A brief share, questions around volume, any contribution welcome

PipMeHappy · June 2, 2014, 5:49pm

Great link, GP00053!

gp00053:

I just started reading Master the Markets by Tom Williams. So far a great read. Below in an exert and if anyone is interested I have supplied a link where you can download it for free. You do have to register with trade guide in order to get the book free, but you don’t have to buy anything or watch. But if your funds are limited it’s a great read and like I said it’s free. One more thing to note. I am not endorsing anything to due with trade guide or any of there services. This is a free download if you register account with them and that’s as far as I went.

The stock market revolves around the simple principles of accumulation and distribution, which are processes that are not well known to most traders.
Perhaps you can now appreciate the unique position that the market-makers, syndicate traders, and other specialist traders are in – they can see both sides of the market at the same time, which represents a significant advantage over the ordinary trader.
It is now time to refine your understanding of the stock market, by introducing the concept of ‘Strong and Weak Holders.’
Strong Holders Strong holders are usually those traders who have not allowed themselves to be trapped into a poor trading situation. They are happy with their position, and they will not be shaken out on sudden down-moves, or sucked into the market at or near the top. Strong holders are strong because they are trading on the right side of the market. Their capital base is usually large, and they can normally read the market with a high degree of competence. Despite their proficiency, strong holders will still take losses frequently, but the losses will be minimal, because they have learnt to close out losing trades quickly. A succession of small losses is looked upon in the same way as a business expense. Strong holders may even have more losing trades than winning trades, but overall, the profitability of the winning trades will far outweigh the combined effect of the losing trades.
Weak Holders Most traders who are new to the markets will very easily become Weak Holders. These people are usually under-capitalised and cannot readily cope with losses, especially if most of their capital is rapidly disappearing, which will undoubtedly result in emotional decision-making. Weak holders are on a learning curve and tend to execute their trades on ‘instinct’. Weak holders are those traders who have allowed themselves to be ‘locked-in’ as the market moves against them, and are hoping and praying that the market will soon move back to their price level. These traders are liable to be ‘shaken out’ on any sudden moves or bad news. Generally, weak holders will find that they are trading on the wrong side of the market, and are therefore immediately under pressure if prices turn against them.
If we combine the concepts of strong holders accumulating stock from weak holders prior to a bull move, and distributing stock to potential weak holders prior to a bear move, then in this context:
• A Bull Market occurs when there has been a substantial transfer of stock from Weak Holders to Strong Holders, generally, at a loss to Weak Holders.
• A Bear Market occurs when there has been a substantial transfer of stock from Strong Holders to Weak Holders, generally at a profit to the Strong Holders.
Master the Markets 21

The following events will always occur when markets move from one major trending state to another:
The Buying Climax
Brief Definition: An imbalance of supply and demand causing a bull market to transform into a bear market.
Explanation: If the volume is seen to be exceptionally high, accompanied by narrow spreads into new high ground, you can be assured that this is a ‘buying climax’.
It is called a buying climax because to create this phenomenon there has to be a huge demand for buying from the public, fund managers, banks and so on. It is into this buying frenzy, that syndicate traders and market-makers will dump their holdings, to such an extent that higher prices are now impossible. In the last phase of the buying climax, the market will be seen to close in the middle or high of the bar.
The Selling Climax
Brief Definition: An imbalance of supply and demand causing a bear market to transform into a bull market.
Explanation: This is the exact opposite of a buying climax. The volume will be extremely high on down-moves, accompanied by narrow spreads, with the price entering fresh low ground. The only difference is that on the lows, just before the market begins to turn, the price will be seen to close in the middle or low of the bar.
To create this phenomenon requires a huge amount of selling, such as that witnessed following the tragic events of the terrorist attacks on the World Trade Centre in New York on September the 11th 2001.
Note that the above principles seem to go against your natural thinking (i.e. market strength actually appears on down-bars and weakness, in reality, appears on up-bars). Once you have learned to grasp this concept, you will be on your way to thinking much more like a professional trader.

