Volume and support resistance

[PipMeHappy]

Thank you, Emeraldorc… I started looking at the Tick Volume on my charts yesterday, for the first time, and tried to manually back-test my reading of candles+trend against volume bars, according to what I have been learning from Coulling’s book… It is like opening up a car engine bay after reading the manufacturer’s repair book: those neat diagrams are nothing like the complex, grimy reality in front of you… I will need to read her book further to see examples of how the theory of the introductory chapters applies in the various situations seen in the charts…

As for the Livermore biography, here is another quote (from page 123 of the .pdf link I referred to further up):

"There isn’t a man in Wall Street
who has not lost money trying to make the market pay for an
automobile or a bracelet or a motor boat or a painting. I could
build a huge hospital with the birthday presents that the
tight-fisted stock market has refused to pay for. In fact, of
all hoodoos [=something that brings bad luck] in Wall Street
I think the resolve to induce the stock market to act as a fairy
godmother is the busiest and most persistent.
Like all well-authenticated hoodoos this has its reason for
being. What does a man do when he sets out to make the stock
market pay for a sudden need? Why, he merely hopes. He gambles.
He therefore runs much greater risks than he would if he were
speculating intelligently, in accordance with opinions or
beliefs logically arrived at after a dispassionate study of
underlying conditions. To begin with, he is after an immediate
profit. He cannot afford to wait. The market must be nice to him
at once if at all. He flatters himself that he is not asking
more than to place an even-money bet. Because he is prepared to
run quick – say, stop his loss at two points when all he hopes
to make is two points – he hugs the fallacy that he is merely
taking a fifty-fifty chance. Why, I’ve known men to lose
thousands of dollars on such trades, particularly on purchases
made at the height of a bull market just before a moderate
reaction. It certainly is no way to trade. "

It is incredible to think that this was written more than one hundred
years ago, and yet it is so immediately connected to what traders
still face today… Greed, hope, and impatience: the Great Three, which
line up the traders’ graveyards six fathom deep…

[PipMeHappy]

Hello Emeraldorc…

It is too early to ask questions on this, as I am just at the beginning… but, generally, when you look at the tick volume bars, do you, say, divide them up with horizontal lines? To help me see where relatively higher volume bars are, I put a line through, say the 50,000K level, and one through the 100,000K level… Again, I would have to post a chart and be specific, but, generally, I wanted to know if this is a good way to go about ‘measuring’ the tick volume to more readily identify volume change in relation to the general tick volume context/history for that pair (within a given time frame).

Cheers

Along with Market Wizards, they are my favourite books. Glad you find Anna Coulling great. A refreshing read when I read it. While her prognosis is nothing new it is well presented. It’s roots are firmly in stock trading it is her combination of price action and tick volume is what is special. Most professional institutional traders don’t worry about this as they create the volume on their insider buying and selling.

So it is a book for independent small retail traders. Swing traders may still stick to tools seeing they will buy at various perceived tops and bottoms. Trend followers will no doubt like this but it means regular position sizing to accommodate wide stops. Most small scalpers are trend followers looking for breakouts so VPA will mean more breakout catches earlier.

I am a swing trader and have modified volume for my swing trades. I have caught some nice trends on volume since it is the only analysis I do I have worked hard to map accumulation price areas.

Anyway you are on the right track… Let me know how you fair trading volumes. Got to say if you move to stocks volume is a must.

[gp00053]

Thank you, Emeraldorc… I started looking at the Tick Volume on my charts

I have also applying Volume Spread analysis on tick charts. Much better constant, cleaner signals. Good Luck with it my friend
Gp

[PipMeHappy]

I have also applying Volume Spread analysis on tick charts. Much better constant, cleaner signals. Good Luck with it my friend
Gp

As Coulling says, Volume Price Analysis (or Volume Spread Analysis) is an ‘art, not a science’… Just like Livermore said,
the Ticker (tape) does not tell you what to do: you have to relate it to price, to the context, and to what came before, which is a discretionary, not mechanical skill…and it has to be, because it has to be adapted to your trading style, your preferred time-frames, and your risk management, among other things.

