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

[Market Wizard]

Hi Level II

Tom has rewritten a new edition of the book -' The Undeclared Secrets That drive the Stock Market', althoug most of the text is the same, it has been updated slightly. As for the errors i dont think they were that bad.

But for any one wanting to understand thee principles of volume, then this is probably the best book i have come across on the subject. There are a lot of questions asked on this board about volume, i believe this book will answer most if not all of them. Although I have had dealings with Tradeguider, a company that Tom is not involved with, very very unprofessional imo,maybe they have improved since then but the rumours are still circulating within the VSA users circle.

 

[dbphoenix]

Generally speaking, it is a mistake to analyze price and/or volume bar by bar as doing so focuses attention in the wrong place. One begins to concern himself with what a particular price bar "means" or what a particular volume bar "means" or what a particular bar pair "means", much like many so-called "candlestick traders" focus on what a particular candle "means".

What matters is not a particular bar or bar pair since the bar is entirely a function of whatever bar interval has been selected by the trader. What matters is that which the bar reflects, i.e., buying and selling pressure. Given the extraordinary depth of bias amongst most traders toward signals and triggers and indications, tuning into this dynamic may be impossible for those traders. But it is just this dynamic which is the concern of those pioneers to whom traders often refer, e.g., Wyckoff, Livermore.

 

[JumpOff]

Because VSA was mentioned in one of the earlier posts on this thread, I looked it up (volume spread analysis). Those links led to the tradeguider chat on elite trader and I also looked at the tradeguider site. Although they talk alot about the relationship of price, volume, support, resistance, etc.. It seems like the real purpose of their software is to make you dependant on the software...

The other thing I don't like about just "following someone else's signal" -even if was based on some artificial intelligence interpretation of volume and price, etc.. is that everyone else who is using it is trading those signals at the same time. Since I'm new at this, my reactions are a little slow, and I expect that would just leave me following the herd.....

To me, the 'territory' was so cluttered with cartography that it was kind of hard to see the territory. And I also wondered about the results, look here:
http://www.tradeguider.com/charts/emini%205%20min%20(19th%20March)%20Chart8.jpg
This hypothetical trader did 3 round turns during a 15 point move - there can't really be much profit in that by the time you add in spread, commission, and something for the time you spent looking at the screen....?

The first entry was short and I see why they chose that point just on price action alone, (a run up that was losing steam and failing to make higher highs, showing tighter bars). Add in a fading volume and it just seemed like the thing to do. After that, there was good volume on the downtrends, quiet volume during the consolidation periods. I think I might have preferred to just let that trade go on until I saw some higher highs with decent volume.

Am I catching on?
JO

 

[Rognvald]

There is a context and a story as I see it. The story is divided into chapters, paragraphs and sentences and through these there is a gradual revealing of the plot - then the denouement.

The trading context is the instrument traded. The story is the progress of price/volume and each new aspect of it are points at which possible entries/exits are revealed. This meaning is not revealed in one word (bar) but usually in a number of sentences which have to be weighed in the light of what has gone before

Generally speaking, it is a mistake to analyze price and/or volume bar by bar as doing so focuses attention in the wrong place. One begins to concern himself with what a particular price bar "means" or what a particular volume bar "means" or what a particular bar pair "means", much like many so-called "candlestick traders" focus on what a particular candle "means".

What matters is not a particular bar or bar pair since the bar is entirely a function of whatever bar interval has been selected by the trader. What matters is that which the bar reflects, i.e., buying and selling pressure. Given the extraordinary depth of bias amongst most traders toward signals and triggers and indications, tuning into this dynamic may be impossible for those traders. But it is just this dynamic which is the concern of those pioneers to whom traders often refer, e.g., Wyckoff, Livermore.

 

[dbphoenix]

Am I catching on?
JO

If you're referring to the chart you posted, I can't say. These couldawouldashoulda charts that trade via Lucky Charms aren't terribly helpful, at least to me.

But then this thread isn't about how to use tradeguider. Why not try annotating and posting your own chart with just price and volume bars, preferably one you saw forming in real time (note that those earlier bars would have looked quite different in real time than they do EOD)?

 

[JumpOff]

spelling and grammar

OK - I'll give it a shot (even though i expect it will be embarassing). My best learning moments usually happen just after the JumpOff point. Seems like there are plenty of observers lurking around ready to laugh and hand me a pole so that I can at least pull myself out of the water if I get in over my head....

It will probably be a day or two. I belong to that unfortunate group that 'socrates' refers to as 'the people who keep the treadmill going.' I'll be back when I 've got this month's orthodontist bill paid
.
JO

 

[bracke]

JumpOff

I am looking forward to your price volume analysis, not to laugh at you but to learn from your correct and incorrect observations.

I have already done something similar earlier in this thread but I had the complete chart in front of me. It's only by doing the type of exercise that you are going to do that we have any chance of progressing along the price/volume route.

When you post your chart I intend to print it out and immediately cover up the later portion then analyse it to see if I agree with your own thoughts.

At least you know that there is one working with you.

Regards

bracke

 

[brys]

Oh well that was a typo. It should have read "laugh and hand me a pole." I meant that I expected those folks to laugh with me in a friendly sort of way, "oh yeah, been there, done that. Here JO, take the other end of this pole and come out of the deep end, your in over your head...."

Hi,

Don't let your ego (fear from being 'ridiculed' and being wrong) stop your learning process. Better to be wrong here than in the markets. ;-)

All the best!

