Price, (Volume), Support, Resistance, Demand, Supply . . .

[aricho]

Db, if its not too much trouble for you, could you please post some charts and solutions like you did earlier on this thread? i found them very useful, but still i need more practice..

If you cant do that what do you think i should do to improve my price and volume analysis?


Thanks

 

[Splitlink]

good idea
who will start? haha

Have you got a chart i could have a go at?

I get the impression that you do not have access to charts. I use Chartscope which deals with UK stocks. If you have any stocks in mind I could post them for you but they are daily.

With due thanks to Db for his interest, I am keeping an open mind on volume. Yesterday's short of SDR is getting near my stop level. I mentioned that I shorted for other reasons than the volume issue and if it does not work soon "otra cosa, mariposa" as the Spanish say, and my stop will take care of it.

One thing I would say, though. We are in a strong bull market. No one should be shorting stocks- that goes for me! But it is only an opinion.

Split

 

[OpenMind]

I will have a go. This is one of my past trades which did not succeed. The first chart is a long term picture and the second one is for the medium term. I thought there was a good breakout in January 2005. But the stock did not fly at all. It became very inactive and I sold it after some time.

My question is what did I do wrong? How can I tell if a breakout is going to be successful or not?

I admit it is not one of the 'what do I see?' and 'what happens next?' questions I was talking about. But I would be very interested to learn from the experts on this particular example.

 

[dbphoenix]

As for what you did wrong, given what I see, nothing. You play the hand you're dealt and you do the best job you can.

As far as "knowing" what happens next, that involves testing. But every time that particular subject is introduced, a flamefest results. Therefore, it belongs in a separate thread.

As for examples, the following two threads contain plenty, as does my book. The charts contained in these threads are getting a little creaky, but the principles don't change.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=29005

http://www.elitetrader.com/vb/showthread.php?s=&threadid=33766

 

[Spcboe]

Based on my experience with those who claim to be interested in this, a prerequisite of understanding is the acceptance of certain postulates, i.e., that support and resistance exist, that there is such a thing as trend, that there is usually intent behind price movement.
--Db

DB, not sure what you mean when you say, "there is usually intent behing price movement."
Could you explain this. Thanks. And thanks for all the good posts.

 

[dbphoenix]

"If one is convinced that S/R and trend are figments of the imagination and that price movement is random, then this approach is not for him."

--Db

 

[Christrader]

Hello,

What is everyone's opinion of Tom William's - The Undeclared Secrets That Drive the Stock Market ?

thanks,
christrader

 

[neil]

From the "Search" facility

Hello,

What is everyone's opinion of Tom William's - The Undeclared Secrets That Drive the Stock Market ?

thanks,
christrader

Under the "Discussion" tab above I typed in the box marked "Search" the name "Tom Williams" and came up with:

http://www.trade2win.com/boards/search.php?searchid=570190

You can search further from those posts. Try a search on "Tom Williams" at www.elitetrader.com as well. :|


Sharkey - perhaps we could do with a more obvious "SEARCH" button at the top of the page :?:

 

[dbphoenix]

Someone was asking about this earlier. It's the flipside of posts 438-440 [now 368-370]. Beats guessing.

 

[aricho]

I get the impression that you do not have access to charts. I use Chartscope which deals with UK stocks. If you have any stocks in mind I could post them for you but they are daily.

With due thanks to Db for his interest, I am keeping an open mind on volume. Yesterday's short of SDR is getting near my stop level. I mentioned that I shorted for other reasons than the volume issue and if it does not work soon "otra cosa, mariposa" as the Spanish say, and my stop will take care of it.

One thing I would say, though. We are in a strong bull market. No one should be shorting stocks- that goes for me! But it is only an opinion.

Split

haha yep

I'm still on hand drawns :cheesy:

but yer someone should start a new thread with price and volume analysis with lots of examples

cheers

GO AUSSIES

 

[dbphoenix]

i dont mind as long as people post charts so i can learn....

