[Susana]

Originally Posted by DbPhoenix »

Nothing more than what I said in my previous post. Is there anything in particular about Wyckoff's views on volume and on buying and selling pressure that you disagree with?

I'm a pure price action trader, no indicators, no volume except for what I get from using constant volume based bars and a little market profile examination.

Volume to me is something that sometimes makes sense, but only if we are at key areas, and other times it only makes sense after the fact. It actually affected my performance, so I simply dropped it and just use price because well, I do better just with price. I'm sure many like you, can use it to their advantage, unfortunately I never managed to find consistent gold in volume.

I take this opportunity to thank you for your posts, fantastic work, you deserve all the accolades, I truly mean that.

[DbPhoenix]

Originally Posted by Susana »

I'm a pure price action trader, no indicators, no volume except for what I get from using constant volume based bars and a little market profile examination.

Volume to me is something that sometimes makes sense, but only if we are at key areas, and other times it only makes sense after the fact. It actually affected my performance, so I simply dropped it and just use price because well, I do better just with price. I'm sure many like you, can use it to their advantage, unfortunately I never managed to find consistent gold in volume.

I take this opportunity to thank you for your posts, fantastic work, you deserve all the accolades, I truly mean that.

You are not alone in making sense of volume only intermittently. Many people misunderstand it. Many others don't understand it at all. But this is not surprising since so much misinformation about it is circulated here and there.

Volume is simply a record of transactions. It has no other meaning. It is not an indicator. It is not a predictor. It doesn't do anything. If volume is high, both selling interest and buying interest are high. If either of these is low, volume will be low. If, as you state, buying interest is "zero", there will no transactions at all and thus no volume.

Again, the example which prompted this arc shows that both buying interest and selling interest have recently been very high, i.e., volume is high. The fact that buying interest could not prevent the continued fall of prices shows that it is not as strong as selling interest. Some traders will find these facts regarding the relative strengths of buyers and sellers to be important. Some will not.

Those who are interested in pursuing the subject may find the attached pdf regarding "volume studies" informative:

[Susana]

Thank you for the PDF file, will read it.

[DbPhoenix]

I don't know exactly where to put this, but since understanding it is key to trading "the Wyckoff Way", here is as good a place as any.

Looking at the markets of yesterday, today, and projecting that look into the future, it is evident that markets themselves do only three things after taking into account their basic buying and selling functions. Their products rise in price, they fall in price, or they move sideways in price. If these are the only three things that they do, then in a nutshell we have the answer to what to concentrate on in market analysis. We dissect and study every price, volume, and time action using whatever knowledge we have to analyze each price rise, each price decline, and each sideways movement. This gives us the most meaningful direction to follow in our analytical efforts and takes us to the highest levels (again a personal opinion) of Technical Analysis. We will also find that behind a great deal of classical writing is this same focus, analyzing physical aspect after aspect of every rise and every fall.

When we take a close look at the classical period that began with William Hamilton's The Stock Market Barometer in 1922 and ended with William Dunnigan's One-Way Formula for Trading in Stocks and Commodities in 1957, there is one common thread that links just about every technical work produced in that period. That single thread was that their analytical methodology dealt directly with the reality of physical price, volume, and time. For better or for worse (and this writer says "for worse"), the emphasis on reality of past years has given rise to a great deal of emphasis on fantasy today. Price, volume, and time are physical realities to deal with directly; moving averages, oscillators, momentum indicators, and the like have no physical existence on the charts—they are mathematically formulated lines or fantasy lines that have no reality. We find that Divergent/Convergent lines have a basis and often work beautifully, but on the whole fantasy lines should be seen for what they are. That most fantasy lines of today were known to the great market masters and generally ignored by them speaks volumes.

--Donald Mack

[firewalker]

A recent report out of MIT, analyzing world oil production and consumption, also concluded that the basic fundamentals of supply and demand could not have been responsible for last year's run-up in oil prices. And Michael Masters says the U.S. Department of Energy's own statistics show that if the markets had been working properly, the price of oil should have been going down, not up.

http://www.cbsnews.com/stories/2009/...n4707770.shtml

Comments?

[tune]

Originally Posted by firewalker »

Comments?

http://www.traderslaboratory.com/for...y-its-own.html

[atto]

They're confusing supply and demand of the actual commodity with supply and demand of the futures. There's a difference, and they don't make a clear distinction (as it sounds better without).

...theoretically priced according to supply and demand doubled from $69 a barrel to nearly $150
Theoretically? Huh? No, it was actually that much. Sorry if your models didn't work.

[They] were the first to notice the effects a few years ago when prices seemed to disconnect from the basic fundamentals of supply and demand
Prices can't move without supply and demand, so here's the confusion. They see "less oil selling in the marketplace" (lower demand) and "refineries producing more" (more supply), but see rising prices, so "price has disconnected with supply and demand".

Let's examine the flip side. Without futures, companies can't hedge their risk, so have to sell at market for whatever the price is. There's debate as to what causes more volatility, so here's an article from another view, questioning if institutional, investment, and speculative funds have increased prices and volatility: http://www.ft.com/cms/s/0/70026d22-4...nclick_check=1 . If you're into this, look into what happened to the Onion when futures trading on it was banned.

[BennyHey]

Great post otto, right on.

Could not have hit the nail more on the head. Lets look at the tape from the run-up in oil futures. I'll bet there were more people buying then selling