And, like any art, it is not a simple thing, because experience and practice take time and effort, so I will probably only really see the benefits of VPA once I have really mastered it. . . At the moment, I will not be using it in my trading - I am nowhere near ready!

[gp00053]

As Coulling says, Volume Price Analysis (or Volume Spread Analysis) is an ‘art, not a science’… Just like Livermore said,
the Ticker (tape) does not tell you what to do: you have to relate it to price, to the context, and to what came before, which is a discretionary, not mechanical skill…and it has to be, because it has to be adapted to your trading style, your preferred time-frames, and your risk management, among other things.

And, like any art, it is not a simple thing, because experience and practice take time and effort, so I will probably only really see the benefits of VPA once I have really mastered it. . . At the moment, I will not be using it in my trading - I am nowhere near ready!

Keep at it; definetlt worth the time. But like every thing . . .learn practice; learn practice; more learning more practice

[PipMeHappy]

Agreed!! I will keep doing just that… Good luck with it too, gp00053! Did you get the book?

[emeraldorc]

Hello Emeraldorc…

It is too early to ask questions on this, as I am just at the beginning… but, generally, when you look at the tick volume bars, do you, say, divide them up with horizontal lines? To help me see where relatively higher volume bars are, I put a line through, say the 50,000K level, and one through the 100,000K level… Again, I would have to post a chart and be specific, but, generally, I wanted to know if this is a good way to go about ‘measuring’ the tick volume to more readily identify volume change in relation to the general tick volume context/history for that pair (within a given time frame).

Cheers

Hi Pip… Interesting question, that was my first logic when I started with tick volume but then I decided to put all the prices on an xl sheet. I did a test for 3 days recording the volume every hour only stopping to sleep and the average pip movement corresponding to each volume bar.

The first thing I learned was certain prices always attracted huge volumes over the session this was centered around the session lows and highs.

2. The volume on each currency pair was different and it was hard to just divide the volume up to decide what was above average. So instead I used my 3 day check to determine what was low session volume and high session volume and just average.

3. I then realized that depending on the pair volume came in at specific times and tended to dictate the entire session and it didn’t matter whether it was 15 min, 1 hour or daily.

4. I then started to group the bars to see if the position was worth holding into the longer time frames.

Now to answer your question sorry for the slight ramble. It never works as well to draw a line in the middle, I would read each bar individually as a 1st Step, so if in the 8 am London session we see volume of 1900 on your tick (average volume for me) volume with a 7 pip high to low and 5 pip open to close on a green bar after a series of 500/600 volume in the Tokyo and Sydney sessions then I assume this is an early bullish signal especially if the last day was bullish with at least a major green bar of 20 pip open to close this would form a degree of support so any bearish moves I likely not to last.

You can wait for further confirmation with a second green bar with 2100 volume as an example with maybe a similar pip movement. This is a morning session and you are seeing average rising volume on a green bars. The important thing here is deciding the volume that will move the market. At this point providing you are not faced with resistance close by I would take the buy trade.

Firstly, you have average volume in low volume period suggesting it is professional money starting an accumulation to get those good prices before everyone wakes up in London and also before the 9.30am economic releases.

Second it rising average volume so you know there is sufficient interest.

thirdly, you know that the previous day had a high volume move on the bullish side suggesting many people have a vested interest. Recording the lows and highs associated with high volume help you to locate prices of significance (note I said prices not levels, I think most traders are obsessed with levels and trend lines in fact it is the prices that matter).

It is not always full proof but it works.

On NFP days it is so volatile so I accumulate my positions before as the NFP never shakes off an overall bullish or bearish trend. I trade GBP/USD heavily and on occasionally GBP/JPY and AUD/USD so those USD releases tend to matter.

Lastly if you swing trade then watch out for the falling volume on falling prices and high volume Doji’s.

Today I took a trade today which in my mind I have doubts but it was pure volume analysis. GBP/USD, I noted some earlier buying volume a few days back that are propping the pair. Then the FED Dudley statement came out coupled with the CPI UK figures. Massive volume came in close the 200MA 1 hour session leaving a massive upper shadow at first sight it looks like selling volume but then we have buying volume and rising buying volume that breaks the 200MA so I buy at 1.6842 having already cashed in on my GBP/JPY trade I thought why not… Then I realize the FOMC minutes is due tomorrow and retail figures from the UK, volatility heaven…The daily however is bullish so I thought I’ll hold the trade if I am right the massive volume was buying and I would be in a great entry position to perhaps head for 1.6900 where there was high selling volume.