Thanks

You've been through the ET threads already? . . .

--Db

 

[rossored]

OK I have just been through this thread and delivered a heavy pruning to those posts which, imo, add nothing or very little to the content. This includes a lot of the "thankyou" posts etc and it unfortunately means that with 105 posts in total deleted, the references to post #xyz in some posts will be screwed - not a lot we can do about that i'm afraid. Hence, if in an existing post someone has said "look at post #333" and I've binned what was #331 and #332, then post #333 will now be post #331. OK?

Some people (aricho, openmind and others) will find that I've deleted some of your posts which again I felt added little to the thread for those people who may be trawling through this thread. Its nothing personal, I just wanted to try and bring it back on topic and tidy it up (i've also deleted some of mine if it makes you feel any better )

If anyone has a issue with anything I have done, then please PM me and I will attempt to sort it out.

Thanks.

 

[Dow Dog]

Ok, so for all you price volume guys and gals, this post may seem a bit odd but I would like to test you all and ask you a question which goes as follows :-

If you are into price and volume, which one do you look at first and which one do you go to to confirm your analysis ?

Me ?

I always look at volume and when I see the volume pattern that I want , I then look at the price pattern to see if it looks as good as the volume pattern suggests it might be.

Does anyone else do it this way ?

It does work by the way.

 

[cj12]

Hello all I don't post much these days. But I will give my view on volume

Traders get to wrapped up in volume. Im my opinion you don't need volume if you scalping the YM or S&P for small amount of points sometimes volume can confuses you.

I look at volume but its not my number one tool for making a trading decision. I like looking at other markets in relation to one another. Show me a chart where volume have help you get in trading the YM.or S&P

It all about understanding weakness and strength in relation to other markets.

Strength or weakness in the Dow transportation index, when you have discrepancy in the two, the divergence pinpoints strength or weakness-generally in the direction of the transport.I also look at the bond market for clues

Also look for if the Dow or s&p takes hours to rally say 60 points and then it sells of 40 points in about 5 mins or so. That kind of explosive burst is important because it indicates that the market has touched the highs of the day. On the slow breaks the market will generally regain strength and move higher

When you see the spike its time to position yourself for the move to come. A lot of traders miss the mark at this point because they don't understand what's happening. as the public so called indictors say not ready yet, then when they all line up. Its time for pro traders to get out.

I use volume different form most of you. I like see heavy volume at the end of a move, I then trade the opposite of everyone else.

CJ

 

[Trader333]

It all about understanding weakness and strength in relation to other markets

This may be applicable in trading indices but it is not the case when trading stocks when trading by price and volume. It has much to do with available supply and corresponsing demand at a given point in time and what is available of that stock to trade. It has much to do with accumulation and distribution and an understanding of the mechanics involved in this process.


Paul

 

[cj12]

Trader333

My view is base on indices trading I agree with you thoughts on trading stocks. But my point was there is no need to get wrapped up with volume based on trading indices. You will never know who the big players are, when it comes to volume it wont show up on the mini YM and the mini S&P.the big numbers are still played out in the pits. The only way to know what the commercials are doing is stand in the s&p pit remember it is nothing for an offer of 5000 lots on one order in the pits by the big commercials, How can you tell whether the big commercials and arbs are moving the market? Just look at volatility on the day You also want to take note of the direction of the market.

CJ

 

[dbphoenix]

I hope I've made it clear to those who've read the entire thread, or at least most of it, that "volume" is not some quantity attached to some arbitrary bar interval with a beginning and an end. Rather it is trading activity. In fact, one need not even plot "volume" in order to get a sense of trading activity in real time, intraday (more difficult on daily/weekly charts). Forex traders in particular will understand this.

The issue is not so much volume or demand or supply but of potential support and resistance and what happens there. If nothing does, then the propects are not as attractive as they are when the caca hits the fan at those levels. This is not to say that opportunities can't be found when it's slow, but they seem to knock more often and more insistently when players are actually playing than when they are falling asleep or waiting for lunch or the closing bell.

