Volume tells all

[new_trader]

Yes, the professionals frequently make money at the expense of the public. Yes, the professionals generally do not make the same basic mistakes as the public. Yes, the professionals generally have far superior discipline.

However, I think you are presenting a false dichotomy here. The public can be "right" also - think of every bull run - when the public become interested in stocks again and buy them, this is during the period that the price is going up. At the exhaustion phase of every bull move, most of the public are buying from the professionals who are unwinding their positions. However, that is not to say that the public who bought on early bull tips and held for a few years (and sold well before the top) can't profit.

I suppose what I am trying to say here, and not doing it particularly elegantly, is that professionals can be wrong and the public can be right. I'm sure it is a given that the public are "wrong" on balance, and the professionals are "right" on balance. However, trading against the public isn't a system in itself - in fact, trading against the public can get quite dangerous.

I think it is important to study the mistakes of the unsuccessful traders, and to learn to use as many of the professionals advantages as you reasonably can without actually being an institutional trader. The ultimate weakness of the professionals is a large line, which can't be bought without putting up the price on themselves or sold quickly without destroying the value of their position. The "cattle" have the advantage of being nimble.

Just some ponderings ... sorry, I'm waffling now.

Someone once said to me that the time to sell stocks is when "Everybody" is talking about buying them. "Everybody" was talking about buying stocks just before the Tech boom crashed around 2000/ 2001. The public is always wrong.

 

[berbo]

Hello,

Just wonder if anybody on this board is using Marketvolume..Technical Analysis QQQ Trading Nasdaq 100 Stock chart S&P 500 market timing system
Your insights would be appreciated.
Berbo

 

[BearClaws]

Yes, I try to look at volume but not in isolation.
You cannot look at volume alone can you as it can change in response
to good/bad news for some stocks. After saying that, Volume is one indicator I do use
when I look at buying or selling a stock combined with my trading strategy.

My problem here in the UK is that some platforms do not give the client the best data
to work with.
I am finding my current broker is cheap commission wise, but lacking in features
I really like to use when actively trading.

Time to find a better broker I realize.
Anyone know a good, cost effective online broker who supplies level II data,
low commission fees, market depth,volume weighted average prices and direct market access on all the major exchanges.
I trade mainly UK stocks but I think most worldwide exchanges are tradeable now.
Oh yeah...and they must have a good trading platform.

I would be interested to hear peoples recommendations and why.
I am not a professional trader as such but willing trying to trade like one.

Cheers.

Yes it is easy with hindsight, but I can read the live edge, and have 65 people to prove it. I gave a commentry on a seminar and it was almost as if the market(SP500 emini) was waiting for my que, I have many years experence which is not easy to come by, just hard work marking charts every day for months and years.

Sometimes you can find me on the tradeguider seminars on a wednesday, I do not work for TG, nor am I paid by them, but I do help out from time to time as I have had the software since 1996, originally VSA by Tom Williams a syndicate trader in Beverly Hills, so I am not trying to sell you anything. I am trying to bring your attention to a little overlooked indicator which no one ever seems to take notice of.

Jesse Livermore once said the ticker tape was a crystal ball for those who could read it.

sounds like somthing i read a while ago called "don't tell the professionals" am i right? sorry, but I never heard of this.

Kind regards

 

[Slapshot]

Someone once said to me that the time to sell stocks is when "Everybody" is talking about buying them. "Everybody" was talking about buying stocks just before the Tech boom crashed around 2000/ 2001. The public is always wrong.

Spot On!

 

[firewalker99]

Spot On!

Not always, for instance when the public is buying stocks like mad in the end of the bull market (parabolic rise), they are not necessarily wrong. After all, price is rising. Of course they are buying far too late, but I hope you get my point.

 

[DC STOXX]

Also remember that volume can often be BS!

What if we are at a key level & choose i trade loads of size there with myself or the guy sitting next to me to make it appear somebody is accumulating a large position here long or short, while realistically getting on the other side, or just doing nothing but squeezing the "not so good" traders around us...

