A brief share, questions around volume, any contribution welcome

[emeraldorc]

Thanks to Pipmehappy, GP00 and a few others everyone is discussing volume, I thought it will be great to share some material on my trading on volume, much of it is my developed style over a few years but I have my grounding in some great works from Wyckoff, Livermore and a few others not mentioned.

It will be nice to keep this thread going I will be posting in here as well when I can. You guys have really inspired me to stay here on babypips such a great community of ordinary guys and gals. Really Love it...

I apologize in advance for the long 20 min video but I am not that great a narrator. I recorded this for my journal in March. Hope it is loved...

Volume in FX tutorial 2 - YouTube

[gp00053]

Great video. Definitely, definitely worth the watch. I subscribed to the thread and your channel. Looking forward to keeping this thread going. And ready for lots of discussion. Traders will get to see the difference between a trader who uses hardly any indicators (accept of course for support and resistance points, which are indicators) to my style where I use a few for two reasons 1. to save time 2 to confirm my thoughts. IMO it's the only 2 times they should be used and only after a trader knows how to apply them without an indicator.

Back to VSA. I agree with you 100% volume is the only way to go and there is a lot of different ways to approach it.. One of the great things about VSA is it's adds another approach to markets. Besides tech analysis and fundamental analysis, VSA takes the best of both to add a third type of analysis. It can be used pretty much on any time frame or tick chart, once you understand it, you see how in the blink of any eye current conditions.

A quick note about long winded I found from experience traders who apologize for long winded video's and posts, are the best ones to watch and read. There is never an ulterior motives just tons of good information that pops up while they are talking or posting. So long wind away my friend.

Once again emeraldorc, thanks for the video and I'm looking forward to participate in this thread. Best Wishes and Continued Success
Gp

[emeraldorc]

Thanks GP.

Some great comments from you as always. I look forward to future contributions from everyone. Have a great weekend.

[PipMeHappy]

Hello emeraldorc, nice video! I like your style! One thing: like me, you have your in-built laptop microphone, which means that we get treated to a full round of cooling fan whirring every so often. I recommend a head-set! Got one recently but the laptop just refuses to let go of its in-built mic input so I will take it to the shop on Wednesday and get it sorted.

That was just a technical point... I found the video very interesting... Coulling, in her VPA book, says that you can use tick (volume) on any time-frame, but then, like you, she seems to favour shorter time-frames... Is tick (volume) and price analysis best served hot on a five-minute plate or cooler on a monthly one? Salad optional

[gp00053]

Hello emeraldorc, nice video! I like your style! One thing: like me, you have your in-built laptop microphone, which means that we get treated to a full round of cooling fan whirring every so often. I recommend a head-set! Got one recently but the laptop just refuses to let go of its in-built mic input so I will take it to the shop on Wednesday and get it sorted.

That was just a technical point... I found the video very interesting... Coulling, in her VPA book, says that you can use tick (volume) on any time-frame, but then, like you, she seems to favour shorter time-frames... Is tick (volume) and price analysis best served hot on a five-minute plate or cooler on a monthly one? Salad optional

As you know I trade short term as well, having said that I also trade longer term, this video is more for longer term trading using Volume and tick charts. The website they mention also has good and useful info. Currency and Forex trading using VSA - YouTube
As usual I'm not promoting anything that they are selling but I found the free stuff helpful and useful.

If you look at VSA in phases, it takes into account 4 phases. 1. an accumulation phase; 2 a markup phase; 3 a distribution phase; 4 a mark down phase. When you finish the markdown, the traders that can move the market go back to the accumulation phase and starts are over. It's continual and consistent in what comes after each phase. It's like a Fibonacci tool, it doesn't matter the time frame, to use it you need a trend. Hope that helps my friend
Gp

[emeraldorc]

Hello emeraldorc, nice video! I like your style! One thing: like me, you have your in-built laptop microphone, which means that we get treated to a full round of cooling fan whirring every so often. I recommend a head-set! Got one recently but the laptop just refuses to let go of its in-built mic input so I will take it to the shop on Wednesday and get it sorted.

That was just a technical point... I found the video very interesting... Coulling, in her VPA book, says that you can use tick (volume) on any time-frame, but then, like you, she seems to favour shorter time-frames... Is tick (volume) and price analysis best served hot on a five-minute plate or cooler on a monthly one? Salad optional

Haha! Yes indeed, I do use the internal mic, my fan has become noisy lately despite having a quad core processor but I suspect it is the windows media center streaming that is tasking my machine. I plan to invest in what would be a third laptop in 2 years as technology keeps advancing. The external mics tend not to work for me as well...