Gp
4shared, Online file sharing and storage

emeraldorc · June 3, 2014, 11:59am

gp00053:

I just started reading Master the Markets by Tom Williams. So far a great read. Below in an exert and if anyone is interested I have supplied a link where you can download it for free. You do have to register with trade guide in order to get the book free, but you don’t have to buy anything or watch. But if your funds are limited it’s a great read and like I said it’s free. One more thing to note. I am not endorsing anything to due with trade guide or any of there services. This is a free download if you register account with them and that’s as far as I went.

The stock market revolves around the simple principles of accumulation and distribution, which are processes that are not well known to most traders.
Perhaps you can now appreciate the unique position that the market-makers, syndicate traders, and other specialist traders are in – they can see both sides of the market at the same time, which represents a significant advantage over the ordinary trader.
It is now time to refine your understanding of the stock market, by introducing the concept of ‘Strong and Weak Holders.’
Strong Holders Strong holders are usually those traders who have not allowed themselves to be trapped into a poor trading situation. They are happy with their position, and they will not be shaken out on sudden down-moves, or sucked into the market at or near the top. Strong holders are strong because they are trading on the right side of the market. Their capital base is usually large, and they can normally read the market with a high degree of competence. Despite their proficiency, strong holders will still take losses frequently, but the losses will be minimal, because they have learnt to close out losing trades quickly. A succession of small losses is looked upon in the same way as a business expense. Strong holders may even have more losing trades than winning trades, but overall, the profitability of the winning trades will far outweigh the combined effect of the losing trades.
Weak Holders Most traders who are new to the markets will very easily become Weak Holders. These people are usually under-capitalised and cannot readily cope with losses, especially if most of their capital is rapidly disappearing, which will undoubtedly result in emotional decision-making. Weak holders are on a learning curve and tend to execute their trades on ‘instinct’. Weak holders are those traders who have allowed themselves to be ‘locked-in’ as the market moves against them, and are hoping and praying that the market will soon move back to their price level. These traders are liable to be ‘shaken out’ on any sudden moves or bad news. Generally, weak holders will find that they are trading on the wrong side of the market, and are therefore immediately under pressure if prices turn against them.
If we combine the concepts of strong holders accumulating stock from weak holders prior to a bull move, and distributing stock to potential weak holders prior to a bear move, then in this context:
• A Bull Market occurs when there has been a substantial transfer of stock from Weak Holders to Strong Holders, generally, at a loss to Weak Holders.
• A Bear Market occurs when there has been a substantial transfer of stock from Strong Holders to Weak Holders, generally at a profit to the Strong Holders.
Master the Markets 21

The following events will always occur when markets move from one major trending state to another:
The Buying Climax
Brief Definition: An imbalance of supply and demand causing a bull market to transform into a bear market.
Explanation: If the volume is seen to be exceptionally high, accompanied by narrow spreads into new high ground, you can be assured that this is a ‘buying climax’.
It is called a buying climax because to create this phenomenon there has to be a huge demand for buying from the public, fund managers, banks and so on. It is into this buying frenzy, that syndicate traders and market-makers will dump their holdings, to such an extent that higher prices are now impossible. In the last phase of the buying climax, the market will be seen to close in the middle or high of the bar.
The Selling Climax
Brief Definition: An imbalance of supply and demand causing a bear market to transform into a bull market.
Explanation: This is the exact opposite of a buying climax. The volume will be extremely high on down-moves, accompanied by narrow spreads, with the price entering fresh low ground. The only difference is that on the lows, just before the market begins to turn, the price will be seen to close in the middle or low of the bar.
To create this phenomenon requires a huge amount of selling, such as that witnessed following the tragic events of the terrorist attacks on the World Trade Centre in New York on September the 11th 2001.
Note that the above principles seem to go against your natural thinking (i.e. market strength actually appears on down-bars and weakness, in reality, appears on up-bars). Once you have learned to grasp this concept, you will be on your way to thinking much more like a professional trader.

