The only price that is "something" is the last transaction UNLESS your are refering to level2 screen. The last transaction was the last sale. And that last sell was made on volume. Now on a level 2 screen the bid and ask price levels are an indication of buying/selling pressures without any transaction actually going across however, they actually don't do anything until somebody hits one or the other. If most and larger transactions are going across on the bid then that is an indication of weakness as sellers are coming down or buyers are backing off or both. However, the size of that transaction is volume and it does indeed mean something. If you have 20 transaction at the bid at 5 at the ask but those five together were 6 times more in size then you have buying pressure. Bigger blocks are going across on the ask. The tendency will be for the price to go up.fudgestain said:".. until someone hits either the bid or the ask and purchase or sells a quantity (volume) you have nothing". Wrong, you can have price without a transaction which is something. You cannot normally have volume without price, though.
Look at volume in a volume bar chart, say the YM. Each bar consists of the same volume. Generally, the bars are longer on a faster price rise (as on a faster price fall); this tells you that same volume equates to more points in a fast rise. As I said before its sellers retreating that create the price rise. It is better that you use quite a reasonable amount of volume per bar to see this illustrated.
Again a lot of imaginings are attributed to the volume in price movements. Nothing will stop these unjustified imaginings and I don't mind everyone and his dog being wrongly diverted. When price spikes you have sellers taking fright and retreating very fast to make the apex; next the momentary top and suddenly buyers taking fright with buyers retreating very fast. Those that have spent years, sometimes decades, meandering on about volume, will try and rationalise their ramblings if the actuality of what really happens is ever brought to their attention.
I agree with you that price rise because sellers retreat. However, they only retreat when they see demand coming in. If you were in the market place selling oranges and you saw someone coming in and paying the asking price and buying every orange up then you would retreat and raise the price of your oranges. However, if hardly anyone was buying oranges (lack of demand-no buyers or buyers backing off) you might even lower the price of your oranges to sell them. So, while prices rise when sellers retreat they retreat because there is demand otherwise, they would have no reason to retreat. So we are back to demand causing sellers to retreat and demand IS VOLUME just as it can be supply. So, volume does affect price. And it is a barometer of demand/supply when correlated with what price did.
Sure sellers will retreat if they see demand coming in with people eager to buy their stock at any price. They will also lower their price if buyers are backing off and they see other sellers hitting the bid. Buyers will also retreat if they see supply coming in. Why should they pay premium price if the market is flooded? Buyers will also up their bid if they see sellers backing off and see other buyers willing to pay the ask price on large transactions. So, we have buyers that can retreat and also raise their price and we have sellers that can retreat and also lower their price but the THING that makes this happen is the BALANCE between supply and demand and that balance is indicated when the volume is correlated with the price.
Of course, I am sure you would disagree with me. However, I do think you made a valid point in saying that price rise when sellers retreat. Nevertheless, I contend we have to ask why did they retreat? I answer back it is only when they see demand coming in! I can't tell you the times I have been a seller and when I see demand coming in I quickly cancel my sell order and retreat placing my sell order at a higher price. However, if there is no demand I usually just leave it or lower it. It would be wishful thinking to think that I could just retreat and put a higher price on my stock and that in itself would cause price top move. However, demand coupled with retreating prices now that is a different story!
As far as longer volume bars on a price rise/fall why do they even show up as such if volume means nothing? You yourself said they show up on rises or declines. Or did I misunderstand what you are saying? Pf they are longer what does that mean? Does it have ANY significance??
Have your instincts proven to be good in the monetary sense?? If so then whatever your doing is working for you. Keep it up. If not you might need to re-evaluate your instincts. After all money is the bottom line in this game.Fader said:I'm always fading my best instincts
Answers to parts of your questions:
A test is always a low volume down bar in which price stays low most of the bar but closes near the top. If the test is successful, you should see strength coming in within the next few bars.
An up-thrust is an up bar in a rising market with high volume and wide spread, where the price closes near the low. A hidden up-thrust is an up-thrust where the volume is low.
A wide spread up bar on its own doesn't indicate presence of supply. If in addition we have heavy volume and the bar closes away from the high, then it's a sure sign of incoming supply.
Indy2005 said:
A test is always a low volume down bar in which price stays low most of the bar but closes near the top. If the test is successful, you should see strength coming in within the next few bars.
An up-thrust is an up bar in a rising market with high volume and wide spread, where the price closes near the low. A hidden up-thrust is an up-thrust where the volume is low.
