[Volume Based Candles] and how to profit

[TinGull]

I wanted to start a thread dedicated to what brownsfan019 has brought up in another thread. I don't quite understand how to see through volume based charts and candles, so I'd love to hear more about how it can improve ones trading.

I was looking at a 2000 contract and 5000 contract based chart and see patterns there, but not sure if I'm looking at things right.

I'd love to open this up and hear what brownsfan019 is doing and get some dialog going.

[notouch]

They're usually called constant volume bars (or candlesticks). They're useful because you can see price and volume as the candlesticks develop without having to look at price and volume separately. High volume would be coming in if a lot of candlesticks formed in a short space of time. For example if you were using 1000V candles then if 5 candles formed in 30 seconds near a support level then this shows big volume (5000 contracts) coming in at that level. It's easier to see in real time than on historical charts.

[TinGull]

I thought it would be easier to see in real time. Is there anything that can be gleaned from looking at them after the fact?

[notouch]

Just look very closely at the times the candlesticks formed. Historical charts have this information but you'll need to study them closely. A low volume period would be for example a 1000V candlestick that closed 5 minutes after it opened. A high volume period would be where 5 candlesticks formed in one minute.

[notouch]

Here's one I made earlier...

This is from a while back. I think it was FOMC which caused the volume.

[TinGull]

Cool, thanks

[brownsfan019]

tin - notouch summarized the volume based / share bars charting format very well. Basically in real-time, I can tell just by watching my charts if there's a lot of volume coming thru or not. I don't need tape, a separate volume indicator, or anything. As notouch said, you need to try watching real-time to really see the value.

Here's an example while using a candlestick formation - in traditional candlestick analysis a doji symbolizes that the current trend may be coming to an end as the bulls and bears went back and forth and noone won. On a time chart that doji can be saying: 1) the trend is over or 2) the bulls and bears are simply taking a breather.

Now, with a volume chart, that doji tells me that XXXX contracts traded in order to produce that, not just traders taking a break. In order for that doji to be produced, the bulls and bears did in fact have a good fight, which is what I want to know and see. I don't want a 'breather', I want a fight.

As another trader asked me when I first questionned the share bar method, he asked if I watch my clock when I trade. I replied no. Then it hit me, the time it takes a candle to form is irrelevant. What you want is a candle that is telling you something - either there is action going on or not much is happening right now. I personally want the action/momentum and to participate in that. I don't want to enter a time where volume is low and moves are little. I can't stand trades that take hour(s) to develop. I just don't have the patience.

The other big thing for me is that on a time chart with candles during big moves, you aren't going to be able to do much till it's too late. In other words, if the contract moves points over a 3 minute timeframe, that candle is useless. So during big moves, I saw giant candles forming and watched the action take place w/o me. I knew something was going on, yet I had no way to take advantage of it. That same move on a volume based chart can possibly provide me with MANY signals. It's night and day.

In the end (for me at least) this is what pushed my trading over the edge. Volume based charts provided me a quick and easy way to visually see what was going on. Rapid candles = rapid volume movements that I want to participate in. Slow candles = low volume that does not help my trades.

[TinGull]

Very nice. I would love to have you do a video presentation sometime on this. It really is an interesting concept that I've never dove into. And candles are your bread and butter, right?

Thanks brownsfan, I appreciate the insights.

[TinGull]

And...do you think dojis hold more importance on a volume based chart? Say...after you witness the doji and all the sudden price starts moving fast as hell, you wanna be in on that as quick as possible, yea?



Thanks again

[brownsfan019]

	Quote:	TinGull
	Very nice. I would love to have you do a video presentation sometime on this. It really is an interesting concept that I've never dove into. And candles are your bread and butter, right? Thanks brownsfan, I appreciate the insights.

Tin - I posted a chart setup of mine here on one of the threads and what I use is simple - volume charts, candles and moving averages. That's it.

I guess in essence I am 'reading the tape' as I know many guys here do, but I do it in the form of my chart, not a separate window. When candles are rapidly forming (as notouch's chart showed), I already know there is heavy selling pressure, I don't need a seperate window to show me that (and be a distraction in my opinion).