What I'm trying to say is that I don't find it useful the look at the volume on the small scale, short term perspective

 

[Slapshot]

Not always, for instance when the public is buying stocks like mad in the end of the bull market (parabolic rise), they are not necessarily wrong. After all, price is rising. Of course they are buying far too late, but I hope you get my point.

FW, I see your point, perhaps I should have expanded a little.

The public or the herd, uninformed or misinformed masses or whichever you wish to call them always get sucked in at the top of a bull move. The reasons for buying like mad as you describe it is from the the fear of missing out and the belief that the price is going to the moon. All the news stories will be good, the TV will be reporting the gains. So in answer to your post, yes it's clear why they're buying but ultimately they're been sucked into poor postions by the professionals. It happens time and time again.

IMO a contrarian view of the market is healthy and the ability to spot weakness in the chart a skill that needs to be learnt, something which is not easy.

Cheers

 

[firewalker99]

FW, I see your point, perhaps I should have expanded a little.

The public or the herd, uninformed or misinformed masses or whichever you wish to call them always get sucked in at the top of a bull move. The reasons for buying like mad as you describe it is from the the fear of missing out and the belief that the price is going to the moon. All the news stories will be good, the TV will be reporting the gains. So in answer to your post, yes it's clear why they're buying but ultimately they're been sucked into poor postions by the professionals. It happens time and time again.

IMO a contrarian view of the market is healthy and the ability to spot weakness in the chart a skill that needs to be learnt, something which is not easy.

Cheers

Good post

A contrarian view is indeed the most preferred one. With that in mind, think about where the VIX currently is in relation to what the stock markets did over the last month.

 

[Rvlv]

Seeking info on tradeguider from VSATRADER

Hi VSATRADER,


Tradeguider came a long way.
You must have had a long experience in vsa line of action.

Please enlighten us as on today, in what best way tradeguider can be used for swing trading of shortterm,say week to many weeks.

What kind of simple thumb rules we can use before buying stocks,when using tradeguider as a guidance tool?

thanks in advance,
rvlv

 

[Slapshot]

Hi VSATRADER,


Tradeguider came a long way.
You must have had a long experience in vsa line of action.

Please enlighten us as on today, in what best way tradeguider can be used for swing trading of shortterm,say week to many weeks.

What kind of simple thumb rules we can use before buying stocks,when using tradeguider as a guidance tool?

thanks in advance,
rvlv

rvlv,

I'm sure Sebastian will reply to you in time but in the meantime I'll try to answer some of your questions.

Tradeguider is an educational tool as well as a charting package. The methodology that tradeguider is based upon is the original works by Tom Williams.

To define entry/exit points in Tradeguider or any charting package you first need to have a trading plan and (if you are going to use VSA as your education) a good understanding of the principles of the methodology. Those principles once understood will help you identify where supply & demand is active in the market. Those priciples can be applied to any time frame.

If you're interested in learning about VSA then Tom Williams book is a good starting point.

Hope this is of some help to you.

 

[chump]

I don't go with the volume tells all, it helps sometimes is all it does for me which in fairness is enough.
Other week I was looking to perhaps buy **** (so no one says it's a pump up) and I see this spike in volume at a new low...so I go to the info site and look to see what is this and it's the chief Ex taking a loss prior to a tax year end on stock in her trust fund. That made a lot of sense and turned me away from the buy,but on the chart was deceiving on it's own.

 

[firewalker99]

I don't go with the volume tells all, it helps sometimes is all it does for me which in fairness is enough.
Other week I was looking to perhaps buy **** (so no one says it's a pump up) and I see this spike in volume at a new low...so I go to the info site and look to see what is this and it's the chief Ex taking a loss prior to a tax year end on stock in her trust fund. That made a lot of sense and turned me away from the buy,but on the chart was deceiving on it's own.

I'm not sure what you're trying to say here... new lows on increased volume wouldn't signal a buy signal anyway, right?

 

[chump]

I'm not sure what you're trying to say here... new lows on increased volume wouldn't signal a buy signal anyway, right?

