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Hey...what about Volume?

  • #701
  • Oct 30, 2019 4:29pm Oct 30, 2019 4:29pm
Quoting FXState
.... Don the DeltaMan
NowI'm just blushing...

Thank you for your kind words.
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  • #702
  • Nov 5, 2019 1:19pm Nov 5, 2019 1:19pm
Hello Don Pato, I mentioned you in a post on the WTI thread, I'm looking at the hourly volume, seems we have a little bit of a spike at higher prices, trying to see what you may see, the price could be moving higher and I'm claiming absorption, could I get your view, if you have a mo, thanks Detector.
I don't need to be good at the game, only good enough to beat my opponent,
  • #703
  • Nov 5, 2019 2:19pm Nov 5, 2019 2:19pm
Quoting detector
Hello Don Pato, I mentioned you in a post on the WTI thread, I'm looking at the hourly volume, seems we have a little bit of a spike at higher prices, trying to see what you may see, the price could be moving higher and I'm claiming absorption, could I get your view, if you have a mo, thanks Detector.
If you are asking for my opinion on WTI...my broker does not provide that market for me. However if you are asking about Nat Gas here is my take on the top here...according to the hourly order flow.
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There was indeed absorption at the highs of the day on this market which quickly moved down. But now toward the end of the day it appears buyers are coming back in to support the lows. Let me see if I can find hourly WTI futures on the internet
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  • #704
  • Nov 5, 2019 2:29pm Nov 5, 2019 2:29pm
Quoting DonPato
{quote} If you are asking for my opinion on WTI...my broker does not provide that market for me. However if you are asking about Nat Gas here is my take on the top here...according to the hourly order flow. {image} There was indeed absorption at the highs of the day on this market which quickly moved down. But now toward the end of the day it appears buyers are coming back in to support the lows.
Oh no problem Don Pato, thanks for taking the time, maybe see if their is some correlation with the two, just a thought and I could be wrong as I'm still putting this together, the price has been in a bit of a trend (1hr) and hit the outer boundaries of where I would be shorting, however volume/activity is a little scarce but the spike is reminiscent of what you see, (or I see) as absorption, giving this theory away also is there is no spike outside the boundaries then back in, it's slowly approaching with breakout intentions (only my thoughts) sorry to ramble on, really appreciate you taking the time, thanks, Detector
I don't need to be good at the game, only good enough to beat my opponent,
  • #705
  • Edited 3:41pm Nov 5, 2019 2:35pm | Edited 3:41pm
I found this at barchart.com. This is the Dec 19 futures contract for WTI. Intraday was quite active today. I used the 6 min chart (which I think is best intraday for futures). Just using the raw tools to see this is what I saw using the following definition of absorption: Price closes < 50% off the extreme on rising volume. This is the general definition I've been using when I don't have access to more detailed information.
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Please also remember this is in retrospect so it is easy to look back at the completed day and say where one should've recognized signals...but doing that on the right hand edge is a little different...this is why I always try to show right hand edge trading on my screen shots.