The volume is clearer on the shorter time frames as the daily upwards tends to show bars with identical volume with a few extremes which I use to catch really major support and resistance or look for falling volume in an uptrend to swing trade for a longer trade. I start my entry on the hour chart as my dominant chart for entry and use the daily as my general directional chart. I use to use the 15 min chart but that chart I find works for intraday scalps and if you feel like risking like the traders of old and over leveraging but I like to play by the rules so the 15 min lost it's appeal to me unless the 1 hour is in a tight range and I want to catch the breakout in that case the move starts at the 15.

The logic is similar to that of a zoom lens if the daily is not clear zoom into an the hour if that isn't clear zoom to 15 by then you should have a picture to decide on. The monthly is best to combine the volume with a standard statistical deviation that are not really indicators but volatility measures (Bollinger or linear regression) because if a monthly chart was to widen in deviation would mean a volatile currency pair or tighten would mean a pending catastrophe as the breakout will be severe. So any extreme volume on channel support followed by a tail off would be a definite reversal and are really low risk.

[PipMeHappy]

Hello emeraldorc,

thank you for this! I hope that more people will drop by to leave comments...

Regards

[pipozaver]

Hi,

nice video. However, i am heaving problems with sell or buy volume. How do you determine what is actually happening with the market? A first glance, i only see big volume on big candles and i find it hard to extract the the essence.

[PipMeHappy]

Thank you, gp00053! It is quite long (1h45m) so I need to finish watching it, but thus far it is quite useful...

Thank you ...

As you know I trade short term as well, having said that I also trade longer term, this video is more for longer term trading using Volume and tick charts. The website they mention also has good and useful info. Currency and Forex trading using VSA - YouTube
As usual I'm not promoting anything that they are selling but I found the free stuff helpful and useful.

If you look at VSA in phases, it takes into account 4 phases. 1. an accumulation phase; 2 a markup phase; 3 a distribution phase; 4 a mark down phase. When you finish the markdown, the traders that can move the market go back to the accumulation phase and starts are over. It's continual and consistent in what comes after each phase. It's like a Fibonacci tool, it doesn't matter the time frame, to use it you need a trend. Hope that helps my friend
Gp

[PipMeHappy]

Hello emeraldorc, I took the laptop to the shop and the microphone settings have been adjusted: my next video will have a fantastic audio quality!!

Listening back to some of my older videos, I wish I had better audio then, as the cooling fan noise really was not cool, excuse the pun...

Cheers.

Haha! Yes indeed, I do use the internal mic, my fan has become noisy lately despite having a quad core processor but I suspect it is the windows media center streaming that is tasking my machine. I plan to invest in what would be a third laptop in 2 years as technology keeps advancing. The external mics tend not to work for me as well...

The volume is clearer on the shorter time frames as the daily upwards tends to show bars with identical volume with a few extremes which I use to catch really major support and resistance or look for falling volume in an uptrend to swing trade for a longer trade. I start my entry on the hour chart as my dominant chart for entry and use the daily as my general directional chart. I use to use the 15 min chart but that chart I find works for intraday scalps and if you feel like risking like the traders of old and over leveraging but I like to play by the rules so the 15 min lost it's appeal to me unless the 1 hour is in a tight range and I want to catch the breakout in that case the move starts at the 15.

The logic is similar to that of a zoom lens if the daily is not clear zoom into an the hour if that isn't clear zoom to 15 by then you should have a picture to decide on. The monthly is best to combine the volume with a standard statistical deviation that are not really indicators but volatility measures (Bollinger or linear regression) because if a monthly chart was to widen in deviation would mean a volatile currency pair or tighten would mean a pending catastrophe as the breakout will be severe. So any extreme volume on channel support followed by a tail off would be a definite reversal and are really low risk.

[amiscell]

Hi Emeraldorc. I find your video extremely illuminating. I was always under the impression that volume would not be a significant indicator in FX since you can't get the full "market depth" though brokers. However, with your analysis you have proven otherwise!

I have a fundamental question - How do you determine whether the volume is "buying" or "selling"? In some cases it seems more obvious, but for instance in the second chart you analysed (gold) - on the 8th of May, you see that as buying volume. if I look at the candles corresponding to the highest volume peaks (see picture attached), they are actually bearish candles.
Could you explain if there is a particular technique or something to look out for?

[PipMeHappy]

Hello amiscell: you raise an important point...