 

[TheBramble]

Has anyone else taken a Price & Volume chart - analysed the action and THEN - inverted the volume bars and re-analysed it?

What results did you come up with?

 

[bracke]

Has anyone else taken a Price & Volume chart - analysed the action and THEN - inverted the volume bars and re-analysed it?

What results did you come up with?

What would be the point of doing it ?

Should one arrive at the opposite to the original anlysis ?

It would probably need to be done without one knowing otherwise it will likely bias the analysis.

Regards

bracke

 

[dbphoenix]

A couple more charts to chew on. OL = Opening Low. Previous charts are attached to posts 56 and 66 [now 46 and 56].

 

[bracke]

A couple more charts to chew on. OL = Opening Low. Previous charts are attached to posts 56 and 66.

The comments that you add to the charts appear so obvious when one reads them but I know that they are not so obvious to the untutored eye when the comments are not added.

May I suggest that when you next post a chart you delete part of it and invite comments on what happens next. You could then post the complete chart with your comments and we could see if we are correct with our own comments.

Regards

bracke

 

[dbphoenix]

The comments that you add to the charts appear so obvious when one reads them but I know that they are not so obvious to the untutored eye when the comments are not added.

May I suggest that when you next post a chart you delete part of it and invite comments on what happens next. You could then post the complete chart with your comments and we could see if we are correct with our own comments.

Regards

bracke

Sounds like a quiz.

Analyzing static charts is only the barest beginning. And even after analyzing hundreds of charts over many months, there is still the issue of being sensitive to the buying and selling pressures that create the bars in real time.

There's nothing special about these charts. They are merely a selection of the charts I print out every day, though I write my notes on the page rather than type them onto the image (the latter is done for posting). Therefore, any chart on any day can be annotated.

The purpose of the annotations, however, is only to give the interested trader some idea of what to look for in real time during and throughout the trading day. And if one is sensitive to the push/pull, volume bars are close to irrelevant, at least to someone who's trading in real time (volume bars are much more important to EOD traders).

Therefore, if you're trading in real time, make your notes in real time. If you wait, you may find that subsequent events answer your question, and the puzzlement you felt at the time will be forgotten. Note the puzzlement. Then, if the answer appears, note the answer as well. Waiting until the EOD to make your notes is of only marginal value without these real time jottings.

 

[bracke]

Sounds like a quiz.

Analyzing static charts is only the barest beginning. And even after analyzing hundreds of charts over many months, there is still the issue of being sensitive to the buying and selling pressures that create the bars in real time.

There's nothing special about these charts. They are merely a selection of the charts I print out every day, though I write my notes on the page rather than type them onto the image (the latter is done for posting). Therefore, any chart on any day can be annotated.

The purpose of the annotations, however, is only to give the interested trader some idea of what to look for in real time during and throughout the trading day. And if one is sensitive to the push/pull, volume bars are close to irrelevant, at least to someone who's trading in real time (volume bars are much more important to EOD traders).

Therefore, if you're trading in real time, make your notes in real time. If you wait, you may find that subsequent events answer your question, and the puzzlement you felt at the time will be forgotten. Note the puzzlement. Then, if the answer appears, note the answer as well. Waiting until the EOD to make your notes is of only marginal value without these real time jottings.

Fair comment and understood.

Regards

bracke

 

[Vorpal]

.
(volume bars are much more important to EOD traders).

Would it be possible for you to explain the reasons why volume bars are more important to EOD traders. Thank you.

Regards.

 

[dbphoenix]

Would it be possible for you to explain the reasons why volume bars are more important to EOD traders. Thank you.

Regards.

EOD traders aren't watching the charts form in real time throughout the day. So volume bars are all they have, unless they include intraday price action in their analysis.

 

[frugi]

Hi dbphoenix et al,

Thanks for an interesting thread.

My charting package only updates once a second so it is impossible to view a price bar change tick by tick (although it is possible to crudely "read the tape" by watching each trade go through on the IB interface). Do you think this compromises a daytrader's ability to read price action significantly enough to consider moving provider?

Thanks.

 

[TheBramble]

Frugi, the timeframe you trade is irrelevant.

Being able to use the price & volume data 'for that timeframe' is the goal.

As a personal observation, anything shorter than 5mins just appears as 'noise' to me. I'm sure this isn't the case for many other traders who simply couldn't live without the tick.

5min, 30min, EOD, weekly - it makes no difference. Volume is just as important in all timeframes.

 

[frugi]

Thanks Bramble, but I think you misunderstand my question.

Regardless of whether I am watching a 60, 30, 5 or 1 minute bar form in real time I was wondering whether it is necessary to see every single tick of data that forms part of that bar, or whether a snapshot every second is sufficient? Sometimes I am sure I miss important clues because I am not seeing every trade go thorough.

e.g at support I might see 100 lots go through on the offer in one second, but I do not know whether that's a big fella buying 100 or 20 little players buying 5 apiece because I am missing the individual trades that happen within that second. This could make a big difference as to what position I might take.

Guess I've kinda answered my own question there, but I'd still be interested in others' views. e.g Skimble has said in the past that she can tell who is in control by watching the ticker, i.e the wibbly bit of the current bar ticking up and down: would/could her interpretation be flawed by 1 second snapshots?

Does eSignal delivers tick by tick data? Or is there a time and sales type window for futures that I've missed?

 

[Trader333]

Frugi,

Who are you using as a realtime data provider ?


Paul