On this day's trading it appears that the absorption phase called just about every swing point.
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  • #706
  • Nov 5, 2019 3:00pm Nov 5, 2019 3:00pm
Quoting DonPato
I found this at barchart.com. This is the Dec 19 futures contract for WTI. Intraday was quite active today. I used the 6 min chart (which I think is best intraday for futures). Just using the raw tools to see this is what I saw using the following definition of absorption: Price closes > 50% off the extreme on rising volume. This is the general definition I've been using when I don't have access to more detailed information. {image} Please also remember this is in retrospect so it is easy to look back at the completed day and say where one should've...
My thoughts too, hence my stance, my first circle is out and out buying, also the second, but the cross does not, or seems to, represent enough selling to warrant a fall, could you correct my thoughts, albeit my position is moving against me at the mo, I still hold on to the long for now, even though news reflects the opposite, I remain cautious, thanks for even more effort, D
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I don't need to be good at the game, only good enough to beat my opponent,
  • #707
  • Nov 5, 2019 3:40pm Nov 5, 2019 3:40pm
Quoting detector
My thoughts too, hence my stance, my first circle is out and out buying, also the second, but the cross does not, or seems to, represent enough selling to warrant a fall, could you correct my thoughts, albeit my position is moving against me at the mo, I still hold on to the long for now, even though news reflects the opposite, I remain cautious, thanks for even more effort, D
I am trying to understand? The position shown on your chart is a LONG position is that correct? If so, it would seem that you were "suckered" into making a "break out" trade and I suspect your red/green indicator at the bottom did that to you. Hopefully by now you see that price is ranging between the peak prior to your "X" and the low just prior to your blue (upward pointing) arrow. The open price seen here is right in the middle of that range...typical. If I were wanting to buy (long) my buy would be at level where the base of the candle with the blue arrow. Of course again this is in retrospect and now the market is closed. Price is going to "drift" for a while until the London market opens again. As this is a 5 min chart you are going to have a long night ahead of you. But I'm not sure what your trading window is (how long you are wanting to hold). If I were convinced that prices will rise I might be tempted to add in at the bottom of that range...but I'm not convinced of this. For me what this looks like is basically stable prices that tend to move higher when the shorts stop out. I would appear to me that the shorts are driving the market higher, and when that stops prices will fall.

Not sure this helps you but this is what I see. Now if your position is a short, I would be at break even right now or even consider taking my profit off the table and see what happens tomorrow.
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  • #708
  • Nov 5, 2019 4:14pm Nov 5, 2019 4:14pm
Quoting DonPato
{quote} I am trying to understand? The position shown on your chart is a LONG position is that correct? If so, it would seem that you were "suckered" into making a "break out" trade and I suspect your red/green indicator at the bottom did that to you. Hopefully by now you see that price is ranging between the peak prior to your "X" and the low just prior to your blue (upward pointing) arrow. The open price seen here is right in the middle of that range...typical. If I were wanting to buy (long) my buy would be at level where the base of the candle...
Don Pato, you've done an excellent job, thank you, I dropped down to the 5min for a better volume view, I'm trading from the hourly, the red and green boxes are only guides, I had mistakenly taken a short and let it run however more scrutiny of the chart and recent news never turned the price, I checked the volume (along with my indicators) and decided there was a good cause for a long, the short failed so I turned the position, hence the higher price and not lower down, the Nasdaq has done this on numerous occasions,(indicators were conflicting and wasn't using volume) rising higher but I've been short this week and adding as it went up.
I have since closed the long position, my reasons for being so cautious, there is a break in the UK for one hour, I wanted to get a clearer picture as to hold or close, didn't want a gap down on the open because of delayed news, if in doubt, close out, you have been very generous in giving your input tonight and I do sincerely thank you, Detector.
I don't need to be good at the game, only good enough to beat my opponent,
  • #709
  • Nov 5, 2019 4:32pm Nov 5, 2019 4:32pm
Quoting detector
...you have been very generous in giving your input tonight and I do sincerely thank you, Detector.
Its my pleasure, I hope there was some value in what I said. Keep on "detecting".
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  • #710
  • Nov 5, 2019 4:45pm Nov 5, 2019 4:45pm
Quoting DonPato
{quote} Its my pleasure, I hope there was some value in what I said. Keep on "detecting".
There certainly was, also good to interact on the volume/activity (as I call it) front, the last time I was detecting, I cleared the local beach of tin cans, ringpulls and a 5p coin LOL, D
I don't need to be good at the game, only good enough to beat my opponent,
  • #711
  • Nov 7, 2019 2:43pm Nov 7, 2019 2:43pm
Hello DP, thought I would post a chart for some suggestion about volume, see if I'm getting this.
The first circle shows selling, high volume/activity at the top end of the bar, only to be confirmed after the event, as is the next circle, only this time the bar is longer, last circle, seems the same setup only volume is less than previous, not making the cut on the LWMA, could this be a sign the sellers are battling with buyers and have given in a little, my take is the price is going up, suppose we shall get this confirmed one way or another, but before the event, have you came across this before DP, thanks, Detector.
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I don't need to be good at the game, only good enough to beat my opponent,
  • #712
  • Nov 7, 2019 4:37pm Nov 7, 2019 4:37pm
Quoting detector
Hello DP, thought I would post a chart for some suggestion about volume, see if I'm getting this. The first circle shows selling, high volume/activity at the top end of the bar, only to be confirmed after the event, as is the next circle, only this time the bar is longer, last circle, seems the same setup only volume is less than previous, not making the cut on the LWMA, could this be a sign the sellers are battling with buyers and have given in a little, my take is the price is going up, suppose we shall get this confirmed one way or another, but...
Hello again detector. The first thing I need to point out and I repeat...I have mentioned this many times on this thread the last time was post# 667. Intraday volume studies are not as reliable for tick volume. I see here you are using a 4 hr chart and MT4 and this tells me that no matter what market you are looking via MT4... it is tick volume you are looking with this platform. But note at the bottom of your chart how volume comes in waves...

