume summary chart below is cut out and laminated on my desk, it's a quick reference.

Garry

Hey Garry thanks for posting your charts with the better volume indicator. I'm pretty impressed, the results are very close. In fact yours caught 3 that mine didn't and I caught one that you didn't. So very close results. I should note that tick charts do not look the same with different vendors, and even with Zen-fire they don't look the same cause it depends on when you start your chart. On TS I've found mine often match up with those posted on eminiwatch. So it's normal for us to have slightly different bars and volume levels.

I'm doing more trading on Ninjatrader now and I think I will purchase the NT version of Better Volume. I feel a little lost without it.

Attached Thumbnails
How to use volume in your trading-ts-bv-comparison.jpg  
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  #84 (permalink)
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Hi Cunparis,

Thanks for the info. Part of what I was showing, is what you found out, is RJay's Better Volume was good but not quite the same.

I have attached new chart with changes. Am I right about the first not being a LVPB?

Plus I really like Garry's Better Volume Paint Bars! Really seems to simplify the chart.

Thanks

Rod

Attached Thumbnails
How to use volume in your trading-zb-12-09-9_1_2009-233-tick-.jpg  
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  #85 (permalink)
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RodS View Post
Hi Cunparis,

Thanks for the info. Part of what I was showing, is what you found out, is RJay's Better Volume was good but not quite the same.

I have attached new chart with changes. Am I right about the first not being a LVPB?

Plus I really like Garry's Better Volume Paint Bars! Really seems to simplify the chart.

Thanks

Rod

I have confidence in RJay that he will get it working properly, but really guys $67 is well worth it. Barry is a master at volume so even if it does one little thing better.. if it just gets you out of one bad trade or into one good trade the $67 is paid for. I've made a lot of money using his indicators so for me they're practically free.

Rod - your first LVPB I would say is not an LVPB only because it follows a HVC bar. A HVC bar marks a change of ownership, a big transfer of shares, and is likely to stop the current trend.

For LVPB I look for a trend (could just be 5 bars in the same direction) and then all of a sudden price pulls back on low volume. This just shows a temporary lack of buyers and not much selling pressure. The lack of selling pressure will bring in more buyers and the usual result is the trend resumes.

Think about it: You want to buy 1000 contracts. But if you send a market order for 1000 you'll drive up the price quite high (often a climax bar which starts and/or ends a trend). So you don't want to do that. So you buy 200 and see what happens. Market moves a few ticks, no big deal you buy 200 more. Now you have 400/1000. Price has went up 1 point. You're professional, you will only buy the remaining 600 at a good price. You will not chase the market. So you back off. When you back off price starts coming down (this is totally unrealistic with ES but for a small illiquid stock it's totally reasonable so for our example just think instead of you there are 100 other you who trade like you, more on that in a minute). So price comes back down 1 pt and you load up another 400. Now you're at 800. See how it works? Meanwhile when you pause, some amateurs think "ok the move is over let's short this son of a *#@?$! and they start shorting only to get their butts handed to them.

I find it really helps to interpret these volume patterns by imagining yourself as the trader (both pro & amateur). The Master the Markets book I mentioned in the first post talks about tests and such.

So I've given an example of how a single big trader could potentially move the market on a small illiquid stock. But I said it wouldn't work for ES. But if there are 100 big traders and they all do the same thing, it will work for ES and this is what we see especially in the HVC patterns.

Notice the HVC patterns don't just occur randomly, they occur at very specific locations:

- turning points
- profit taking after a good run

So you can see that these professional traders have very clearly defined entry points, often near S/R levels. We can either work really hard to calculate and plan all these ourselves, or we can sit back and just follow their lead.

PS: the 2nd one is a good example of LVPB. Unfortunately in this case the trend didn't resume, which is a good example of how it's not foolproof. Other tools will help and we'll get to that after we master the volume.

Today was nice and relaxing for me, tomorrow will be another fun day. Good luck with your trading for tomorrow. Everyone should be back from vacation now. The gap up today is likely to get filled.

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  #86 (permalink)
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cunparis View Post
I have confidence in RJay that he will get it working properly, but really guys $67 is well worth it. Barry is a master at volume so even if it does one little thing better.. if it just gets you out of one bad trade or into one good trade the $67 is paid for. I've made a lot of money using his indicators so for me they're practically free.


No I wasn't criticizing the indicator.! I know from reading through the thread that RJay wanted a comparison. I think his work is excellent and much appreciated.

Yes you are correct that it is a small price to pay for this indicator and I have no problem paying for it. I am just trying to learn volume trading.

Thanks again for all your efforts.

Rod

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  #87 (permalink)
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cunparis View Post
Hi RJay, I tested it but it appears to have a lot of problems. I'm attaching a chart with yours and with Barry's on Tradestation. See if you can tweak yours to have similar results.

Yours has a lot of blue bars, too many to be useful.

You also have a lot of yellow bars. Usually a yellow bar will be the lowest volume of the last 20 bars. if you see a big volume bar then it can't be yellow.

When I turn on all the colors, I get only 2 HVC bars and quite a few high volume yellow bars.


Hi cunparis,

Just an FYI, NT does not store tick data for historic bars. (you already know this!!!)

The only true comparison is side by side in real time.

I did enjoyed the programming experience. I learned a couple of things.

I would need the paid version to compare and tweak.

This would be very time consuming.

I'm curious to know how close I am to the paid version,

Thanks,

RJay

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  #88 (permalink)
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RJay View Post
Hi cunparis,

Just an FYI, NT does not store tick data for historic bars. (you already know this!!!)

The only true comparison is side by side in real time.

I did enjoyed the programming experience. I learned a couple of things.

I would need the paid version to compare and tweak.

This would be very time consuming.

I'm curious to know how close I am to the paid version,

Thanks,

RJay

RJay - I realized this in the shower but you beat me to it. Sorry for being absent-minded, I'm so used to tradestation having this historically. I'm spoiled.

Tomorrow I'll run my 3 tick charts with your indicator and post all 3 from NT & TS. that should help narrow it down but I realize if you can only do it real time it's like chasing a moving target.

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  #89 (permalink)
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To the guys that love free stuff,

Free Resources: Charts, Presentations, PDF's, Extracts. TradeGuider - Trading Software, Investment Software,Volume Indicators

This is your link to a free pdf copy of Master the Markets.

Enjoy,

Garry


Last edited by GarryM; September 7th, 2009 at 06:17 PM.
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  #90 (permalink)
Elite Member
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RodS,

Thank you for the kind words.

Garry

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