While I cannot speak for others, I view volume and PA as either one of two things.
Confirmation.
Anomaly.
There are many threads discussing how to view volume and PA together. A search for VSA will help you with that and I don’t want to post links to other threads. Read about men like Jesse Livermore and Wyckoff.
I have decided upon trial and error, that CONFIRMATION of my PA through volume is what suits my personality best. Anamolies only make me second guess myself and as we all know, that is the make or break of this game.
I can give an example. USDCAD below. Followwww…MEEEEEE
On Dec 12 of 2013, we received a Large bullish Engulfing bar after breaking through previous resistance. This as PA traders was a great place to look for setups. With the trend, Large PA, Swing point on and on. Volume on that day was fairly high compared to the previous 3 days (most of which were bearish). The following day, A VERY large bearish bar appeared. This might have scared lots of pure PA traders out of the trade as it would have been fairly close to the SL’s of these traders. However take a look at the volume and you will see that it was a tad lower than the bear bars previous to the EB. A false push down with no momentum behind it compared to the Bullish EB. A very simple way of confirming if a move is genuine or not.
You can think of it like this, bodybuilder and strongman compete in a lift. Both are fairly built but one moves the weight with clear strength over the other, whereas one is just for show and may or may not be able to complete the lift (unless you are Ronnie Coleman and not to say some PA for show creates big reactions). Just be sure that you dont compare one to one constantly, but rather read the volume just as you would read the PA. As a whole.
Ay up folks,
Just checking in after me christmas break, hope you all had a good rest and charged those batteries up ready for another year. New years resolution trading checklist goes as follows:
Don’t set a monthly goal, I feel if I do then once I go into the negative then I overtrade to try to make up my losses before the month is out which promotes revenge trading and emotions kick in.
Never chase a missed trade because I think I won’t get the opportunity to trade again this week.
Last year my worst month was -12R (12 trades) and my best month was +15R (2 trades). Nuff said!!!
Only look at charts twice a day NY close and 2pm or 10am(uk time) depending on my work shift pattern.
Keep a detailed record of each trade, not just the usual ENTRY, T/P, S/L, PA signal etc… but screenshots and even how I feel at the time I open the trade and manage it afterwards. This makes me trade only good set ups because I’m quite lazy and can’t be arsed with paperwork.
5.Write down my strategy and stick to it to the letter
6.Write down my strategy and stick to it to the letter
7.Write down my strategy and stick to it to the letter
8.Write down my strategy and stick to it to the letter
9.Write down my strategy and stick to it to the letter
10.Write down my strategy and stick to it to the letter.
P.s For those of you in the U.S Brrrrrrrrrrr!!! Shove another log on the fire
I have entered a trade @.8240 on nzd/usd, going short
Downtrend with a retracement to the .618 fib level that formed a solid pinbar with increased volume compared to previous candle.
He only weakness i see in this is that there is minor noise to the left and the S/R level is based on the fib level rather than a line I had drawn into my charts.
Overall, based on my scoring system, i give it 4/6 and am risking 2%.
My take profit is currently set at just about a 1:2 RR
It most definitely can follow through. Just use confluence in your favor to weed out the ones you dont have confidence in.
First, lets take a look at volume as an anomaly. In the same USDCAD DAILY chart, on Nov 22 and 25, we have 2 CT PB’s that are at a really nice resistance level. Normally being CT, you’d be cautious of entering those 2 but looking at the volume, we can be almost certain because both volumes were fairly low compared to the big bullish bar preceding it with the 2nd PB showing even less volume than the first. Large moves followed by little volume against the trend? Odd place to enter with odds stacked against us. Warning signs!
Now an example of one that followed through. I will use USDCAD DAILY again because I hear often how when giving examples, I could be cherry picking. No excuses with this one. Aug 23rd. Not exactly a pinbar but long tail at a resistance with strong push down (no nose) showing strength in the down move. Seems fairly nice BUT was accompanied with lower volume compared to the past 3 days with big solid bullish bars. You could see in the next few days it whipsawed back and forth and finally gave in to the downside. Lot’s of PA with low volume can produce sizeable moves depending on your risk and money management (11/16/13, 10/05/13, 7/12/13, 7/25/13 to name a few on USDCAD). It’s just your decision to see if they fit in with your trading plan and if you believe the odds are stacked in your favor. Sometimes, you have perfect PA with a spike in volume and it doesn’t play out as well as you’d hoped. Just open up a pair and look back at the history, I’m sure that’s easy enough to do.