Gp
4shared, Online file sharing and storage

Yes GP! I did a post almost exactly like this a while back but this is it… The basis of all order flow with large capital you can potentially never loose in the now less volatile FX market. In the stock market world no fish is too big to kill however but as an FX trader with correct sizing and risk management you should profit long-term.

Thanks for this. Yes, Pipme Anna describes this as much in her book and the reason tick volume matters so much despite its complications is if 1 tick is market move equal to $1m sunk in a move then 3000 ticks = $3bn dictating that move. This information is invaluable when trying to consider what the capital cost is entering the market.

Something GP’s last video post was trying to point out. I have DOM as I am ECN platform user so to see liquidity at all price levels gives you the scope of buying and selling going on in capital terms.

Thank you for sharing.

emeraldorc · June 4, 2014, 12:58pm

Hey guys, I have joined Banka and swallow in their long running high low thread and I am posting some of my trades in their so if anyone wants to follow some of my actual trades just take a look in there. Of course the thread is for setups so any questions just post them on this thread.

Have a great day guys.

gp00053 · June 4, 2014, 3:04pm

That’s for sure. Stock Market? :48: Not in this life time

Daxter1962 · June 5, 2014, 11:29am

Hi guys, I hope you are all well. I happened to stumble across this very entertaining video - Volume Day Trading - YouTube I love this guys style.

Regards

Daxter

emeraldorc · June 6, 2014, 8:28am

FxPro EURUSD h1 ctHnn | cTrader

A trade based on volume divergence from price. A classic set up and if you were to open say a volume indicator like MFI it would probably diverging as the indicator is calculated as typical price x volume so it should be showing something…

Thought I’ll share it was a retrace so you would have to be quick but 34 pips non the less…

PipMeHappy · June 6, 2014, 8:53am

Thank you emeraldorc… Missed your latest video, as no time… Been busy actually trading and analysing

the market… and with life generally.

I look forward to spending more time on looking at volume and learning more… I am also investing

a small sum for my mother on a separate FX account, starting this month, so I had a bit of extra

work to do!

How has your trading been?

Cheers

gp00053 · June 6, 2014, 9:28am

Here are a couple of short but informative and video’s on VSA

As usual I’m not recommended a site, programs or anything else they’re selling in this case just their description of VSA and one way to apply it to your trading
Gp

keen246 · June 6, 2014, 11:48am

Hi everybody, I’ve become very interested on VSA and been following each one of your posts and videos (thanks gp00053 for your posts. I truly appreciate and learn from them) on the subject on this thread and on the previous one. I’ve been reading a lot lately and Coulling’s book is on its way. I set my mind on becoming and expert on VSA. I know now it’s a long way and that it’s not matter of a few patterns to master and you’re already and expert. It’s a fully discretionary approach and requires to have solid foundation on VSA and PA and tons of practice.
As you may guess, I have now many questions. I’ll try to figure them out through reading and practicing but would be nice to have an expert advice when needed. I want to have the basics pretty clear, that’s why I would like to ask you guys, specially Emeraldorc, who seems to have more experience, the basic Wyckoff cycle of accumulation, re-accumulation, distribution-redistribution, on what time frame is most likely to be observed? Can you point me to a specific example where I can make and attempt to analyze it? I know that on practice it won’t appear like on the text book, but I don’t seem to see any resemblance of the cycle on any time frame. Or that model is not quite applicable to Forex but is it only valid on stocks trading?
@PipMeHappy: I guess that by now you have already finished Coulling’s book. Did you find it really useful and practical to learn about VSA applied to forex? I plan to start next week its reading but would be good to have your feedback.

gp00053 · June 6, 2014, 12:01pm

That’s for sure.:51: I want to be just like him, when I grow up.

That’s what’s great about price action and VSA. You get to trade opportunity not only time frames. The combo works on all time frames, candles, price bars, time charts, tick charts, trending and ranging markets. Anyway welcome aboard, glad you like the posts.
Gp

emeraldorc · June 6, 2014, 3:58pm

Hahaha! Nice one GP…

Thanks for the compliments and kind words but I am only human and have invested a great deal of time in markets hence the shared knowledge. As retail traders we are at the mercy of those who can see both sides of the market.