Do you see this? What do you think causes those waves? Is it because they are "gap" times between market days? So is it logical to say the volume is high in the areas you are circling, when really it is simply the all three markets (London, Asia, US) are all active at the same time? Could that be why price spikes at these moments? Can you see that this same candle has the highest volume EVERY day? So drawing conclusions from association from volume on these candles is completely useless...

This is why I have always advocated using a full day's worth (24 hrs - NY close) of tick volume to make your assessment. Using tick volume intraday is not helpful precisely because of this waning/waxing quality that happens every day because of the nature of our spherical world.

Now to answer your questions. Since we cannot really find usefulness in the volume used here we must rely on simple technical analysis tools. I would appear there is a resistance level right at the place where your buy order is located. I (IMHO) would be more inclined to sell this level but that is just looking at the price action and nothing else.
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  • #713
  • Nov 7, 2019 4:54pm Nov 7, 2019 4:54pm
Quoting DonPato
{quote} Hello again detector. The first thing I need to point out and I repeat...I have mentioned this many times on this thread the last time was post# 667. Intraday volume studies are not as reliable for tick volume. I see here you are using a 4 hr chart and MT4 and this tells me that no matter what market you are looking via MT4... it is tick volume you are looking with this platform. But note at the bottom of your chart how volume comes in waves... Do you see this?...
Don Pato, you have been very kind to me in your answer, I see what you say, I should take 100 lashes LOL, will read through you thread again, definitely something I would like to master.
Good call on the TA at the right side of the chart, something I rarely, if ever do, the ironic part, this area is my selling point, similar to the set up now emerging, however, price has passed through the white 200ma hence my long view, thank you again for being patient, within a few paragraphs my vantage point is growing, Detector
I don't need to be good at the game, only good enough to beat my opponent,
  • #714
  • Nov 7, 2019 5:04pm Nov 7, 2019 5:04pm
Quoting detector
{quote} Don Pato, you have been very kind to me in your answer, I see what you say, I should take 100 lashes LOL, will read through you thread again, definitely something I would like to master. Good call on the TA at the right side of the chart, something I rarely, if ever do, the ironic part, this area is my selling point, similar to the set up now emerging, however, price has passed through the white 200ma hence my long view, thank you again for being patient, within a few paragraphs my vantage point is growing, Detector
It looks like you are lashing yourself enough for the both of us. I too made this mistake until I sat down (in sackcloth and ashes) and thought through this logically. If you are more inclined to trade intraday, may I suggest a the futures market during the active US session. The data is far more reliable and transparent and the concepts are learned much faster as you are trading and looking at smaller time frames...however this also requires that you think and take action more quickly too...

Sometimes the desire to "get it right"..."right now" makes you take trades that you then stand back and say, "HUH?? Why did I take that trade?" I highly recommend keeping a journal along with your trade log (or screen shots with notes - this is what I do) to keep your thinking straight and understand and learn.

