[daedalus]

I had a few, ok, well a LOT of questions regarding volume. I just started using it in my trade setups a few days ago and it has revolutionized my entries and exits. However, I understand that I am still missing out on a LOT of information held within the volume histogram and I had some questions that maybe someone could explain to me.

I am interpreting price action and volume a certain way but I don't know if its the RIGHT way. ANY HELP WOULD BE APPRECIATED.

Charts are from yesterday and today's price action in the NQ on a 377 Tick chart. Using the Tick Delta indicator from the indicator forums. Its is merely the same as the stock TS volume indicator except it splits out the volume into buyer/seller dominated bars (thats the part i'm using effectively now). But i think the part i'm missing is in the amount of volume coming into various moves and the possible divergence patterns that are occurring right under my nose.

I'm a really big visual learner so i've tried to describe everything with charts that have key points labeled with numbers so hopefully we can explain the same inflection points on the examples clearly.

So lets get started!



I guess one of my biggest questions is how to accurately measure for divergence in the market. So i've tried to pick out inflections with obvious new swing high/lows in the market keyed up with the corresponding volume on those candles. Examples of this would be on the chart:

1-2, higher low backed with higher high in volume, thus, move is backed and higher highs are expected?

3-4, higher low with divergence lower low in corresponding volume, thus divergent behavior and new highs not expected. potential reversal?

8-9, lower low but with divergent higher high in volume, thus potential reversal?

Is there any logic wrong here? Am i looking at the right spots to measure volume?

Basically, should i be looking at volume in uptrends measured at the new highs or at the swing lows, and vise versa in downtrends?

Price action from today:



So again, should i be looking at volume when the move is making a higher high (the blue dots on the 4-5 move) or at the green dots on that same move? Now that i think about it really is coming down to one big question of where to measure the volume from. Because thats what I need to know to accurately interpret the volume at any level and right now i'm just kind of guessing off of what i know of price action.



so in the 3-5(not labeled but the next blue dot after 3) is a lower low in volume on a lower low in the price ok? Or is the real information on the 2-4 upswing that is divergent in volume indicating to stop buying after the 4 point?

I'm sorry if this is confusing or not clear. I appreciate all of your responses!!!

[BlowFish]

Have you tried using a smoothed tick delta indicator? It essentially changes it to a log scale and smothes it with an ema. You should be able to find one knocking around here somewhere. Let me know if you can't. It really shows up divergence a bit more clearly (though I should say it's not something I use but I am tempted to as it gives a pretty nice clear read).

There is a site that has a few videos on using a similar indicator for divergences but I am loath to list it here as they sell a version of the free one!! That really irritates me!

Here's a video on how a vendor uses "delta divergence" that I found on Google.


You can find the "free" version of this indicator elsewhere on TL.

-fs

[daedalus]

Thanks for the posts guys. I am aware of various vendors that do the delta divergence stuff, i understand that for the most part. The reason i'm showing the delta divergence indicator is simply that it is the same as the volume histogram, so the same kind of basic volume analysis should be possible.

[daedalus]

Heres TTM's full 90 webinar on the delta indicator which as you mentioned is available for download in the indicator section.

http://www.tradethemarkets.com/public/1721.cfm

[daedalus]

I should also mention that the youtube video mentioned refrences a different indicator than whats on my charts. The Tick Delta indicator is just splitting each bar into buyer/seller dominated on each volume bar. Delta Divergence (the youtube and TTM webinar i posted) is an entirely different indicator and idea than whats on my charts.

Originally Posted by daedalus »

I should also mention that the youtube video mentioned refrences a different indicator than whats on my charts. The Tick Delta indicator is just splitting each bar into buyer/seller dominated on each volume bar. Delta Divergence (the youtube and TTM webinar i posted) is an entirely different indicator and idea than whats on my charts.

That's nice to know .

I'm actually surprised that TTM hasn't snapped up the Tick Delta indicator and marketed it yet as their own indicator.

Investor R/T has a similar indicator called Volume Breakdown - more info, and a couple of videos here:

http://www.linnsoft.com/tour/techind/vb.htm

[BlowFish]

I wasn't thinking of the hucksters at TTM I was thinking of the huckster here. Actually some of the stuff that Malcolm is doing seems pretty sensible. But charging for versions of public domain indicators arrrrrrrggggggghhhhhhh.

http://www.futures-day-trader.com/pu...partment41.cfm

http://www.futures-day-trader.com/pu...epartment2.cfm

Lots of videos showing how to use the tool to detect divergence.

Try smoothing the delta as I mentioned I think you will like the result. It makes divergence much clearer (to me at least).