Keen246 my last post demonstrated a typical Wyckoff something that GP has a great deal of experience with. The most obvious is high effort should produce high reward and low effort, low reward… The problem starts when this law is violated. I have read many books on market micro structure and price discovery, the truth is, it is as simple as an auction. So in effect prices are fictitious and are designed to profit the market maker and specialist buyers (hedgefunds that buy on their behalf).

So knowing this, if you see price rising but activity is low, then this is similar to an empty auction house trying to ask higher prices but note if the market maker’s specialist have bought at 1.3600 then they will only desire to sell at 1.3700 or higher, to do so they must send the price higher to tease buyers in so they can sell to them at those higher prices (distribution phase) this allows them to sell at the highest possible price without causing the price to crash.

Once they have sold the last stock or inventory, they exit the market at this point the market maker is free to bid the price lower in a bid for the specialist to repeat the process at the bottom (accumulation phase), note in the FX market the seller just took the opposite side of the trade meaning they never left the market so the order flow is merely changed.

How do you get a glimpse (by no means will you be 100% correct)? Volume activity. Price most always reflect activity (tick volume), it may take millions to move the market just a tick or two. So if the market is moving up furiously on very little ticking is this not a trap?

Something to think on…

Yes, Pipme, trading is great, I had a slow week on the Euro madness and despite the entire market ranging for eternity and punishing me a for trying to trade it, the Euro figures came out the market reacted in both directions stop s were hunted and finally a real opportunity came along and it seems like life will be back to normal. I am still hanging on to last weeks blinding profits so I have mitigated risk quite well.

Looking forward to next week.

gp00053 · June 7, 2014, 11:12am

Here’s a great Larry Williams range trading strategy I use. In place of his will trend indicator I substituted with a 24 period EMA

Here’s a IMO better description on how to apply the 2 indicators

Forgot to show how it looks

PipMeHappy · June 7, 2014, 3:39pm

keen246:

Hi everybody, I’ve become very interested on VSA and been following each one of your posts and videos (thanks gp00053 for your posts. I truly appreciate and learn from them) on the subject on this thread and on the previous one. I’ve been reading a lot lately and Coulling’s book is on its way. I set my mind on becoming and expert on VSA. I know now it’s a long way and that it’s not matter of a few patterns to master and you’re already and expert. It’s a fully discretionary approach and requires to have solid foundation on VSA and PA and tons of practice.
As you may guess, I have now many questions. I’ll try to figure them out through reading and practicing but would be nice to have an expert advice when needed. I want to have the basics pretty clear, that’s why I would like to ask you guys, specially Emeraldorc, who seems to have more experience, the basic Wyckoff cycle of accumulation, re-accumulation, distribution-redistribution, on what time frame is most likely to be observed? Can you point me to a specific example where I can make and attempt to analyze it? I know that on practice it won’t appear like on the text book, but I don’t seem to see any resemblance of the cycle on any time frame. Or that model is not quite applicable to Forex but is it only valid on stocks trading?
@PipMeHappy: I guess that by now you have already finished Coulling’s book. Did you find it really useful and practical to learn about VSA applied to forex? I plan to start next week its reading but would be good to have your feedback.

Hello Keen246 !

I am at page 123 (out of 168), and I must say that I did find the book a little long-winded: some of the information really is over-cooked, but just a little… Better to take longer saying something if it means that
everyone reading it will understand it… The last section of the book should actually come much earlier on, in other words the screenshots of actual charts should have come right at the beginning, as the stylised volume
and price action graphs are often too ‘clean’ when compared to the sometimes ‘noisy’ look of charts…

The book is good but it could have been compressed to about half the size and given many more examples of
real chart screenshots… However, as a first and ‘gentle’ introduction to Volume Price Analysis, it is good… It is down to the reader to then take that learning onto live charts and applying the VPA principles to various scenarios, present and past… There are no ‘Eureka’ moments in the book, however, as it does repeat a lot of the ‘this will change your trading forever’ mantra but it does not show how with real chart samples until the last forty-three pages (out of one hundred and sixty-eight)!

