Sometimes I really think the market is fully random and neither volume or whatever even make sense. The chart below: 3 HV weak bars right into round lvl. Follow with low volume retracement at low of UHV. Still moving up {image}
In practice, this means: (1) The trend is your friend. (2) Cut your losses short and let your profits run.
Take a look at this chart:
Admittedly, this is a hindsight chart. But if the weakness and strength you see are there now, they were there then. However, that is not the real issue. The real issue is that at some point, you have to be able to recognize the non-random state of the Market and go with it.
Personally, I prefer the use of indicators to assist me in identifying a potentially non-random period. While I don't want to use them to make trading decisions, I don't want to trade against them either.
Are there opportunities to go Long when Chart Modes I & II are red and price is below both the Balance Point Line (BPL) and the Trend Bias Line (TBL)? Yes. However, it is more likely than not, that Short trades avail the trader to benefit from a period of non-randomness to the downside-a DOWNTREND. If you're right, then sit tight and gather as much profit as you can. And if you're wrong, which you will be the majority of the time, cut your losses as quickly as possible. After all, you can't profit from the periods of TREND if you don't have the money in your account to make a trade.
Much of trend trading is "location trading". Which means, you have to "be there". "Being there" entails seeing the trade and having the ability to enter (i.e. money in your account).
Although some clearly stand out, notice that I am not highlighting any entries on the chart. What is more important to me is the knowledge that I would never go Long on the left side of the chart and I would never go Short on the last third of the right side. Of course, this does not negate randomness nor assure I can't be wrong. But If I wanted to catch a train going South I would have two options: (1) Look for a slowing train moving North, jump on and hope it changes direction. Or (2) Jump on a train already moving South. I prefer the latter.
Volume Spread Analysis (VSA) and trend Indicators help me identify which train is which.
Without VSA, you're playing checkers while the Smart Money plays chess.