I am nowhere near emerladorc's level of knowledge in this field (volume/price analysis, and trading in general),

but I think I could answer this by saying that what you see on the attached chart is indeed a bearish candle with

strong volume behind it, but what the volume would tell you was that the institutional money (the big money)

was actually BUYING: this means that when the market-makers (the 'insiders') want to BUY stock, they may

release news that that stock is worth little and push people/investors to SELL... All the while, the investors

will be BUYING what the retail crowd and other investors would be SELLING off, thus ACCUMULATING their

stock...

Maybe, sometimes, there is confusion, like in this case, as to which of the two halves of the exchange (one half

doing the buying, the other doing the selling) one is talking about... I hope this helps!

Now over to Professor Emeraldorc!

[emeraldorc]

Hi,

nice video. However, i am heaving problems with sell or buy volume. How do you determine what is actually happening with the market? A first glance, i only see big volume on big candles and i find it hard to extract the the essence.

Hi pipo, thanks for raising that point, it is a really significant point.

There are a few ways to approximately determine the kind of volume, this still remains one of the most difficult analysis to make with volume can eventually be your Achilles heel however if you do get this wrong you will still be right most of the time than you are wrong.

1. You can zoom into faster time frames to do the analysis this tends to make the picture clearer, for example if you see a red bar in the 1h and assume the volume is selling then go to 15 min and see what is happening there you may see the sentiment changing with some buying other clues could be pivot lows forming.

2. The other clue is the upper and lower shadows which have spawned those illustrious names like tweezer top candle pattern or evening star, etc. So if you see a bearish move with a long lower shadow (lower tail) then you will assume the sellers are weakening and have been held back.

I took a trade today on XAU/USD at 1283.77 I will do the analysis regardless the outcome and post, it appeared like a low risk trade with volume increasing in what appears like buying volume at what was a previous area of buying volume and support in the past. The view on this is a longterm one over a day, the risk for me was a fundamental one i.e. the USD appears to be gaining strength on some strong housing data however manufacturing is still a question mark which has a direct effect on the economy but the risk on the trade is there however this was based on volume and here lies the classic difficult of deciding which volume, if I am wrong I probably will get blasted to that major support but last week was a good week so I don't mind yielding a few pips in light of the lack of opportunity on a Monday.

The major support is 1277.00 so we will see...

[emeraldorc]

Hello amiscell: you raise an important point...

I am nowhere near emerladorc's level of knowledge in this field (volume/price analysis, and trading in general),

but I think I could answer this by saying that what you see on the attached chart is indeed a bearish candle with

strong volume behind it, but what the volume would tell you was that the institutional money (the big money)

was actually BUYING: this means that when the market-makers (the 'insiders') want to BUY stock, they may

release news that that stock is worth little and push people/investors to SELL... All the while, the investors

will be BUYING what the retail crowd and other investors would be SELLING off, thus ACCUMULATING their

stock...

Maybe, sometimes, there is confusion, like in this case, as to which of the two halves of the exchange (one half

doing the buying, the other doing the selling) one is talking about... I hope this helps!

Now over to Professor Emeraldorc!

Thanks Pip. PROFESSOR!! Love it....

You nailed it pretty much these apparent bearish sessions always look like selling they almost always buying. To quote Livermore, you need to know when to buy as an institution so as to not to move the price aggressively and there is no better time than when the news comes in and the selling starts because now you can buy huge lines by capitalizing on the selling wave from small retail speculators and the market makers reducing price in a false move.

It makes sense imagine trying to accumulate a 100m line in the market in one day. That will no doubt send the price to oblivion so you will either buy slowly or go big when the selling is sufficient. So in fact the problem for institutions is not stops or losing it is about getting the best prices and building their position without competitors knowing otherwise you can only imagine that if I knew you where selling I might take the opportunity to accumulate on your selling hence denying you profits. Welcome to institutional trading... Hence they say small retail traders are fair game.

[gsofield]

Great video. Thanks for taking the time to share your experience.
It has been my experience that all brokers are not created equal when it comes to volume data. My question is what brokers do you think display the most reliable volume data?
Thanks again for sharing.

[PipMeHappy]

Great question, gsofield!

My broker's Tick Volume bars are available on both the Desktop and the Web-based Trading Station (2)... I am with FXCM.

One thing that puzzles me is that when I display the Tick Volume under my chart, the last bar (i.e. the one currently

forming, in real time) always seems to be enormous comparing to anything that has gone before, which is a lie to what

happens when you pick up that chart a little later, using the same time frame... As this is something that I noticed a few

times and that does not reflect the reality of things, I wonder if Tick data is only really useful in the past, whether that

'past' means a one-minute time-frame or a one-month one...

I am sorry that I cannot be more specific, but I definitely noticed this oddity occurring a few times, across different pairs

and bearing no relation to what actually happened a few minutes later (when that enormous volume actually turned out

to be nothing of the sort)...