We’ll see… :21:

[PipMeHappy]

Emeraldorc, you are simply wonderful… I would have happily paid for the kind of training/tuition that you provided for free in this post… You spent time typing it all out, taking care to really explain things…

You are a great man.

One day, if we meet, I will definitely hope to buy you a drink.

Cheers!

Happy trading.

Hi Pip… Interesting

question, that was my first logic when I started with tick volume but then I decided to put all the prices on an xl sheet. I did a test for 3 days recording the volume every hour only stopping to sleep and the average pip movement corresponding to each volume bar.

The first thing I learned was certain prices always attracted huge volumes over the session this was centered around the session lows and highs.

2. The volume on each currency pair was different and it was hard to just divide the volume up to decide what was above average. So instead I used my 3 day check to determine what was low session volume and high session volume and just average.

3. I then realized that depending on the pair volume came in at specific times and tended to dictate the entire session and it didn’t matter whether it was 15 min, 1 hour or daily.

4. I then started to group the bars to see if the position was worth holding into the longer time frames.

Now to answer your question sorry for the slight ramble. It never works as well to draw a line in the middle, I would read each bar individually as a 1st Step, so if in the 8 am London session we see volume of 1900 on your tick (average volume for me) volume with a 7 pip high to low and 5 pip open to close on a green bar after a series of 500/600 volume in the Tokyo and Sydney sessions then I assume this is an early bullish signal especially if the last day was bullish with at least a major green bar of 20 pip open to close this would form a degree of support so any bearish moves I likely not to last.

You can wait for further confirmation with a second green bar with 2100 volume as an example with maybe a similar pip movement. This is a morning session and you are seeing average rising volume on a green bars. The important thing here is deciding the volume that will move the market. At this point providing you are not faced with resistance close by I would take the buy trade.

Firstly, you have average volume in low volume period suggesting it is professional money starting an accumulation to get those good prices before everyone wakes up in London and also before the 9.30am economic releases.

Second it rising average volume so you know there is sufficient interest.

thirdly, you know that the previous day had a high volume move on the bullish side suggesting many people have a vested interest. Recording the lows and highs associated with high volume help you to locate prices of significance (note I said prices not levels, I think most traders are obsessed with levels and trend lines in fact it is the prices that matter).

It is not always full proof but it works.

On NFP days it is so volatile so I accumulate my positions before as the NFP never shakes off an overall bullish or bearish trend. I trade GBP/USD heavily and on occasionally GBP/JPY and AUD/USD so those USD releases tend to matter.

Lastly if you swing trade then watch out for the falling volume on falling prices and high volume Doji’s.

Today I took a trade today which in my mind I have doubts but it was pure volume analysis. GBP/USD, I noted some earlier buying volume a few days back that are propping the pair. Then the FED Dudley statement came out coupled with the CPI UK figures. Massive volume came in close the 200MA 1 hour session leaving a massive upper shadow at first sight it looks like selling volume but then we have buying volume and rising buying volume that breaks the 200MA so I buy at 1.6842 having already cashed in on my GBP/JPY trade I thought why not… Then I realize the FOMC minutes is due tomorrow and retail figures from the UK, volatility heaven…The daily however is bullish so I thought I’ll hold the trade if I am right the massive volume was buying and I would be in a great entry position to perhaps head for 1.6900 where there was high selling volume.

We’ll see… :21:

[emeraldorc]

Emeraldorc, you are simply wonderful… I would have happily paid for the kind of training/tuition that you provided for free in this post… You spent time typing it all out, taking care to really explain things…

You are a great man.

One day, if we meet, I will definitely hope to buy you a drink.

Cheers!

Happy trading.

Thanks Pip. I may hold you to it one day

To bring back that point GBP leaped to 1.6907 the news is currently milking it so I expect some outsider buying before an inevitable correction. I see volume falling off on the retrace so perhaps a buying opportunity to 1.6930 where the last institutional selling came in.

