What you are talking about here is not really about tape reading, though Wyckoff was a tape reader (in a very different time I might add, when prints would come across the wire every 30 seconds or over minutes, compared to today, where they come by in milliseconds). It's a Wyckoffian perspective on volume analysis, and I use this extensively--this was my trigger for entry on the trade I posted. I think that the principles of accumulation and distribution are logical and therefore timeless, so they will always have some validity in the markets. What I do not adhere to is Wyckoff's "smart money" and "internal operators" lingo. It takes my focus too much off of what is happening, and puts it too much on who's doing it. I really don't care who's doing it--the fact is, if price moved up, demand was greater than supply, and vice versa. IMO it complicates the issue at hand by attempting to assign labels to market participants.

I can understand on the longer time frame (daily to weekly) that the labels may be appropriately assigned, as investors enter and exit the market systematically. But I do not see every volume spike on a 5m chart as activity by "smart money." I've seen people using 100 tick charts that span a grand total of 10 minutes talk about "accumulation and distribution," and taking it to that extreme is too much, IMO. But the principles work on any time frame, and that's the key for me--I just don't personally like to presume to understand or know the intent of the trader. I use volume, I use delta to some degree, and moreover I use price--who does it, for what reason, is not important to me.

On your annotations, I do not see the 3rd or 5th boxes as any kind of significant volume activity indicating accumulation or distribution. The context is the important aspect here, and the 4th box (the trade I took) had the important context of being a channel line test. The 12:26 bar (the last high volume bar in your first red box) is the significant bar in that group, as the support held, and then price moved up. It very well could have moved down, and that volume would have represented accumulation by longs, which then likely would have bailed and fueled a further move down.

What I'm saying is that an increase in volume in and of itself doesn't mean much, except that there was greater participation, and only what happens next confirms whether it was truly accumulation or not.

For example, all this morning as the high of the day was put in, volume kept dwindling, and looked to be WAY past exhaustion before the high of the day. A climax does not always precede a reversal--sometimes just falling volume does--the 11:10 1m bar looks very climactic, but it keeps going up. So, the context is important. After 95.00 broke, it really didn't matter how the volume looked--we were destined for the daily EMA, prior resistance, etc.: basically, 95.80 was about as clear a target as you can find. The 5m bar that was the high of the day closed in the middle, and had over 10K contracts, certainly looks exhaustive -- but it's the context that really gives it away though, as this was a super key level for oil.

Sorry for droning on, hope this addresses your post.

Okay, just googled Wyckoff for the first time. It is nothing like I learned through Tape Reading and Market Tactics by Humphrey B. Neill. Wyckoff's method seems extremely complex and overly descriptive... like a science with rigidity and rules rather than an art

I agree, sometimes volume doesn't precede a reversal but if volume does not confirm a reversal, then it is safe to say that the people bringing the markets down are small traders who are not worth following... not because they are unintelligient, but because they don't have the capital to direct the markets anywhere. Sure the market can drift down on low volume, but more often than not, that sh!t gets put to a stop by some large traders.

Guys like you, Dionysus Toast and Fat Tails all have these logical arguments and ideas and are single handedly encouraging me to buy an elite membership just so I can read more ideas and theories that you all posts lol. Anyways, I am relatively new to Tape Reading but it appears the most ideal method for an analytical thinker like myself. Just some ideas that are bouncing off my head. Who knows what I will think tomorrow but this is what I believe today

An example of using volume in trading today. Took this trade, exited early unfortunately but clear target was upper channel line (.35 was initial target)...

Thats why i think most people fail. They treat everything with rigid rules, like if they see alot of trades at the bid, then someone is selling real hard, so you must go short. If a hammer forms, you need to take a long. If you get a green bar at a MA, you go long.

You will never make money doing that. You need to see what happens, and then react.

If you see huge orders being traded at the bid, and it stalls there for 5 min, and fails to go lower( meaning all it can muster is 1-2 ticks more to the downside), and starts trading back up, then thats bullish. Now if you see orders picking up at the ask a few ticks higher after this, then you have a reason to go long with a reasonably small stops. Its exactly what cunparis said, someone is absorbing the selling, or its a limit buyer. You don't know until the market tips its hand.

People treat their indicators like a buy and sell switch. Thats why you constantly hear people on these forums talking about how its impossible to make money.

I kind of wish i could show you guys a video ( I record all my live trades), but the files are huge, and my DOM is on there, with my account number.

If enough people are interested, i could try to do one using the ladder and record without my dom( with chart trader on) so you guys can see the trade. Ill put a separate dom up on sim so you can see the level II

Thank you for sharing Josh.

I use the same volume and CD setup and I am wondering if you could you tell me which bar you entered .01 at, and detailed with the volume and CD together what made you pull the trigger at that specific point?

Thanks,
Laurus

Honestly I think you already have all the ideas you need to be a successful trader. I am fully convinced that in my brain are enough ideas, and that I am smart enough, to be a successful trader. Unfortunately I have much larger problems to solve in my path to success than intelligence, like managing trades, showing common sense, controlling fear and greed, and so on. You seem to be very intelligent and have good ideas. If you buy an elite membership, do it just to have access to 100% of the forum. I originally did it to have full access to indicators and historical data and the like, and while I don't really use many of those indicators, $50 is a small price to pay to try things, and have full access to the site.

I saw the volume entering on that bar, and because I had the channel drawn, was ready for a long trade. The bar dipped below to the .92, and then came back up above .95. About 30-40 seconds into the bar close and I thought that if it broke 95.00, it was a good long, and on my tick chart it showed a small level there as expected, so I placed the buy stop above at .01. Buyers bought into the bar close and I was filled a few seconds before the bar closed. A probably better entry was to wait for the bar close and put the stop above the high for a long at .03. I did not use delta at all in the decision to go long. The previous solid up trend, channel line, and volume itself was all that was needed for me to take the trade.

Thank you for the details. I understand what you say. I have looked over the chart again and see that CD shows both respect of support and divergence with price which coincides with the volume bar discussed. So all in all a good entry

By the way, thank you for sharing personal details further up. Have you read any of Van Tharp's books? I like his take on the matters. Not long time ago he released a new and expanded edition of the "Super Trader" book. I liked the first one and are most probably going for this one too to get the "expanded stuff".

Laurus

...Today I had poor stop placement on 3 trades, each of which would have hit targets of about 50 ticks each, and I wound up negative on the day. I say this to say that the major improvements I need to make right now cannot (unfortunately) be easily found in a book. Though, I am reading "Trading in the Zone" by Douglas for the 3rd time and the first time in a few years and am finding a LOT of helpful things in there that I was not ready to see or understand the first two reads. But then translating that to real action is my challenge at the moment.