However, if you took this book and then tried to apply its teachings in real charts, it would certainly be a good teaching resource, and you may want to integrate this with Coulling’s videos on her YouTube channel… I suspect that I will only truly appreciate the value of her teachings when I will ‘get’ what volume analysis could do for my trading… At present I have not incorporated volume analysis into my trading, mainly because I can only access it from the Desktop version of my trading software, but I actually do most of my trading (like the BabyPips FX-Honorary member, PipNRoll) on my mobile telephone, which means that I cannot access volume as it has not been made available for the web-version of my trading software…

When I will start my summer holidays, I will have more time to be at home during the trading week, and start my own studying of tick volume on the charts, and see if it can help me understand how to trade with it…

There you go!

Happy trading!

Enjoy the book!

PipMeHappy · June 7, 2014, 4:54pm

Good video, very clear…

Shame that the pictures/graphs were not given at the same time as the commentary: you only had a couple of seconds on a graph, then it would move on to the text slides, and you had to either scroll back every time or
simply rely on memory…

Nonetheless, yet another good (and free) resource,

so thank you, GP00053!!

Daxter1962 · June 8, 2014, 12:30am

PipMeHappy:

Hello Keen246 !

I am at page 123 (out of 168), and I must say that I did find the book a little long-winded: some of the information really is over-cooked, but just a little… Better to take longer saying something if it means that
everyone reading it will understand it… The last section of the book should actually come much earlier on, in other words the screenshots of actual charts should have come right at the beginning, as the stylised volume
and price action graphs are often too ‘clean’ when compared to the sometimes ‘noisy’ look of charts…

The book is good but it could have been compressed to about half the size and given many more examples of
real chart screenshots… However, as a first and ‘gentle’ introduction to Volume Price Analysis, it is good… It is down to the reader to then take that learning onto live charts and applying the VPA principles to various scenarios, present and past… There are no ‘Eureka’ moments in the book, however, as it does repeat a lot of the ‘this will change your trading forever’ mantra but it does not show how with real chart samples until the last forty-three pages (out of one hundred and sixty-eight)!

However, if you took this book and then tried to apply its teachings in real charts, it would certainly be a good teaching resource, and you may want to integrate this with Coulling’s videos on her YouTube channel… I suspect that I will only truly appreciate the value of her teachings when I will ‘get’ what volume analysis could do for my trading… At present I have not incorporated volume analysis into my trading, mainly because I can only access it from the Desktop version of my trading software, but I actually do most of my trading (like the BabyPips FX-Honorary member, PipNRoll) on my mobile telephone, which means that I cannot access volume as it has not been made available for the web-version of my trading software…

When I will start my summer holidays, I will have more time to be at home during the trading week, and start my own studying of tick volume on the charts, and see if it can help me understand how to trade with it…

There you go!

Happy trading!

Enjoy the book!

I couldnt agree more. I am about three quarters through the book and it is extremely long winded. I am a great believer in keeping things brief, clear and concise.

PipMeHappy · June 8, 2014, 4:06am

As an Italian myself, I can vouch for this: Coulling writes very much how I write, using long sentences and/or taking a long time to say something… It is how the Italian mind works (although Coulling moved to the UK
as a child, and did not actually complete her schooling there). . . Just check out my new video 301 Moved Permanently (a shameless plug, I know) to see how the art of ‘keeping it long-winded’ is achieved…

I should then keep quiet and practise what I preach or expect of others!