That for me is the power of volume. Not a single indicator involved.

[gp00053]

As Coulling says, Volume Price Analysis (or Volume Spread Analysis) is an ‘art, not a science’… Just like Livermore said,
the Ticker (tape) does not tell you what to do: you have to relate it to price, to the context, and to what came before, which is a discretionary, not mechanical skill…and it has to be, because it has to be adapted to your trading style, your preferred time-frames, and your risk management, among other things.

And, like any art, it is not a simple thing, because experience and practice take time and effort, so I will probably only really see the benefits of VPA once I have really mastered it. . . At the moment, I will not be using it in my trading - I am nowhere near ready!

Absolutely right on the money. That’s why it’s so important to master the basic’s and keep building onward and up. I told a friend of mine who was having a bit of trouble planing his trades and he said he couldn’t understand how people trade with no indicators. I told him how you start is not how you finish. You need a strong understanding of the basics, and everyone is different so if you need to use indicators to help you with your planning, use them.

As well there is more to your trading method than planning the trade. Your plan has to have proper money management and worked with patience and discipline. I told him you didn’t blow up your account because you used or didn’t used indicators, it blew up cause you did have patience and discipline and were not using proper money management

[PipMeHappy]

Hello emeraldorc,

could you possibly help me understand this puzzle?

This is the Cable (GBP/USD) this morning, on a five-minute time-frame: in Coulling’s book, Volume Price Analysis, the

three red candles that you see in the chart from 8.30am, would be used as an example where volume changes

in a similar way, either increasing, or decreasing, but here the first two volume bars underneath are of the same

height (even though the candles are of different shape) and then the third and fourth show volume of opposite

magnitude to their shape… Even more confusingly, if you look to the end of the chart, the third and fourth

candles from the end are full candles (almost no wicks) and yet one has plenty of volume behind it but the

other has practically zero volume… Follow this with the last but one tiny doji candle but with a massive volume

spike, and the confusion in my head is now complete and total !!

Could you make any sense of this?

Cheers…

@emeraldorc

Hi Pip… Interesting question, that was my first logic when I started with tick volume but then I decided to put all the prices on an xl sheet. I did a test for 3 days recording the volume every hour only stopping to sleep and the average pip movement corresponding to each volume bar.

The first thing I learned was certain prices always attracted huge volumes over the session this was centered around the session lows and highs.

2. The volume on each currency pair was different and it was hard to just divide the volume up to decide what was above average. So instead I used my 3 day check to determine what was low session volume and high session volume and just average.

3. I then realized that depending on the pair volume came in at specific times and tended to dictate the entire session and it didn’t matter whether it was 15 min, 1 hour or daily.

4. I then started to group the bars to see if the position was worth holding into the longer time frames.

Now to answer your question sorry for the slight ramble. It never works as well to draw a line in the middle, I would read each bar individually as a 1st Step, so if in the 8 am London session we see volume of 1900 on your tick (average volume for me) volume with a 7 pip high to low and 5 pip open to close on a green bar after a series of 500/600 volume in the Tokyo and Sydney sessions then I assume this is an early bullish signal especially if the last day was bullish with at least a major green bar of 20 pip open to close this would form a degree of support so any bearish moves I likely not to last.

You can wait for further confirmation with a second green bar with 2100 volume as an example with maybe a similar pip movement. This is a morning session and you are seeing average rising volume on a green bars. The important thing here is deciding the volume that will move the market. At this point providing you are not faced with resistance close by I would take the buy trade.

Firstly, you have average volume in low volume period suggesting it is professional money starting an accumulation to get those good prices before everyone wakes up in London and also before the 9.30am economic releases.

Second it rising average volume so you know there is sufficient interest.

thirdly, you know that the previous day had a high volume move on the bullish side suggesting many people have a vested interest. Recording the lows and highs associated with high volume help you to locate prices of significance (note I said prices not levels, I think most traders are obsessed with levels and trend lines in fact it is the prices that matter).

It is not always full proof but it works.

