China Diapers
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Volume for FTSE futures? Is there any reason to think that the volume figures reported for a single stock would be less accurate than the open/close price?
timsk
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Yes, I agree with CD on this.
If I had good reason not to trust my volume figures, then I would be equally worried about the validity of the prices of the instruments I trade. As I outlined in a previous post, I use cumulative delta - for which an accurate breakdown of volume is critical. I have complete faith in my data provider on this front and, if I didn't, I'd change my supplier.
If the OP - or anyone else - is investigating volume and trying to decide whether or not it can add something to their trading, I would say that worrying about the accuracy of volume shouldn't factor in their decision making process - beyond making sure that they have a supplier of quality data.
Tim.
kimo'sabby
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Personally i regard volume as the best indicator. In fact, i would suggest that there is nothing better in the industry to use.
You are not alone in that. If you did not, then I would question why you used it. I don't trust the figures, or the time that the volume is published, but that is my problem.
There we go, Tim. All very elastic stuff. It is either accurate or it isn't and we all know how trustworthy the brokers are! If the volume is published earlier or later and the price is reversing on publication, then a different perspective is put on the trade.
This all very debatable and my remarks are only an opinion.
I find the extreme high volume often accompanies one of the last candles in a trend before it reverses. A volume blow-off or whatever its called.
Other than that, I don't pay that much attention to it. A passing glance to see if it is either really low or really high compared to the rest of the day nothing more. Even then, it doesn't change my decision to enter or not.
For every large move on high volume i have seen on a chart, there is another that moved similarly on no volume at all.
Other than that, I don't pay that much attention to it. A passing glance to see if it is either really low or really high compared to the rest of the day nothing more. Even then, it doesn't change my decision to enter or not.
For every large move on high volume i have seen on a chart, there is another that moved similarly on no volume at all.
That was my primary concern when using volume, but if you do not use volume how do you know if is going to be a true breakout
You never know anything for sure. All I do is assess what happens to price, 9 times out of 10, when "that" happens. "That" being being any pin, pattern of any kind that attracts my interest. It is a statistical observation but any individual trade is just one of a group, the majority of which have shown a net profit in the past. That is why money management is essential. You must have enough capital for the group and be able to come back if that group proves a failure.
timsk
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Hi Split,
I hear what you're saying and, I agree in so far as volume data needs to come from a verifiable source. If one's using free data off of the net such as Yahoo, or data supplied by a SB broker (the same thing essentially as it's free) - then it might not be trustworthy. However, if one wants to use volume and it's essential to have data that's as current and as accurate as the accompanying price data, then it is available at a price. DTN.IQ - who is my data supplier - would go out of business in nano seconds if they supplied corrupt, delayed or untrustworthy volume data.
Tim.
I agree
TheBramble
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I used to trade a NASDAQ Lev-II environment with accurate volume and all the bells and whistles. However, the crap fills, slippage, partial fills, delayed orders, wrongly routed orders etc. were becoming a real pain and even though I was making money (at last), I jumped ship to trade FX, for all the right reasons. But, so dependent had I become on these tools and data, I felt I was trading blind and decided to endure all that crap again and go back to trading the NAS, just because I had gotten so used to the information supply. It didn’t take too long on that final foray to realise what a dream FX is to trade compared with pretty much any other asset class. And I let go all the superficial data, including volume and stayed with FX.
Volume data for FX is pretty meaningless for a retail player. You might just as well ignore it where it is provided.
But for exchange traded assets where accurate volume data is available, would I put as much emphasis on it as I used to? Probably not. While useful generalisations can be made about what volume ‘means’ within the context of price action, it’s still just another layer or veneer on the underlying
The biggest issue for me is one of granularity. When you look at a bar, whatever timeframe, and it says 100,000 volume for that bar. That’s a piece of data. For the entire bar. And in the context of a down trend which has been seeing steady falls and volume of max 10,000 per bar and this current relatively high volume bar is an up bar, that’s potentially interesting. And there might be a tendency to attribute all or most of that volume to the bar being up and even go further to deciding THIS is the reversal bar.
But when, during that bar, did the volume hit? Was it spread out with even distribution or did it hit in just one go, or over just a few transactions. And how much of this volume was up volume and how much was down? The closing price of any bar is simply a snapshot of the last traded price at a given point in time. What if 90,000 of that bar’s 100,000 volume was selling it down to the low of the bar and the last 10,000 came in in dribs and drabs, but designed precisely to make it look like it had been bid up?
