Hey...what about Volume? | Page 28 | Forex Factory

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Hey...what about Volume?

  • #541
  • May 7, 2019 6:00pm May 7, 2019 6:00pm
Quoting danasa
...I think the trickiest of them all is the variability of the Absorbtion in its myriad forms.
Actually I've found that the exhaustion phase is the most opaque and difficult to determine. This is precisely due to the differences between "true" volume and tick volume. Tick volume does not give you the @bid or @ask transaction, which are used to determine the "aggressiveness" of the market. That is what I attempt to extrapolate with my crude indicator. However, Absorption is quite simple to find even without any special indicators. Simply stated, it is any candle that closes more than 50% away from its extreme on rising tick volume. Often these will produce a pin bar that isn't always the case. In post #534 I showed that the absorption can also be split between two bars that produce the same effect as a pin bar.


Quoting danasa
... Pls correct me on the above notes where I am wrong! But now I want to know how to read the delat volume extrapulation more...I see it is useless alone, it has to be cordinated with the tick volume and location and closing price and wicks characteristic...pls shed more light on this!
You appear to have absorbed the material quite well and I congratulate you. I believe pretty much any indicator (including mine) is "useless" if all you are trying to do is enter/exit using some fixed set of rules, like a computer algorithm. I came up with this tool to allow me to "see" better how the order flow was developing on the right hand edge and then be able to make real time decisions about my trades. I no longer have a "fixed set" of rules to trade with....Yes I know this sounds ridiculous.

When I trade, I am looking for turning points. Those points where the market stops moving in one direction and goes the other way. While have become quite skilled at finding them, not all turning points result in "push off" as you describe, or reversal. Some turning points merely result in sideways price action. But one cannot predict the future. I simply read what I think is the evolution of the order flow on the right hand edge and try to make appropriate decisions based on what I see.
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  • #542
  • May 7, 2019 6:05pm May 7, 2019 6:05pm
Quoting danasa
Sorry to seem to over type; but I have looked at www.algodeveloper.com for the indicator I have not found it on their site. Please can you give a direct link or instruction on how to get it?
This is the page you want: https://www.algodeveloper.com/product/volume-profile/

You have to ask the propietor for a copy of this indicator that allows you to configure it for "delta" volume.
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  • #543
  • May 7, 2019 7:24pm May 7, 2019 7:24pm
Thank you Shifu, your humble disciple appreciates your knowledge!
  • #544
  • May 8, 2019 9:17am May 8, 2019 9:17am
Quoting danasa
Thank you Shifu, your humble disciple appreciates your knowledge!
Inserted Video


Soon you will "see" - Grasshopper!!
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  • #545
  • May 8, 2019 1:59pm May 8, 2019 1:59pm
Quoting DonPato
{quote} Hello LuckyMind and welcome As I do not know what indicator you are running at the bottom of your chart I felt it best NOT to make any assumptions and refer back to my own "extrapolated Delta". As I have stated in the past on numerous occasions, I hesitate to use these methods on intraday trading because of the waxing and waning of volume during a 24 hr day...that is typical of various markets around the world opening and closing. However I have corrected your phase analysis as follows: {image} Note here that the climax phase occurred when...
Thank you!
  • #546
  • May 15, 2019 7:44am May 15, 2019 7:44am
As you promised - Soon you will "see" - Grasshopper!!

Has this volume kung fu tutorial ended, how will we see the grasshopper when the Shi Fu is not handing out the lesson for advancement...

I know you are busy, but pls do update us. thank you!
  • #547
  • May 16, 2019 9:36am May 16, 2019 9:36am
Quoting danasa
As you promised - Soon you will "see" - Grasshopper!! Has this volume kung fu tutorial ended, how will we see the grasshopper when the Shi Fu is not handing out the lesson for advancement... I know you are busy, but pls do update us. thank you!
While I appreciate your enthusiasm and eagerness, I started this thread to stimulate conversation and dialog. However there doesn't seem to be anyone interested in this kind of discussion. So if you wish to start a dialog on this subject please ask a question and I will do my best to explain.

This is NOT a tutorial or class on how to trade...I am simply sharing my point of view and market observations that support that view. Anyone is free to debate or disagree as long as they do it respectfully and do NOT become "Troll-like". I'm certain there are points of view that are different from mine and I am equally certain that one will never convince the other of the "truth" they have established for themselves. In this we agree to disagree, but simultaneously acknowledge with respect that if its working for you...then congratulations!! That is the point of trading successfully, finding something that works for you and that allows you to "see" the market clearly.

My point of view (as I have stated many times here and other places) is this:

  1. Anyone and everyone who wishes to participate in the market MUST do so through the auction process, by placing orders
  2. Each of those orders whether generated in person or by computer is stamped with a Date/time/and size (volume).
  3. These order are constantly "flowing" in and out of the market producing a flow of orders that are world wide
  4. Orders to buy and sell are matched with each other in a giant machine (now a super computer) called "the market"
  5. The constantly changing and variation of these orders produces movements in price we commonly term "price action"
  6. This price action is the RESULT not the cause of order flow/volume generation. Therefore Price itself is "lagging" behind the other structural components of the market.

