Finirama said:
All this bickering is boring.
Socrates,
As mentioned in PM i do not use volume analysis for trading and simply use price bar patterns. I have been reviewing my trades with the addition of volume and can see that it gives a more complete picture, especialy regarding tight range trading days.
Just some questions if i may.
1) Do you use daily bars and volumes for trading direction expentancy for the following day?
2) Do you hold positions overnight in expectancy/future flash of a gap in the way of the trade? If so, wot determines whether a gap is likely on the following day or not?
I have posted a day chart for you reference.
First of all stop squabbling, don't prod China, I am not having any of this from any of you.
Any nonsense of any sort and I submerge. Not in your case, Finirama, because I can see it was good natured.
When I say submerge it is to demonstrate the difference between a rowing boat and a nuclear submarine.
Right, here we go, all of you pay close attention:~
First of all I am not interested in the instrument or what it is or is not.
It must qualify on three criteria.
1. It must be a liquid instrument.
2.There must be continuity of liquidity.
3. The price must move.(there are instruments that are very liquid out of proportion to their movement).
Now turn your attention to the chart. Look into it carefully. Don't look at it. Look into it.
Look at the second bar. It has a narrow spread, but the volume underneath it underpinning this result is huge. It is the greatest recorded volume in the whole chart, is it not ? Here lies the clue from which all subsequent market action develops.
Now observe that the third bar opens, lifts a little bit(which is a trap) and then collapses to close at or near the low. Why is this ?
Simple. If the previous bar (2) with all that huge volume underneath to underpin it were buying
the bar that follows it(3) would have rocketed north would it not ? Instead the bar that follows
does the OPPOSITE of what is expected (this is an information shock delivered to the herd),
which confuses the audience, and as if this were not enough of a shock to freak everybody (!)
the next bar opens and without so much as by your leave rockets upwards !................and then, when everybody(?) is getting really bullish and the media is trumpeting without shame and the commentators are commenting without any understanding of what it is they are commenting about, Plop ! Down it goes, to the dismay and astonishment of all, and to the fury of those who are long.Look carefully at the volume under (4) it is lower, is it not ? in fact isit not the lowest recorded volume on this chart so far ? It is isn't it . Why do you think that is? There are 2 reasons not one. First reason the residual instrument has been unloaded onto uninformed buyers who were influenced by the chattering they were listening to instead of paying attention to what they should have been paying attention to which is contained within the second reason.
What is it ? See the volume. This gives us another clue this type of volume is CAUSATIVE.
I am pretty sure that most of the business was done in the morning, and earlier part of the day.
But there is not the response that there should be to take this significantly higher. So, it collapses and closes just above the opening. This marginal advance in the price improvement for so much work to try to lift it on preceding days is not a success, is it, notwithstanding the trumpeting, eh ? What do you think of that ? Because now, the price begins to seeiously lose ground, and fast. YOU SEE HOW THE USE OF TIME HAS CHANGED. First the time was being stretched, with all this dithering going on, now everything is happening very fast, is it not ? Why and how is the time being manipulated ? Simple. There is a rush to buy back the instrument at considerably lower prices. What this level could be is known in advance and a target set to achieve the level within a given time period which in this case is not less than 10 and not more that 20 trading sessions (or days). This target is achieved on the 10th day. On the 9th day,
observe that the price action displays a drop to the lowest level so far and the volume is low. Why? If you understand all of this you would wait in the expectation of even lower prices, wouldn't you ? You would mount a dawn raid to do your buying then, when prices had been marked down at the open, and everybody is frightened this may go to the centre of the earth and come out the other side in the middle of Sydney Harbour or thereabouts,. But if you truly understand what is going on with the price with the volume and how the time is being used(here we are talking of net present time only) you will arrive at the conclusion that this is an excellent opportunity to buy the instrument cheaply, especially of your use of time is differerent to everybodyelse's. You see. You may be beginning to grasp that all this is a matter of priorities in which timing is the essence. This timing is always described as being in net present time.
That is a correct assumption insofar as acting on a flash of recognition is concerned , but what happens when an outcome is known in advance, the use of time becomes different. And this is what is happening here?Therefore everyone is baffled.What is happening should not be happening ~ but it is. Why ? This is the consequence of having two time values muddled up, rather like you checking your watch against the speaking clock. Your wristwatch will still keep time and display it, however you would not become aware of the error until you checked it.
Supposing you have no speaking clock to refer to. would your wrist watch time not be adequate for most practical purposes ? Supposing you did not use a wrist watch at all but everybody els was obliged to use one. Can you now see how the value of time is different, and because its value is different, so its use is different.. Imagine what havoc could be wreaked
with peoples' schedules and expectations if the use of time could be tampered with without anyone noticing. It would be very confusing would it not ?On the 14th bar the spread is narrow again, the volume is heavier than the previous bar, the price touches its lowest low and then snaps up smartly. But now look and you will see not as smartly as the next time this happens in bar (16) here the close is on the high, even closing above the opening. Market conditions are now changing. However prices drift, and are allowed to drift down to exactly the same price level as that achieved by the first fall after the gap down in bar (14) and yet the volume is higher, and now prices begin reluctantly to lift. Why is the volume higher in bar(20) than in bar (14) ? This is mixed volume ~ part is causative by the price being driven down and part is subjective as a cocsequence of the low price attracting buying = activity = volume.
Ok, we can see as we get nearer and nearer to the end of the chart how low price levels become more infrequent and last less.Why ? Because the use of time has been changed again from causative to subjective, as the bull phase takes hold. Everything that works in one timeframe works in another.Everything that happens in one timframe happens in another.