On NFP days it is so volatile so I accumulate my positions before as the NFP never shakes off an overall bullish or bearish trend. I trade GBP/USD heavily and on occasionally GBP/JPY and AUD/USD so those USD releases tend to matter.

Lastly if you swing trade then watch out for the falling volume on falling prices and high volume Doji’s.

Today I took a trade today which in my mind I have doubts but it was pure volume analysis. GBP/USD, I noted some earlier buying volume a few days back that are propping the pair. Then the FED Dudley statement came out coupled with the CPI UK figures. Massive volume came in close the 200MA 1 hour session leaving a massive upper shadow at first sight it looks like selling volume but then we have buying volume and rising buying volume that breaks the 200MA so I buy at 1.6842 having already cashed in on my GBP/JPY trade I thought why not… Then I realize the FOMC minutes is due tomorrow and retail figures from the UK, volatility heaven…The daily however is bullish so I thought I’ll hold the trade if I am right the massive volume was buying and I would be in a great entry position to perhaps head for 1.6900 where there was high selling volume.

We’ll see… :21:

[gp00053]

@PipMeHappy

Could you make any sense of this?

Cheers…

I’m not sure if this will help. If it’s me, I’m looking for either more accumulation and long signal

[PipMeHappy]

Yes, gp00053, that is indeed what Coulling talks about, and I fully understand that part…the volume bars (tick volume bars)
however are still a mystery to me when I see them live…

[gp00053]

@gp00053

I’m not sure if this will help. If it’s me, I’m looking for either more accumulation and long signal

Sorry I forgot this

Accumulation Phase. Institutional and professional traders buy at wholesale prices
Markup Phase. Bullish movement
Distribution Phase. Institutional and Professional traders are selling at retail prices
Markdown Phase. Bearish Movement

Volume Spread Indicator Colors
YellowGreen; Increasing spread and increasing volume means strong participation and price should continue in this direction
Red : Decreasing spread and increasing volume means market direction is losing steam
Blue: Increasing spread and decreasing volume means price is moving without strong participation
Gray: Decreasing spread and decreasing volume means market condensing

[PipMeHappy]

Thank you…

All my tick volume bars are of the same colour… Did you colour yours in yourself?

Coulling’s bars are also all the same colour, so I think colour is not an essential part of it… and I have

to just learn how to read the damn things !!

[gp00053]

Thank you…

All my tick volume bars are of the same colour… Did you colour yours in yourself?

Coulling’s bars are also all the same colour, so I think colour is not an essential part of it… and I have
to just learn how to read the damn things !!

Yes I did and do use color. I was involved in a car accident 4 years ago, that among other things left me with a head injury that affects my comprehension, so the different colors help me comprehend easier and faster. But you are absolutely right colors or color doesn’t matter as long as you know what the signals are telling you or at least on the balance of probabilities what they’re telling you

[PipMeHappy]

I am sorry to hear that… I cannot imagine what you have gone through…

Thank you for sharing that, and for all your help… Much appreciated!

[gp00053]

I am sorry to hear that… I cannot imagine what you have gone through…

Thank you for sharing that, and for all your help… Much appreciated!

You know you’re in trouble when the police arrive and ask the ambulance drivers where’s the body when they said we just put him in the ambulance and the officer says you mean he came out of that car and is still alive? Good thing I was knocked out, I might have really got nervous. Anyway went from wheel chair, to walker, to cane (so far) to every day different therapies for a year, now down to once a week. But as we say in poker, don’t waste time crying, play the hand you’re dealt. Can’t play poker anymore, but the good news is I discovered the forex

[andrew1185uk]

Glad to see a few others also have Anna Coullings book. My favourite and something I started using at the beginning of the year.

Had immediate success but became impatient and went through a spell of trying other types of trading(who knows why?). Anyway, I now use this along with the market maker model and ICT’s order block concept on 4hr timeframe which works for me with work.

I was wondering if any of you volume traders have used volume at price which is in the latter part of the book?

I have been unable to find a free indicator and was wondering if you found it much use to your trading as an additional confirmation of key levels.

[anon53594692]

@godzilla I highly recommend you buy this book. I am reading it now and the author of this book has been using VPA for 17 years and has a wealth of knowledge on this. I hope this helps you.