The study and evaluation of order flow/volume can coincide with or even precede price movements. And when this study is correlated with TIME a small but consistent inefficiency can be found and a brief window of opportunity opens to take advantage of that inefficiency. With proper training and observation one can use this small inefficiency to create an edge that will out perform the market at large.

OK...there you have it...my trading system, beliefs, and methodology in one concise, "easy to read" 3x5 card.

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  • #548
  • May 16, 2019 3:35pm May 16, 2019 3:35pm
Quoting DonPato
{quote} While I appreciate your enthusiasm and eagerness, I started this thread to stimulate conversation and dialog. However there doesn't seem to be anyone interested in this kind of discussion. So if you wish to start a dialog on this subject please ask a question and I will do my best to explain. This is NOT a tutorial or class on how to trade...I am simply sharing my point of view and market observations that support that view. Anyone is free to debate or disagree as long as they do it respectfully and do NOT become "Troll-like". I'm certain...
The Don certainly you are getting too edgy on my comment above. I like to see myself being playful mostly...Not trolling...that was harsh and surprising.

I posted that comment before we had a chance to have our conversations a day ago. Take it easy and be playful. That being said, I like your view of market and I am fusing it with mine! So chill... Since ppl r not interested I am. We continue our discuss else where ...you know where!
  • #549
  • May 16, 2019 5:19pm May 16, 2019 5:19pm
Quoting DonPato
{quote} This is the page you want: https://www.algodeveloper.com/product/volume-profile/ You have to ask the propietor for a copy of this indicator that allows you to configure it for "delta" volume. {image}
hellow DonPato can you eurgbp analysis shareshort position?
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  • #550
  • May 16, 2019 5:52pm May 16, 2019 5:52pm
Quoting DonPato
{quote}

  1. This price action is the RESULT not the cause of order flow/volume generation. Therefore Price itself is "lagging" behind the other structural components of the market.


The study and evaluation of order flow/volume can coincide with or even precede price movements. And when this study is correlated with TIME a small but consistent inefficiency can be found and a brief window of opportunity opens to take advantage of that inefficiency. With proper training and observation one...

Very well said and precisely my own belief.
  • #551
  • May 16, 2019 6:26pm May 16, 2019 6:26pm
Quoting thisara1
hellow DonPato can you eurgbp analysis shareshort position?
I am currently away from my office and only checking messages with my cell. As soon as I return to the office I will be happy to provide my opinion
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  • #552
  • May 16, 2019 6:27pm May 16, 2019 6:27pm
Quoting Nik-Nyc
Very well said and precisely my own belief.
Thank you for your compliment. Great minds think alike!!
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  • #553
  • May 16, 2019 6:34pm May 16, 2019 6:34pm
Quoting danasa
The Don certainly you are getting too edgy on my comment above.
Not edgy at all no "snarkiness" intended. I don't think you a troll I was simply asking any who disagree to do so respectfully.
Quoting danasa
I like to see myself being playful mostly...
However I do take what the business seriously and find no time for being playful in this venue...if I want a good laugh I will watch CNN business or Bloomberg. (Now THAT should be funny).

In all seriousness I had no intention of offending and apologize if that is the case.
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  • #554
  • May 16, 2019 9:07pm May 16, 2019 9:07pm
Quoting thisara1
hellow DonPato can you eurgbp analysis shareshort position?
I will not be able to go back to my office tonight so I will leave you with this screenshot from my phone.
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Of note here is that volume is holding steady as it broke above most recent highs and doesn't appear (at this point) to show any significant sign of slowing down. I see mostly buyers dominating the market and I would have no inclination to sell short at this point.

If you are interested in a short position here I would say keep your position small. I don't see any reason to be interested in selling.

That being said...it's also way too late for a buy...so this chart says, "wait" to me. It is also the last day of the week so price will likely be volatile.
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  • #555
  • May 17, 2019 8:16am May 17, 2019 8:16am
Quoting thisara1
hellow DonPato can you eurgbp analysis shareshort position?
OK...now I am back in the office and have a far more informed view of this market that you asked me to assess.
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Note first: the selling exhaustion phases that appeared and also coincided with the bottom of a well established range (9 weeks in the making). Of particular interest is that the absorption phase was "hidden" inside the large bearish candle that formed the last bottom. It would have been indistinguishable except that the delta volume profile allowed it to stand out...a large block of selling that could NOT push price any lower...Text book absorption.

Next: On the very next candle you see the order flow "inversion". This is MY term (I invented it) to explain that the majority of the buying is occurring in the top 1/2 to 1/3 of the candle. as well the very next candle confirms this with the majority of selling occurring in the lower 1/2 to 1/3 of the candle. This shows the order flow has turned to buying dominance and as can be clearly seen in retrospect, demand is pushing prices higher.