A wide spread up bar on its own doesn't indicate presence of supply. If in addition we have heavy volume and the bar closes away from the high, then it's a sure sign of incoming supply.
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To say that price preceeds volume is meaningless as the only price that means anything is the price where volume occurred. It is like the case of the chicken and egg. Which is first? That is not the point! It really doesn't matter which is first but what does matter is "how" the said price was made and volume my friend tells that story. So, it is really a technical thing to say volume is first or price is first what really matters is that a price transacted and did so with volume and that volume tells a story.dbphoenix said:
Sure you can have a gradual up trend little volume. That too tells a story. Demand is greater than supply that is all it is telling. Like a car gradually going up a slope. Acceleration is slow (volume) but it is going up. A gradual up trend on relatively low volume is simply saying there is slightly more demand that supply. More buying pressure than selling pressure that is all.
Err it was a joke... and yes I'm doing quite nicely thank you for your concernpttrader said:
And ps, volume tells you bugger all, price action is king, and stop saying voulme creates it, it's like saying the pope is catholic, we know he's catholic because he's wearing that girly white dress and funny hat
Money is indeed the bottom line and if you look to the best of the best they use support and resistance and the price action associated with it, and the odd glance at volume
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Fader,Fader said:
In tape reading you have things 8 pieces of data to look at.
open. high, low, close, daily range, volume, price, time it took to make that price.
Why people are willing to look at all the others and chuck volume to the wind is beyond me. Tell me why is price any more important than volume? Does the open mean anything? What about the close? Daily range have any meaning? Is time a factor? If so, then why isn't volume a factor. Why ignore something as volume which tells you how much of something was sold/bought. If you were going to go in business would you take no consideration for the demand for you product. How many (volume) you might could sale.
Why look at the market as if it doesn't matter how much of a stock is bought or sold? Does volume mean anything in a business? Why would one say that it is meaningless activity when it comes to trading? And don't come back with ,,,just because it is. Give me an answer. Why is volume meaningless? I have tried to post showing why I think it is meaningful and has a story to tell but no one that I can remember in this thread has told me why it isn't meaningful. Or maybe I just can't hear good what people are saying????
I understand that in the end price is what counts. I heartily acknowledge that concept! We don't buy volume. We don't even buy price. But we buy stock at a certain price. But I maintain that volume gives us an idea of the demand and supply factor which in turn lets me know if the price is a possible profit point or not. That is if it make sense to buy it.
Now, I am not saying that you toss volume out. You said you did in fact use it some. So, I am asking this question to others in this post. If volume is meaningless then why is it meaningless? If it has any meaning at all doesn't it behoove us to then look at it? Is it any sort of indicator at all of supply/demand? If so, shouldn't we then look at it? If it is no indicator whatsoever of supply and demand then explain that logic or reasoning. It is one thing to say something is such and such but another thing to give a rationale for the position take. Statements like price takes volume out the back door and whips up on it tells me nothing but an opinion. Give the reson behind it!
Not all volume is meaningful, volume should catch your attention
Volume is background, yes we need gravity to stop from flying off into space but we dont walk around concerntrating on being sucked to the centre of the earth, we concerntrate on the walking... let those that have ears....
Volume is background, yes we need gravity to stop from flying off into space but we dont walk around concerntrating on being sucked to the centre of the earth, we concerntrate on the walking... let those that have ears....
So, you are saying price makes volume?? Well you can't have price without volume. All you have is virtual price...little numbers on your screen that dance around and don't mean alot until someone actually applies volume to those numbers and buys something at that price.Fader said:
Price must lower itself or raise itself until volume comes in and once price attracts a trader volume takes place and because it did in fact take place that fact becomes a clue to where supply / demand is at and "how" strong it is!!!.
Patterns have about a 50% chance of working out. There is definetely something to price levels..pivot points...resistance/support and of course price itself. That is precisley why volume is important. It tells the story at those critical levels. He has ears to hear.....Fader said:
Failure at a certain level will tell you everything you need to know including strength, fear, how far it will fall etc... and the volume is meaningless, it can fail on a lot of volume or a little, the outcome will be the samepttrader said:
thats why price takes volume out the back and hands it it's ass
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hmmm, maybe its just how individuals individually associate or attach current beliefs about volume, to some its meaningless because it is of little use, or in their view carries no significance in pursuing or trading/managing risk opportunities. what you want or expect pttrader (as you say) is a reason for them holding this view. Now as with market prices, you cant control what people will say .(generally, using this medium). Frustrating, annoying? it is what it is mate. what is it..?
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