Having said that, my video is free

How do you think you will use your volume notions for your own trading, Daxter? I am not even sure if it will

help me, or rather, HOW… It seems obvious that it will be an ADDITIONAL tool in making decisions, but I

can say that for the most part it does still rely on Support/Resistance (or Demand/Supply) concepts, which

is what I use to trade… Therefore, I cannot truly say that reading Coulling’s book rocked my boat, but there

will be times when I may use volume, and times when it will just make things more complicated than it

should… In the end, it is all relative to what you use: for example, volume-price analysis seems to be

used by Coulling (and others) more on the one-hour and smaller time-frames than, say, on a monthly

one… This suggests that it is not true that volume-price analysis works necessarily well at ALL LEVELS!

I noticed that on the hourly time-frame, the ‘tick volume’ levels have smooth ‘waves’ that are very

much shaped or linked to the movement of the chart’s price action to which they refer… However,

trying to decipher the volume bars on a monthly chart, for example, is something that, based alone

on the principles in Coulling’s book alone, makes very little sense, or rather, it makes less IMMEDIATE

sense than looking at major Support/Resistance levels on a ten, twenty, or thirty-year scale… They

seem much more useful to me, on larger time frames, than the volume bars, in telling me where

the market is likely to pull back or continue in its direction…

That is ONLY MY TRADING OPINION, and nobody else’s… Expert Volume-Price traders might say

that this is only because I do not really GET IT, which is absolutely right! Maybe once I GOT IT

then I will be totally a convert.

Happy trading.

emeraldorc · June 8, 2014, 6:26am

PipMeHappy:

As an Italian myself, I can vouch for this: Coulling writes very much how I write, using long sentences and/or taking a long time to say something… It is how the Italian mind works (although Coulling moved to the UK
as a child, and did not actually complete her schooling there). . . Just check out my new video 301 Moved Permanently (a shameless plug, I know) to see how the art of ‘keeping it long-winded’ is achieved…

I should then keep quiet and practise what I preach or expect of others!

Having said that, my video is free

How do you think you will use your volume notions for your own trading, Daxter? I am not even sure if it will

help me, or rather, HOW… It seems obvious that it will be an ADDITIONAL tool in making decisions, but I

can say that for the most part it does still rely on Support/Resistance (or Demand/Supply) concepts, which

is what I use to trade… Therefore, I cannot truly say that reading Coulling’s book rocked my boat, but there

will be times when I may use volume, and times when it will just make things more complicated than it

should… In the end, it is all relative to what you use: for example, volume-price analysis seems to be

used by Coulling (and others) more on the one-hour and smaller time-frames than, say, on a monthly

one… This suggests that it is not true that volume-price analysis works necessarily well at ALL LEVELS!

I noticed that on the hourly time-frame, the ‘tick volume’ levels have smooth ‘waves’ that are very

much shaped or linked to the movement of the chart’s price action to which they refer… However,

trying to decipher the volume bars on a monthly chart, for example, is something that, based alone

on the principles in Coulling’s book alone, makes very little sense, or rather, it makes less IMMEDIATE

sense than looking at major Support/Resistance levels on a ten, twenty, or thirty-year scale… They

seem much more useful to me, on larger time frames, than the volume bars, in telling me where

the market is likely to pull back or continue in its direction…

That is ONLY MY TRADING OPINION, and nobody else’s… Expert Volume-Price traders might say

that this is only because I do not really GET IT, which is absolutely right! Maybe once I GOT IT

then I will be totally a convert.

Happy trading.

Watching your video now Pip… Great quality voice, can tell you are use to teaching others

Coulling is like Marmite I certainly agree. Volume has always played a role in my trading before meeting Coulling prior I had never encountered retail traders who used it.

I think she struggles to realize that most of volume associated trading requires a great degree of real time observation. So seeing a volume bar mirror price action is important, rather than seeing the bar after the price action completes. If you are sitting at a chart like you sit at your work desk then picking a trade is really easy. If you have to work a lot then analysis is sure harder.

For example I would see a price action develop on a 15 min chart at 10 mins the candle spread is long and approaching resistance and the volume is still pretty small, I know if I am on the long side I should take profit now and reverse to the short side or at the least wait as the price action will tail off.

