[brownsfan019]

Originally Posted by walterw »

browsfan : from an intraday aproach its ok what you say, now its interesting to see sometimes the big picture too... and volume has a lot to say on this big picture... it even told us that there was an inminent downmove as there was no more important volume on the previous top up moves... I dont know if you looked this video http://www.traderslaboratory.com/for...lume-1286.html it can be very usefull to know in witch overall context your small intraday trading can be (I trade a 22 tick chart, very small trading) but now I take into acct this daily context information, I can know more the general bias of the market... cheers Walter.

I watched the video and here's what I saw (see enclosed pic):

1) Decent down move
2) Minimal down move
3) Minimal down move
4) Minimal down move
5) Minimal, if any, down move
6) Minimal, if any, down move
7) The 'big' down move we all saw

So, looking at these statistics based on the chart referenced in the video, it appears to me that 5 out 7 times what the 'volume was telling you' was not very good at all. The volume told you to short throughout a strong up-trend.

2 out of 7 times you made money, if you were still around for the #7.

Am I missing something here? Yes, it's easy to cherry pick the one or two times the volume 'worked', but that is useless if not taken into account with all the times the volume was 'telling' you something.

This chart is a perfect example of why I think trying to use daily volume to predict moves is very misleading.

Note - before anyone asks - I use a program called SnagIt to annotate my trading charts, like this one. If you are still using paint or not annotating your charts at all, that is a big mistake in my opinion. SnagIt is very user friendly and very inexpensive. It's from the guys that make Camtasia. http://www.techsmith.com/snagit.asp

[walterw]

I think brown you are missing something there... and is the fact that a volume surge can also spot an extreme... once that happens you must re-start the reading of volume from the most inmediat context (volume levels) (actually this thread topic)... now this is not for newbees it takes screentime to read this... I am not that expert must confess... cheers Walter.

[dalby]

i would disagree that technicals take less importance at climactic times/emotional etc.

imo, TA is, to a large extent, the study of aggregate trader psychology.

psychology is always an element of TA, and price is ultimately an opinion reached by two sides of every trade.

i think like TA in general (where one looks at various timeframes), volume and volatility needs to be considered in that context.

iow, for shorter term trades, the volume needs to be compared on a shorter time frame.

and for longer term trades, not so much.

this reminds me of the old trader joke, your broker calls and says "the bad news is your account is on margin call and down 50% of its equity. the good news that it was on low volume"

i don't think anybody should use volume and of itself to predict ANYTHING. that's true of market profile, of indicators in general, etc.

it's a matter of synthesizing information.

volume does matter (clearly) imo.

[brownsfan019]

Originally Posted by walterw »

I think brown you are missing something there... and is the fact that a volume surge can also spot an extreme... once that happens you must re-start the reading of volume from the most inmediat context (volume levels) (actually this thread topic)... now this is not for newbees it takes screentime to read this... I am not that expert must confess... cheers Walter.

Walter - I understand the premise behind what the volume is possibly saying and how that can be interpreted, but did my chart example just show that 5 out of 7 times the 'extreme' was simply that the current up-trend took a breather only to resume the trend? I don't see how the chart showed us that the volume surges spotted an extreme. 5 out of 7 times it reinforced the strength of the trend. To me, an 'extreme' would be a major reversal zone and in this chart, the surges in red were anything but a reversal area. Yes, it could have been traded on the short side for a profit if you were able to exit timely.

We can both put our 'side' into words, but I think a chart is much more powerful since it is what it is. Taking a look at my annotations, would you agree that 1) there was a red volume surge and 2) if you assume a red surge can lead to a downmove that this did in fact fail 5 out of 7 times?

I realize it's easy for me to do this in hindsight, but I'm hoping to provide another side to the argument b/c it can be very dangerous when people in a forum all think the exact same way, esp any newbies reading this. The last thing a newbie should do is read this thread and start trading based on a red/green volume surge. I am attempting to explain here that the surges in our example at best signified a pause from the overall trend.

[walterw]

Brown : you cant take into acct the green or red color on the volume histogram, that is just the relationship between open and close of the day (1 bar) , you have to relate pivots of price action going up or down, can you take a look at the bars between 3 and 4 ?.... you will notice price was going up while volume was going down... then inside 4 you will notice a nice drop (large bar) with high volume, we can consider that a volume surge or "selling climax" wich stalls the down move... notice price starts going up and volume on the next days also goes up... thats bullish you will then notice that from PIVOT TO PIVOT volume talks... maybe what you are missing is the reading from pivot to pivot.... (not each bar) hope that helps cheers Walter.

[Nick1984]

Originally Posted by walterw »

browsfan : from an intraday aproach its ok what you say, now its interesting to see sometimes the big picture too... and volume has a lot to say on this big picture... it even told us that there was an inminent downmove as there was no more important volume on the previous top up moves... I dont know if you looked this video http://www.traderslaboratory.com/for...lume-1286.html it can be very usefull to know in witch overall context your small intraday trading can be (I trade a 22 tick chart, very small trading) but now I take into acct this daily context information, I can know more the general bias of the market... cheers Walter.

clicked on the link, can't watch the video!?!

[walterw]

ooops that video is for premium members...

[Nick1984]

and how does one become a premium member? Sorry for hijacking this lol.