 

[OpenMind]

Hi DBPhoenix,
I have started to read your main discussions on the Elite Trader website. I can see a long and hard road ahead for anyone who wishes to learn this type of trading.

When I look at your charts, it seems so easy. When I look at my UK stock charts, it often seems extremely difficult. (It's like watching the Brazilians play football: looks so easy, but just try playing like that...). I really struggle to see any pattern in many cases. Some of the signs are easy to spot: e.g., breakouts on heavy volumes, reduced volume on pullbacks, long bullish candles on good volume etc. But many stocks (on my daily charts) do not seem to follow any pattern at all, they continue to rise for ever on low volumes, pullbacks are on heavy volume but they do not last and so on.

Is it something to do with the market? I.e., do price-volume techniques work better in certain markets than others? Or is it a question of me giving it much more time before I start to see the patterns in any given market?

One more question: how long did it take you to master this art? I know it's a long and hard road, but it would help me to some extent if I know what timeframe I am looking at, e.g., couple of years, ten years, more...?

Sorry if this is a stupid/irrelevant question.

 

[dbphoenix]

The easy answer to your second paragraph is to trade only those signals that are easy to spot. But as for the specifics of the relationships between price and volume, I'd have to see examples. Sorry.

As for having to do with the market, yes. Due to the enormous increase in funds, arbing, hedging, whatever, the volumes on the indices are largely irrelevant, maintaining a consistency that they didn't have thirty years ago. However, I'm not sure what you mean by "price-volume techniques". Perhaps you're trying to apply what you believe you learned in one timeframe with another timeframe that's inappropriate. If, for example, you were to look at Farley's book, you'd likely think that it all looks pretty clear and relatively easy. But nearly all his examples were taken from a narrow window during the bubble period of five years ago. Applying all of that to today's market would likely be problematic. More helpful might be an examination of the '94 market.

As to mastery, probably never. To master this means mastering human behavior, and few people are capable of that. Understanding it well enough to take advantage of it, however, is another matter. I've said that I trade fear, but many people couldn't care less about that. They have no interest in it. And whether or not they can apply the principles of trading by price without being interested in trader behavior, I have no idea. I should think it would be very difficult. But I haven't done a study of it. It does seem, however, that those who think it's all baloney would never even try.

In any case, it'll take more than a weekend seminar . . .

--Db

 

[timsk]

OpenMind and Others New to P/V

Hi DBPhoenix,
One more question: how long did it take you to master this art? I know it's a long and hard road, but it would help me to some extent if I know what timeframe I am looking at, e.g., couple of years, ten years, more...?

Your question amused me because my wife often asks me how long it will be before I'm a consistently profitable trader. Each time I explain to her that studying the markets to learn this art/craft of trading is not the same as going to uni' to gain a degree in - for example - Town Planning (her profession). It's not a course in which the bare minimum of work is rewarded with a degree or diploma followed by a job on the lower rungs of the career ladder. Each person must follow his or her own path: some will be profitable within months, others in years and some in decades.

On a positive note, like you, I'm new to the study of price and volume. However, I can say categorically that my (limited) understanding of this relationship has, in a matter of months, increased my knowledge and added to my skills in a way which I'm confident will be reflected positively in the bottom line when I apply it to my trading. Even if all you do is spend a day or so reading this thread, you may pick up one or two ideas that are of benefit to you. Thinking about the mountain that you have to climb to "master this art" will only neg you you out. Focus on the immediate step that you can take right now. For me, reading the entire thread from start to finish was too bigger step, so I trimmed back the size of the task in hand and just read dbp's posts. Don't focus on the enormity of what lies ahead and the time it will take: focus instead on a bite size chunk that you're comfortable with and that you can start now. In my experience, the rewards come sooner than you expect. 'By the inch it's a cinch; by the yard it's hard'. Enjoy your journey.
Tim.