The volume just adds relevance to the price action. So simply you can adopt a strategy of every time price action breaks a resistance or support level on strong volume take the trade and set a stop below or above that S or R level. That’s pretty simple right? What you use to exit is up to you.

Once you have mastered breakout trades then you can move to divergence, so if volume is falling and price is rising it is divergence if this is close to a resistance level then take the short side and any stops above the R level.

You can still use Fib to exit, MFI, etc for overbought levels but adopt a habit of buying or selling into rising volume will improve your entry and hence your risk/reward ratios considerably and at some point leveraging your position properly to maximize. Example, 50k lot trade with a 10 pip SL will mean a $50 risk is a 5% money risk, 20 trade drawdown allowance on $1000 account. Assuming you took 20 trades like this with a 60% win ratio for a breakeven dollar amount (I am basing this on my own accounts 70% win ratio) then you will have a net return of $200 after 20 trades (this maybe over a month, week or year).

Not to say you can’t do this with other methods but for your risk you may want to be safe and buy into a strong move above resistance or sell a weak move at resistance, volume is still the only way to determine the overall strength. That’s my logic…

In any case it is what makes you money you must stick to and not really change system because anyone says so. So Anna’s mistake is to write a book that has not considered people’s life balance with trading. It is still a great starting point for new traders, we all know the pain when you start out with several indicators with most people not knowing how the indicator was developed.

PipMeHappy · June 8, 2014, 6:43am

Emeraldorc, if there were a button for “REALLY like” I would have clicked it… Great post. . You may not be a teacher by trade, but you would make a great trading instructor …

Cheers

PS: do you like Marmite? I hate it with a passion but I still love Coulling

emeraldorc:

Watching your video now Pip… Great quality voice, can tell you are use to teaching others

Coulling is like Marmite I certainly agree. Volume has always played a role in my trading before meeting Coulling prior I had never encountered retail traders who used it.

I think she struggles to realize that most of volume associated trading requires a great degree of real time observation. So seeing a volume bar mirror price action is important, rather than seeing the bar after the price action completes. If you are sitting at a chart like you sit at your work desk then picking a trade is really easy. If you have to work a lot then analysis is sure harder.

For example I would see a price action develop on a 15 min chart at 10 mins the candle spread is long and approaching resistance and the volume is still pretty small, I know if I am on the long side I should take profit now and reverse to the short side or at the least wait as the price action will tail off.

The volume just adds relevance to the price action. So simply you can adopt a strategy of every time price action breaks a resistance or support level on strong volume take the trade and set a stop below or above that S or R level. That’s pretty simple right? What you use to exit is up to you.

Once you have mastered breakout trades then you can move to divergence, so if volume is falling and price is rising it is divergence if this is close to a resistance level then take the short side and any stops above the R level.

You can still use Fib to exit, MFI, etc for overbought levels but adopt a habit of buying or selling into rising volume will improve your entry and hence your risk/reward ratios considerably and at some point leveraging your position properly to maximize. Example, 50k lot trade with a 10 pip SL will mean a $50 risk is a 5% money risk, 20 trade drawdown allowance on $1000 account. Assuming you took 20 trades like this with a 60% win ratio for a breakeven dollar amount (I am basing this on my own accounts 70% win ratio) then you will have a net return of $200 after 20 trades (this maybe over a month, week or year).

Not to say you can’t do this with other methods but for your risk you may want to be safe and buy into a strong move above resistance or sell a weak move at resistance, volume is still the only way to determine the overall strength. That’s my logic…

In any case it is what makes you money you must stick to and not really change system because anyone says so. So Anna’s mistake is to write a book that has not considered people’s life balance with trading. It is still a great starting point for new traders, we all know the pain when you start out with several indicators with most people not knowing how the indicator was developed.

Daxter1962 · June 8, 2014, 6:56am

PipMeHappy:

As an Italian myself, I can vouch for this: Coulling writes very much how I write, using long sentences and/or taking a long time to say something… It is how the Italian mind works (although Coulling moved to the UK
as a child, and did not actually complete her schooling there). . . Just check out my new video 301 Moved Permanently (a shameless plug, I know) to see how the art of ‘keeping it long-winded’ is achieved…

I should then keep quiet and practise what I preach or expect of others!