Finally: Note the large blocks of buying that occurred just above the old resistance areas...these buyers are the shorts that are now stopping out, flooding the market with buy orders. You are now seeing almost exclusively buying above this area as the retail traders are jumping on. This will soon lead to a Climax buying bar (which is your clue to start looking for the short)...Keep a watch for Climax, Exhaustion, and Absorption buying...

A word of caution on the short...it may be very short lived and only return to "retest" the top of the last 9 week channel.
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  • #556
  • May 17, 2019 8:30am May 17, 2019 8:30am
Hello DonPato, I wanted to follow up on my last post regarding identifying that long setup on BTC, given the very simple truth of volume. On the flip side I managed to identify the turn for a short run down. Thank you again for sharing
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Those that say do not know. Those that know do not say.
  • #557
  • May 17, 2019 9:01am May 17, 2019 9:01am
Quoting ohenry
Hello DonPato, I wanted to follow up on my last post regarding identifying that long setup on BTC, given the very simple truth of volume. On the flip side I managed to identify the turn for a short run down. Thank you again for sharing
I hope you will continue to be successful in your trading and that this small contribution to your knowledge base will serve you well. I don't follow or trade bitcoin but see the logic of your position. I would simply add this word of caution and you can take it for what its worth because again, I no absolutely NOTHING of Bitcoin.

I see you are trading an intraday chart (4 hr) but also note that you look at a variety of time frames (daily, weekly, etc). I've mentioned this before that intraday volume (especially tick volume) does not accurately reflect order flow unless you are using it well within a particular session...EURO/London session, NY session...etc. Even on your chart you can see "waves" of volume as markets around the world open and close. Thus, while a Climax bar may stand out, if your exhaustion and absorption bars seem to appear during a period where markets are in between sessions, or just prior or after a major news announcement, this can skew the volume and mask phases or provide misleading information...again just a word of caution when using intraday tick volume...I will now get off my soapbox.

I am very gratified that you have been able to use this information to your advantage and wish you continued success.
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  • #558
  • May 17, 2019 9:37am May 17, 2019 9:37am
I don't know if you've ever read when I've stated (out of theory) that, "...buyers are driving the market lower..." Many have challenged that idea when I speak to them in person...so with the use of Delta volume Profiling I can finally state with confidence that this phenomenon DOES occur and now have a visual record to show you...daily USD/JPY.
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While the tendency for this market is to buy...price has been slowly creeping downward over the past two weeks....HUH? Yes, buyers are coming into the market in areas where they think price will reverse but are wrong and are getting stopped out. These stop runs, (waves of selling) cause price to fall even further, which inspires more buying, but the buying is too weak to affect price and another wave of stops are hit.

Finally when the buyers say..."Enough!! I don't know where the bottom is..." The bottom then forms because the only selling that was occurring was waves of buyers stopping out. Anyone who was short from the top was simply holding on and moving their stops down until yesterday when they were stopped out.

So the big question mark is this...
Are there enough interested NEW buyers to push price higher? or will price drift down (trying to attract more buyers) and stop out the remaining few that were lucky enough to get in near the bottom of this chart? And if that happens will this attract new selling to really push price down?

OR...
Will more short stop out and push price higher to close the gap seen on this chart from two weeks ago? And will this produce more buying?

Questions...questions...no one can know the future...but if you are in this market right now...long or short I'm sure you're scratching your head...as I am. Perhaps it helps to know that the only thing driving price lower seems to be buyers...stopping out

Anyone want to venture a guess?? anyone?
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  • #559
  • May 19, 2019 6:30am May 19, 2019 6:30am
Quoting DonPato
{quote} OK...now I am back in the office and have a far more informed view of this market that you asked me to assess. {image} Note first: the selling exhaustion phases that appeared and also coincided with the bottom of a well established range (9 weeks in the making). Of particular interest is that the absorption phase was "hidden" inside the large bearish candle that formed the last bottom. It would have been indistinguishable except that the delta volume profile allowed it to stand out...a large block of selling that could NOT push price any...

thank you expain DonPato i am hold eurgbp
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  • #560
  • May 21, 2019 1:20pm May 21, 2019 1:20pm
Quoting thisara1
{quote} thank you expain DonPato i am hold eurgbp
I have been watching this pair and looking for a short opportunity. Indeed, price has risen 12 days without even any sign of slowing the bullish advance. Well now I think I have found some...
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The last few days appear to show larger and larger selling interest at the top of the last 3 days. Today's selling was sufficient to push price below yesterday's low. (1st time in 12 days that has occurred). In addition, the buying that had now returned price to the highs is weak buying. In addition, although gross tick volume is increasing...delta volume is falling off. My conclusion is that larger traders who've been holding long are taking profits. (scaling out or closing out). This is what caused the earlier sell off. I look for any further selling to increase in intensity. I have entered a short at the current level with an additional short placed above today's high. Lets see what happens...
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