Cheers.

[emeraldorc]

Just to fill everyone on my gold trade. I was cleared out at 1279 somewhere so it wasn't a bad loss. I never do a post mortem but everyones benefit. I believe I started my accumulation a little to early the real support was at 1277 there was a slight overshoot from the initial selling volume that occurred at 1286.08 I should have noted that volume broke that support price and regardless momentum was going to take that price lower to the next support where buying can resume.

So, I should have either followed the move lower and TP'd at 1277 area or waited for that support area and then bought in which case my risk would have been significantly lower and I would have had time to analyze any fundamental risk (It does however appear that Gold is now heading lower) but as greed can have its way with you, I entered early and essentially yielded some pips.

That said I am already looking at my next trade so water under the bridge but that highlights sometimes the judgments you have to make when taking on opportunities but helps to see what can go wrong as well as what can go right.

[emeraldorc]

Great question, gsofield!

My broker's Tick Volume bars are available on both the Desktop and the Web-based Trading Station (2)... I am with FXCM.

One thing that puzzles me is that when I display the Tick Volume under my chart, the last bar (i.e. the one currently

forming, in real time) always seems to be enormous comparing to anything that has gone before, which is a lie to what

happens when you pick up that chart a little later, using the same time frame... As this is something that I noticed a few

times and that does not reflect the reality of things, I wonder if Tick data is only really useful in the past, whether that

'past' means a one-minute time-frame or a one-month one...

I am sorry that I cannot be more specific, but I definitely noticed this oddity occurring a few times, across different pairs

and bearing no relation to what actually happened a few minutes later (when that enormous volume actually turned out

to be nothing of the sort)...

Cheers.

Quite interesting pip. It could be that the chart may be slightly stretched exaggerating the movement but that said I found that FXCM was the only broker that refused to add volume to their trading station which I found odd. I asked the fella on the phone what's with that, his words were, "I know what you mean, we only have OBV and to be honest you don't want to trade with second best", their MT4 I don't know but with my 2 brokers that I have used, their tick volume is fine.

The best way to really see if there is any tampering is to pull the chart into spreadsheet via mt4 in which case you will see all the volume figures in digit format this should clear it up. Tick volume should never change or lag it should be real time and should not reset. Hopefully if Jason sees this he can jump in and comment.

[emeraldorc]

Great video. Thanks for taking the time to share your experience.
It has been my experience that all brokers are not created equal when it comes to volume data. My question is what brokers do you think display the most reliable volume data?
Thanks again for sharing.

We all know broker prices vary so there tick volume would reflect the level activity on their price changes but should mirror all other tick data but I find regardless of platform the data is accurate, remember we only looking to validate price by measuring it against activity and nothing more taking into account hazards like Moving averages, support/resistance areas but that's it.

Note the safest way to trade this is still to trend follow and simply ensure you are joining a move with enough momentum. Swing trading requires more interpretation and skill. The pay off is bigger but it has more of a chance to go wrong. Hence the saying don't pick tops and bottoms.

[PipMeHappy]

Thank you, Prof. Emerald!

I do not trade with MetaTrader, so I would not know.

I am finding the tick volume on my chart pretty puzzling compared to the VPA set-ups described in Coulling's book...

That could be more me than the data... However, as I posted before, there seems to be no rhyme or reason in the

way that price and volume bars relate, and I find it impossible at present to use it in any of my trades as something

that confirms anything. Often, successive bullish or bearish candles with normal-sized bodies will not see a proportional

or inversely proportional tick volume bar action below, so that there seems to be no relationship between a bull or bear

run in the chart and a proportionally increasing or decreasing volume size in the chart below... This is what I find the

most puzzling of all... It is almost as though there were some sort of nonsensical zig-zag of ups and downs that had

no relationship to what went on in the candlestick action... I will keep trying... Maybe I still need to learn a thing or

two...

It would still be interesting to hear from Jason Rogers regarding the particular issue that I raised earlier (about the

last bar in the Tick Volume window).

Regards

Quite interesting pip. It could be that the chart may be slightly stretched exaggerating the movement but that said I found that FXCM was the only broker that refused to add volume to their trading station which I found odd. I asked the fella on the phone what's with that, his words were, "I know what you mean, we only have OBV and to be honest you don't want to trade with second best", their MT4 I don't know but with my 2 brokers that I have used, their tick volume is fine.

The best way to really see if there is any tampering is to pull the chart into spreadsheet via mt4 in which case you will see all the volume figures in digit format this should clear it up. Tick volume should never change or lag it should be real time and should not reset. Hopefully if Jason sees this he can jump in and comment.