Having said that, my video is free

How do you think you will use your volume notions for your own trading, Daxter? I am not even sure if it will

help me, or rather, HOW… It seems obvious that it will be an ADDITIONAL tool in making decisions, but I

can say that for the most part it does still rely on Support/Resistance (or Demand/Supply) concepts, which

is what I use to trade… Therefore, I cannot truly say that reading Coulling’s book rocked my boat, but there

will be times when I may use volume, and times when it will just make things more complicated than it

should… In the end, it is all relative to what you use: for example, volume-price analysis seems to be

used by Coulling (and others) more on the one-hour and smaller time-frames than, say, on a monthly

one… This suggests that it is not true that volume-price analysis works necessarily well at ALL LEVELS!

I noticed that on the hourly time-frame, the ‘tick volume’ levels have smooth ‘waves’ that are very

much shaped or linked to the movement of the chart’s price action to which they refer… However,

trying to decipher the volume bars on a monthly chart, for example, is something that, based alone

on the principles in Coulling’s book alone, makes very little sense, or rather, it makes less IMMEDIATE

sense than looking at major Support/Resistance levels on a ten, twenty, or thirty-year scale… They

seem much more useful to me, on larger time frames, than the volume bars, in telling me where

the market is likely to pull back or continue in its direction…

That is ONLY MY TRADING OPINION, and nobody else’s… Expert Volume-Price traders might say

that this is only because I do not really GET IT, which is absolutely right! Maybe once I GOT IT

then I will be totally a convert.

Happy trading.

In short, I do not know. I am slowly getting to grips with some aspects, such as Pete Faders no demand on single bar pull backs, but there seem to be so many anomolies with volume. Firstly there is the high volume bar which can signify the end of a phase or strength in a movement. Secondly, volume seems to be all over the place in a period of accumulation/ distribution and that is where I have great difficulty interpreting where price is going to go next. I guess the only way to get to grips with it, is to put the hours in watching volume on live charts. Everyone who has mastered volume, swears by it, so it is certainly worth the time and effort.

PipMeHappy · June 8, 2014, 7:20am

Hello Daxter, I agree with everything you said, as I am going through exactly the same mental process, where volume seems to be so ambiguous at times, when related to price action… And, as you say, if so many swear by it, it may be a case of, as ‘Professor Emeraldorc’ says, putting in the screen observation time, which is what Coulling says too… In the end, though, as Prof. Emeraldorc says (sorry Emerald, I must stop professoring you up), if something works for you, maybe you need not mess with your trading too much just because someone swears by their method… However, as I was saying to GP00053 in an earlier post on this thread, I feel on the cusp of something quite significant, and that is, the discovery that volume is indeed something that can inform trading IN REAL TIME… what I had not realised until Prof. Emerald’s post today was that volume is so much more powerful when observed in action IN REAL TIME, although I am sure that as historical data it can also inform your trading: when you look at, say, CAD/JPY’s tick volume since the beginning of the available chart data (on FXCM this is about fourteen years) you will see volume in the last few years increasing to great heights; we KNOW that FX volume in this period has progressively diminished OVERALL, so why would it go up so much for this pair? Perhaps because of the Yen’s QE programme? How does this inform our trading in the short, medium, and long term, for this pair, for example? Well, it does not! This is where historic price action Support/Resistance, Fib levels, and past data comes across as much more relevant than volume bars… at least if I understand this right…

Also, volume is dependent on your broker’s particularly market participation levels… Still, if you compare apples with apples, i.e. you only trade according to the same broker’s tick volume every time, then your volume-price analysis would be relative to what your broker’s volume bars would tell you, which would not be a problem, then.

Whatever you do, keep us posted, Daxter! Good luck finishing Coulling’s book…

And, as I am wont to say,

Happy Trading!