Even if you get down to tick data which takes all the issues of granularity out of the equation, unless you have something like Lev-II as well, you’re not going to know for sure if it’s genuine or spoof or a blind. And even Lev-II isn’t going to guarantee you that information anymore. There’s too much that goes on ‘darkly’ to make it anything other than a mug’s game for a non-pro.
There’s a chap on here (a few actually) that know shed loads more than me about Lev-II and use it profitably. But I suspect, if you drill them for it (LOL) they’ll admit they bring a lot more to their trading than volume or even Lev-II to make it a profitable enterprise.
I don’t imagine it’s all game-playing so yes, volume can be a useful indication within the context of price action. But I certainly no longer consider it an essential part of the toolbox.
Volume data for FX is pretty meaningless for a retail player. You might just as well ignore it where it is provided.
But for exchange traded assets where accurate volume data is available, would I put as much emphasis on it as I used to? Probably not. While useful generalisations can be made about what volume ‘means’ within the context of price action, it’s still just another layer or veneer on the underlying
The biggest issue for me is one of granularity. When you look at a bar, whatever timeframe, and it says 100,000 volume for that bar. That’s a piece of data. For the entire bar. And in the context of a down trend which has been seeing steady falls and volume of max 10,000 per bar and this current relatively high volume bar is an up bar, that’s potentially interesting. And there might be a tendency to attribute all or most of that volume to the bar being up and even go further to deciding THIS is the reversal bar.
But when, during that bar, did the volume hit? Was it spread out with even distribution or did it hit in just one go, or over just a few transactions. And how much of this volume was up volume and how much was down? The closing price of any bar is simply a snapshot of the last traded price at a given point in time. What if 90,000 of that bar’s 100,000 volume was selling it down to the low of the bar and the last 10,000 came in in dribs and drabs, but designed precisely to make it look like it had been bid up?
Even if you get down to tick data which takes all the issues of granularity out of the equation, unless you have something like Lev-II as well, you’re not going to know for sure if it’s genuine or spoof or a blind. And even Lev-II isn’t going to guarantee you that information anymore. There’s too much that goes on ‘darkly’ to make it anything other than a mug’s game for a non-pro.
There’s a chap on here (a few actually) that know shed loads more than me about Lev-II and use it profitably. But I suspect, if you drill them for it (LOL) they’ll admit they bring a lot more to their trading than volume or even Lev-II to make it a profitable enterprise.
I don’t imagine it’s all game-playing so yes, volume can be a useful indication within the context of price action. But I certainly no longer consider it an essential part of the toolbox.
timsk
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Fran,
Check out these [Best Threads] for ideas. The 3rd and 4th threads are an obvious place for you to start.
Tim.
TheBramble
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Off topic from your OP but as you asked…
If price is consolidating, moving either within reasonably horizontal parallel upper and lower bands, or in a well-defined triangle (ascending/descending) stick a limit order slightly away from the boundary which will support a continuation after a breakout. So if the price had been moving up and is now consolidating either in a channel flat, tilted or triangle, a limit above the upper boundary.
If the price breaks out of the contra boundary (therefore not a continuation of prior price direction) then wait for a re-test on the boundary for new Support or Resistance and enter on confirmation.
In the example given of prior upward moving price, a break down through the lower boundary would require a re-test and confirmation of new Resistance for entry Short.
kimo'sabby
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Fair enough, but volume is only to be used as an indicator, theres nothing absolute in the figures. It's still the best indicator imo.
Going back to the thread, don´t you think that in the same example that you gave, if is reinforce by the volume will have bigger chance of succeed and possibly rise more than if no volume indication was present?
TheBramble
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No. Definitely not for FX and probably not for other instruments. For the reasons I outlined in my post.
hoodoo man
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So we know that stocks can move on heavy volume or light volume. Does this tell us enough to know whether volume can improve our trading odds?
Some people use volume, some people do not use volume. But all traders contribute to volume when they trade. How much account should we pay to people to tell us to ignore volume as it can't be understood (or it is too difficult)? If volume gave a big edge to those who understood, would we expect details of how to find it to be freely available on the Internet, or would it be a closely guarded secret?
Obviously if you do not have a plan for using volume for your trading it isn't any help to you, but could studying it pay dividends?
What sort of tests could we run to try and prove whether volume information is predictive of whether a stock will move up or down? What is our hypothesis, and how do we quantify this?
All the Internet discussions I've seen just have people looking at either "high volume" and justifying price action in hindsight based on the volume, or people arguing over whether volume has any merit at all.
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