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

[barjon]

bracke

You're right, of course. I think I probably confused matters with the example. The distinction I was trying to draw was between "sustained" pressure and "temporary" pressure and whether it was valid to try and draw such a distinction.

I notice you didn't deny the big yacht

good trading

jon

 

[dbphoenix]

sorry, db, thought you'd asked me as well.

btw you've covered so much in the past you must forgive us our frail memories

jon

It's not a matter of frail memory but of context. Writing a declamatory post or article out of nowhere is one thing, but addressing the particular questions of a particular individual are another. In the latter case, it becomes necessary to find out where they are. If Split doesn't understand what I'm talking about, then I haven't backed up far enough. Even explaining the nature of an auction market and the law of supply and demand may not be far enough. But, I do have things to do, and guessing where to begin is not the best use of my time. And going back too far may seem condescending. So, I'll leave all this on simmer while I take care of business.

--Db

 

[JumpOff]

Let's go back to your remark about there being no "buying" or "selling" volume. I am going to question that.
If we put the market maker on neutral ground, ....

That seems like a pretty big "if" to me...
JO

 

[erierambler]

erierambler

I agree entirely that the principles will always work and apply.

As to clues why buying or selling is taking place perhaps a few chart examples would be useful?

Regards

bracke

It is not so much as why, but what is happening at these areas. I posted a chart earlier for someone interested to study.

erie

 

[bracke]

bracke

You're right, of course. I think I probably confused matters with the example. The distinction I was trying to draw was between "sustained" pressure and "temporary" pressure and whether it was valid to try and draw such a distinction.

I notice you didn't deny the big yacht

good trading

jon

barjon

Whether it is valid to try and draw a distinction between temporary and sustained pressure probably depends on your trading time frame, whether it is possible to do so whilst it is occuring brings us back full circle I think.

I hereby totally deny the big yacht. As a committed land lubber and slight petrol head a suitable sports car would be more appropriate.

Just an observation but we appear to be suffering a 'moderation' (collective noun) of moderators on this thread. Perhaps we could have a competition to decide on the best collective noun. What about 'motley'

Regards

bracke

 

[Splitlink]

Ok, let me put the transaction onto the markeymaker's level. He may buy "X" number of stocks from me but only be able sell X-1 to you. The volume is, therefore, separated into two parts, of which my "buy" volume is the larger. If my stock is sold to the MM, I am not interested in who the final owner is going to be. That is the MM's business. Therefore, what the MM buys and sells is the important point, not what I or you do. The MM , now has the job of selling the rest of his stock and, if you have not bought much, you may see your price fall, even to the point where I may be interested again.

So, if we are to satisfy Db, we are going to have to decide what we consider a transaction to be. My decision is based on the amount of buying and selling volume that the MM does.

Split

 

[dbphoenix]

Ok, let me put the transaction onto the markeymaker's level. He may buy "X" number of stocks from me but only be able sell X-1 to you. The volume is, therefore, separated into two parts, of which my "buy" volume is the larger. If my stock is sold to the MM, I am not interested in who the final owner is going to be. That is the MM's business. Therefore, what the MM buys and sells is the important point, not what I or you do. The MM , now has the job of selling the rest of his stock and, if you have not bought much, you may see your price fall, even to the point where I may be interested again.

So, if we are to satisfy Db, we are going to have to decide what we consider a transaction to be. My decision is based on the amount of buying and selling volume that the MM does.

Split

Satisfying me is not the point. Rather the point is to be clear. "We" don't have to decide what a transaction is. I'm interested in how you define it since you brought up the issue.

Do you consider your sell to the MM to be a transaction?

--Db

 

[Splitlink]

Satisfying me is not the point. Rather the point is to be clear. "We" don't have to decide what a transaction is. I'm interested in how you define it since you brought up the issue.

Do you consider your sell to the MM to be a transaction?

--Db

I have a feeling that I'm in the doghouse. The rest of you are probably laughing your heads off.

Yes, I do and what he sells on to someone else is another transaction. But it is only a suggestion and useless if there is no way to find out, with fair accuracy, what the figures are.

So my next question- where are these figures obtainable or how can they be calculated? There is no need to come back with another question. You, who have obviously spent a lot of time on the study of volume, must have a good idea of whether it is possible to obtain these figures or not. I suggest that they are not, with any accuracy, and I do believe that total volume figures do not give the whole story.