So yes, there are many examples showing low volume PA producing big moves, but like I said in my example with the weight lift, the bodybuilder may or may not be able to lift the weight the strongman lifts. We just have to concern ourselves with putting the odds in our favor much like the hunger games
Of course, this is but my humble opinion/view and may differ from everyone elses but that is why we’re here to learn from each other!
A bit curious about tick display. I’m using MT4 and I don’t like it’s default tick line. I think it’s hard to see. Yours and K’s tick bars are much easier to read. Anyway I can get that in MT4?
Here’s a captured of USDCAD daily chart you mentioned.
Yea sure I use MT4 as well. I hated those thin lines too as it was hard to discern between each bar from the next. Go to volume properties and on the colors tab just make the lines thicker on the left. I set mine to the 4th from bottom.
Now that I take a second look at your screen, you have the on chart volume (pressing CTRL + L). I use the volume Indicator on a seperate window. I couldn’t find a way to make the lines thicker for the on chart volume You could switch to the volume indicator if you don’t mind and change it there if it still bothers you.
I’m also in this one with you. I liked the pin bar as it formed near a diagonal tread line going back to July and EMA-21 line (sorry I can’t post pics at this time). I entered at the retracement of the pin bar with a SL of 1.6331 and a TP of 1.6490. I was unsure on TP as I had to go back to 2011 to see when the price was this high so I just went for a 1:2 and will monitor it.[/QUOTE]
Hey TJTrader
The GBPUSD seemed to be working out nicely last night until today’s GBP data. My plan was to take whatever profit I had off the table before NFP but there is a spanner in the works now. What do you plan on doing? I am currently trailing a stop looking to bail with minimum damage. I still believe that it will go up as it is hugging the 30 day MA beautifully on the daily chart. My worry is that the NFP data will whip me out of the trade before it starts moving again. This is a frustrating one as it still looks like a nice trade to me and easily had a 3 to 1 risk reward ratio.
The GBPUSD seemed to be working out nicely last night until today’s GBP data. My plan was to take whatever profit I had off the table before NFP but there is a spanner in the works now. What do you plan on doing? I am currently trailing a stop looking to bail with minimum damage. I still believe that it will go up as it is hugging the 30 day MA beautifully on the daily chart. My worry is that the NFP data will whip me out of the trade before it starts moving again. This is a frustrating one as it still looks like a nice trade to me and easily had a 3 to 1 risk reward ratio.[/QUOTE]
On the NFP topic, USDJPY is forming a lovely ascending triangle on the 1hr chart as it waits for the data. I’m going to have a go at trading this during the data release using the nearest daily resistance to enter and adding a very tight stop loss the other side of it. I’m going long and will let you know what happens.
On the NFP topic, USDJPY is forming a lovely ascending triangle on the 1hr chart as it waits for the data. I’m going to have a go at trading this during the data release using the nearest daily resistance to enter and adding a very tight stop loss the other side of it. I’m going long and will let you know what happens.[/QUOTE]
Well I got that call wrong but was not triggered in. I’m disappointed I canceled my USDGBP trade now though as I imagine it’s back on baby!
Can’t speak for others but I like to be sure I’m either break even or out of it till the daily close. I’d feel more comfortable knowing it could spike it my direction / Break Even as opposed to go against me / hit my SL.
Can’t speak for others but I like to be sure I’m either break even or out of it till the daily close. I’d feel more comfortable knowing it could spike it my direction / Break Even as opposed to go against me / hit my SL.
Don’t let it take you for a roller coaster ride :)[/QUOTE]
Thanks Semmee, that’s re-assuring and sounds about right. I’ve actually reset a buy limit for the USDGBP hoping I can get back on it, I’m not sure what the chances of it Returning to my entry point are - pretty low I imagine, gutted!
Hey man don’t worry I got BE in like 2 seconds with sizeable profit on 3 of my trades. It spiked and went nuts and went my way again. **** happens but I make sure that it doesn’t hit me…just fly around me
Setups will occur no doubt about that. Either you can wait it out till the Daily cause NY and London still in play. Lot’s of healthy volume yet to occur Debating right now on GBPCHF 4HR.
Hey man don’t worry I got BE in like 2 seconds with sizeable profit on 3 of my trades. It spiked and went nuts and went my way again. **** happens but I make sure that it doesn’t hit me…just fly around me
Setups will occur no doubt about that. Either you can wait it out till the Daily cause NY and London still in play. Lot’s of healthy volume yet to occur Debating right now on GBPCHF 4HR.[/QUOTE]
Thanks Semmee, well done for taking profit. I’m going to stay out the markets for the rest of the day now as I generally don’t trade Fridays. I will let the dust settle and see what it looks like next week.
You could switch to the volume indicator if you don’t mind and change it there if it still bothers you.