On the spike I was interested to know if it was a capitulation to set up on a buy. It wasn't.

 

[timsk]

I'm not sure what you're trying to say here... new lows on increased volume wouldn't signal a buy signal anyway, right?

If it's a volume blow off then yes, it would be the perfect time to buy. Attached is a trade from a few days ago which actually 'failed' in that I got stopped out at breakeven. (long on the X hairs.) My chart is 1 min', wheres I imagine Chump was looking at a daily - but the principle is the same. The heavy volume is from buyers soaking up the selling pressure and halting a decline in price. If there's enough of them - as in this case - the volume swells massively and price then starts to rise.
Tim.

 

[chump]

If it's a volume blow off then yes, it would be the perfect time to buy. Attached is a trade from a few days ago which actually 'failed' in that I got stopped out at breakeven. (long on the X hairs.) My chart is 1 min', wheres I imagine Chump was looking at a daily - but the principle is the same. The heavy volume is from buyers soaking up the selling pressure and halting a decline in price. If there's enough of them - as in this case - the volume swells massively and price then starts to rise.
Tim.

That's right Tim. I'd been monitoring the stock and EOD caught the vol spike,but when I looked into it it was deceiving.Taking out the Chief exec paper swap which still printed on the chart I was left with just a new low on volume that told me nothing that I could buy. Whereas if that had been 'real' capitulation I would have gone intraday the next day to watch more closely.

 

[firewalker99]

That's right Tim. I'd been monitoring the stock and EOD caught the vol spike,but when I looked into it it was deceiving.Taking out the Chief exec paper swap which still printed on the chart I was left with just a new low on volume that told me nothing that I could buy. Whereas if that had been 'real' capitulation I would have gone intraday the next day to watch more closely.

I can't say I follow this stock, but from my experience trading indices, when bad news leads to potential capitulation, I'd consider it as another reason to go long.

 

[chump]

I can't say I follow this stock, but from my experience trading indices, when bad news leads to potential capitulation, I'd consider it as another reason to go long.

FW,
Trading Indices and trading a stock like this which was based on AIM is not the same thing and it's also why volume doesn't tell all in the sense you can just look at a chart and the volume seen there 'tells all' .It doesn't unfortunately because the LAW of large numbers doesn't apply. One ,or two block deals ,or one such as I reported above can hugely distort what the volume really means/'tells'. Other than that I agree with your comment and it even applies to a stock like this,but as I say you've got to look behind the volume first to check it out.

 

[firewalker99]

FW,
Trading Indices and trading a stock like this which was based on AIM is not the same thing and it's also why volume doesn't tell all in the sense you can just look at a chart and the volume seen there 'tells all' .It doesn't unfortunately because the LAW of large numbers doesn't apply. One ,or two block deals ,or one such as I reported above can hugely distort what the volume really means/'tells'. Other than that I agree with your comment and it even applies to a stock like this,but as I say you've got to look behind the volume first to check it out.

No problem chump, I know what you're saying. That's one of the reasons I prefer not to trade stocks.

 

[Slapshot]

Chump, FW, I agree with both of you.

Perhaps the title of this thread is a little inaccurate. Volume alone does not provide all the information. It does however indicate when the pro's are active but shouldn't be taken in isolation, the resulting price action will give more clues as to the future direction. All of course IMO.

 

[millsy500]

FW,
Trading Indices and trading a stock like this which was based on AIM is not the same thing and it's also why volume doesn't tell all in the sense you can just look at a chart and the volume seen there 'tells all' .It doesn't unfortunately because the LAW of large numbers doesn't apply. One ,or two block deals ,or one such as I reported above can hugely distort what the volume really means/'tells'. Other than that I agree with your comment and it even applies to a stock like this,but as I say you've got to look behind the volume first to check it out.

It would be a warning sign maybe but I think you would want confirmation that the vol was indeed buying and not selling. I've forgotten how many times I've seen very high vol that looks like stopping volume or a shake out only for price to carry on south. You would certainly want to see weakness in the background minimum. Stopping volume or a shake out is a trend reversal. Thats how I take it anyways....