Now, before I get accused of starting another argument, I'm going to stand back and listen to what the others have to say.

Split

 

[dbphoenix]

You already know what the figures are with regard to your transaction. If you offered 1000 shares for sale and someone bought them, then for each of the shares you offered for sale, there was a corresponding buy. There was no "buy volume" nor was there "sell volume"; there was simply trading activity. If you offered your shares at a premium and the buyer was willing to pay that premium, that is simply a characteristic of an auction market. Ditto if you had to cut your price in order to unload your shares. The number of shares exchanging hands was exactly the same.

As for what the buyer does subsequent to your sell, that's none of your affair directly since you are not involved in the transaction. You can observe the trading activity and its effect on price by watching a chart or time and sales. You can then choose to become involved in the process or not.

Incidentally, your introduction of "belief" into the equation may account for your difficulties. If you make your choices based on belief rather than evidence, then debate is largely pointless, much less argument.

--Db

 

[Splitlink]

You already know what the figures are with regard to your transaction. If you offered 1000 shares for sale and someone bought them, then for each of the shares you offered for sale, there was a corresponding buy. There was no "buy volume" nor was there "sell volume"; there was simply trading activity. If you offered your shares at a premium and the buyer was willing to pay that premium, that is simply a characteristic of an auction market. Ditto if you had to cut your price in order to unload your shares. The number of shares exchanging hands was exactly the same.

As for what the buyer does subsequent to your sell, that's none of your affair directly since you are not involved in the transaction. You can observe the trading activity and its effect on price by watching a chart or time and sales. You can then choose to become involved in the process or not.

Incidentally, your introduction of "belief" into the equation may account for your difficulties. If you make your choices based on belief rather than evidence, then debate is largely pointless, much less argument.

--Db

You must, surely, realise that my 1,000, or 10,000, shares is like piddling in the ocean. I need to know what the bigger traders are doing and, even that, is likely to be calculated guesswork.

You seem to be concerned about my "beliefs" but I'm not on here for a pyschological assessment. You wanted questions and I am asking them. But my beliefs are turning into a definite conviction that we are both wasting out time with each other, so I'll see you around.

Split

 

[dbphoenix]

I need to know what the bigger traders are doing and, even that, is likely to be calculated guesswork.

Split

While I don't know why you "need" to know what the "bigger traders" are doing, there's no guesswork involved. Just observe the amount of trading activity and its effect on price.

Clearly, however, you want more. You believe that there is some "story" to which you're not a party, and until you know what this story is, you can't make a trading decision. This is not much different from barjon's belief that (1) one can determine the difference between "sustained" pressure and "temporary" pressure, and (2) once having determined this, if it is possible to do so, one can predict the course of price, or at least that this knowledge will have something to do with the decision to trade or not trade.

In any case, you're defining "volume" in a completely different way than the thread does. Therefore, it is unlikely that you will receive satisfactory answers here to whatever it is you want to know. This doesn't mean that your definition is incorrect in some absolute sense, but you're more likely to get information that is useful to you from like-minded people.

--Db

 

[barjon]

............... This is not much different from barjon's belief that (1) one can determine the difference between "sustained" pressure and "temporary" pressure, and (2) once having determined this, if it is possible to do so, one can predict the course of price, or at least that this knowledge will have something to do with the decision to trade or not trade.......

--Db

Not a belief, I merely posed the question as to whether it is a valid distinction to try and draw.

jon

 

[dbphoenix]

Since you "keep testing a volume factor" in your trading, this suggests that you believe that (a) these differences exist, (b) they can be detected, and (c) if detected, used in some way. But this interpretation may be off the mark.

However, like everyone else who studies this factor, you have to decide exactly what it is you mean by "volume". So far, I haven't found any evidence that ascribing motive to volume is of much help when making a trading decision, but you never know.

--Db

 

[timsk]

However, like everyone else who studies this factor, you have to decide exactly what it is you mean by "volume".
--Db

Definition (Traderpedia):
"The number of units of an instrument or market traded during a defined period".
Does it really need to be any more complicated than this?
Tim.

 

[barjon]

Since you "keep testing a volume factor" in your trading, this suggests that you believe that (a) these differences exist, (b) they can be detected, and (c) if detected, used in some way. But this interpretation may be off the mark.

However, like everyone else who studies this factor, you have to decide exactly what it is you mean by "volume". So far, I haven't found any evidence that ascribing motive to volume is of much help when making a trading decision, but you never know.

--Db

Db

As I said to Bracke, I think I confused the issue by a bad example - I've not been trying to ascribe motive. The volume readily available to me is the number of shares traded in the time period (daily for me in the main). I have a sneaking feeling that volume to price rather than time period may assist in relation to S/R, but that's not readily available.

So far as "volume factors" are concerned, I have not found it makes a significant difference if volume falls or rises during a correction (retracement), nor if there is high or low volume after a swing low, nor if the swing low occurs on high or low volume - to mention a few I have looked at over my past 100 trades. In looking I have tried to see both volume and price movement as a piece and as a continuum. As I said, that I have failed to find any significance is probably down to my poor analysis and lack of understanding - if I have a belief, it's that volume must be significant, but I'm having a hard time proving it

good trading

jon

 

[frugi]

So far, I haven't found any evidence that ascribing motive to volume is of much help when making a trading decision, but you never know.

With respect, I am inclined to disagree with this statement, db, although I lack vital evidence.
Surely volume is created purely because traders are realising their motives in the market? Understanding volume in the context of how the various counterparties might be feeling at the moment of each transaction may be key to predicting price movement. Two volume bars of the same length may look exactly the same on a chart, but the result of the transactions involved may be very different, depending on the particular intent of those involved at the time. So although they may not lend themselves to useful analysis in hindsight, that is not to say an appreciation of the motives involved at the time they were formed could not lead to some insights. I think.

 

[dbphoenix]

So far as "volume factors" are concerned, I have not found it makes a significant difference if volume falls or rises during a correction (retracement), nor if there is high or low volume after a swing low, nor if the swing low occurs on high or low volume - to mention a few I have looked at over my past 100 trades. In looking I have tried to see both volume and price movement as a piece and as a continuum. As I said, that I have failed to find any significance is probably down to my poor analysis and lack of understanding - if I have a belief, it's that volume must be significant, but I'm having a hard time proving it

good trading

jon

If you fail to find significance, then the reason may very well be that much of the "common wisdom" just doesn't hold water.

Take, for example, "heavy" volume on pullbacks/retracements/corrections/whatever. This is supposed to be "bad". But if one looks at volume as trading activity rather than try to ascribe motives to it, that "heavy" volume simply means a lot of activity. What matters is the effect on price. If there's a lot of activity but price won't fall past a marginal amount, what does that tell you? What if there's very little "volume" on the p/r/c/w? And what if there's "strong" volume when price recovers from the p/r/c/w? This is supposed to be "good". But what's the result of all that activity? Is there a nice fat bozo? Or does price limp along with bear tails? Does it stall at the top of the p/r/c/w?

You may have noticed that I've stopped using volume on my intraday charts, and I've wondered if perhaps I ought to suggest that beginners also not use it on intraday charts. Perhaps they might understand the dynamics of buying pressure and selling pressure better if they focus on price and the extent and pace of movement and not look at "volume" at all. Granted, this entails actually watching the bars form, but there are at least two programs that now offer replay, so doing this at night and on weekends is no longer problematic.

As for EOD charts, one can get a sense of movement by factoring in some sort of intraday chart, perhaps 5m, 10m, whatever. This was difficult for the rank-and-file until a few years ago, but intraday charts are now widely available, free.

In any case, that you have found the claims of common wisdom to be not necessarily significant does not mean that there is no significance. It may mean only that the significance lies elsewhere. You seem already to have begun to find it.

--Db

 

[barjon]

db

thanks

jon

 

[SOCRATES]

If you fail to find significance, then the reason may very well be that much of the "common wisdom" just doesn't hold water.

--Db

I agree.

 

[RUDEBOY]

Hello Barjon. I don't if this is the type of answer you were looking for, but here goes. Looking at a daily chart at the end of the session, if the price was generally moving up mid-term and the volume was evenly split, then the supportive volume would outway the resistive because of mid-term price movement and because of the mid-term volume. It is quite hard to explain and what i have just said doesn't really mean much on it's own. I suppose if a person is going to trade PV then they have to take into consideration every timeframe no matter what timeframe they are actually trading. Sorry if this makes matters worse. Sincerely. RUDEBOY.