Here is an example of one my my recent futures trades and the notes that go along with them:
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  • #715
  • Nov 7, 2019 5:56pm Nov 7, 2019 5:56pm
Quoting DonPato
{quote} It looks like you are lashing yourself enough for the both of us. I too made this mistake until I sat down (in sackcloth and ashes) and thought through this logically. If you are more inclined to trade intraday, may I suggest a the futures market during the active US session. The data is far more reliable and transparent and the concepts are learned much faster as you are trading and looking at smaller time frames...however this also requires that you think and take action more quickly too... Sometimes the desire to "get it right"..."right...
I've lashed myself many times in this industry DP, but the marks are healing with time LOL, I will spend the time on the thread reading, maybe even answer my own questions, knowledge first, practice after, the one thing I have never done is a journal and while this seems amateurish of me, my results were not that good, however I have found a method that seems to partly work, maybe now is the time to give this the respect it should have always had, this seems very unprofessional too but I'm being honest, wouldn't pay you lip service, thanks again for the intricate answer and advice, duly noted, getting late over here and need to be up in 5hrs,Detector.
I don't need to be good at the game, only good enough to beat my opponent,
  • #716
  • Nov 7, 2019 6:07pm Nov 7, 2019 6:07pm
Quoting detector
... getting late over here and need to be up in 5hrs,Detector.
Rest well friend
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  • #717
  • Nov 10, 2019 1:27pm Nov 10, 2019 1:27pm
Hi DonPato and fellow traders

Still getting to grips with the ideas on the thread. I was hoping to share some of my analysis to see if I'm on the right track. I actually took the short on EU for other reasons but in retrospect want to see if the methodology discussed in the thread played out. I have not yet come to terms with the volume profile analysis so showed the reasoning using the volume and volume delta.

Firstly, EU is in a downtrend on the weekly chart, and retraced back to an area that I was expecting some reaction.

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1) On the daily, on the first move up, there was a climax with some exhaustion with lower volume on the final up candle.
2) This was followed by some absorption - Ideally would we prefer to see higher volume on this absorption candle with more buying activity as well?
3) In the second move up again, a climax on higher volume.
4) Followed by an indecision bar on even higher volume with selling pressure, showing absorption. This was followed by an attempt higher on lower volume showing exhaustion.

So on both legs up, all 3 phases were present, but more noticeable and stronger on the second move?

Any feedback would be appreciated.

Thanks, and happy trading.
  • #718
  • Nov 10, 2019 6:18pm Nov 10, 2019 6:18pm
Quoting Alienonweed
Hi DonPato and fellow traders Still getting to grips with the ideas on the thread. I was hoping to share some of my analysis to see if I'm on the right track...
What you have enumerated here seems to be right on! Congratulations!!

Quoting Alienonweed
... 4) Followed by an indecision bar on even higher volume with selling pressure, showing absorption. This was followed by an attempt higher on lower volume showing exhaustion...
If you will take note of what you call an "indecision bar", you will actually see that the top of this bar was the absorption. And your exhaustion phase is exactly as you have described it. This is what those two bars looked like on the actual order flow (circled)
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 51 KB

Note how the majority of the buying was near the highs of the day and the majority of the selling (in red) was also in this same area. However the buying seen largely outweighs the selling...yet...price fell and finished as you described it "undecided". This is the very definition of absorption. On the very next day there was buying (shown in light blue) but this buying was weak and could not even come up to challenge the previous day's high. This is the classic example that the three phases don't always occur in order. In this case the exhaustion phase was last...sometimes the climax phase is last. Most often however, the absorption phase is last.

Quoting Alienonweed
...So on both legs up, all 3 phases were present, but more noticeable and stronger on the second move? Any feedback would be appreciated. Thanks, and happy trading.
I think you did very well on this analysis and congratulate you for absorbing this information. I hope it will be of help to you in the future.
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  • #719
  • Nov 10, 2019 11:06pm Nov 10, 2019 11:06pm
Quoting DonPato
. . . In my ongoing effort to translate the lessons I learn from my experience in the futures market I have to ask you all here (the more experienced the better)...how come very few people use the volume data included in their brokers? I must admit I have gone on record here as saying the volume information on the forex market is "practically useless". I now repent those words. I have been using the volume info from my forex broker (oanda) and have discovered that I CAN translate some of the lessons of my futures trading into the forex market...perhaps...
Volume as given on the trading terminal is not so useful. What is of value it the effective NET volume (the buy - sell differential). This is what shows us where the supply/demand balance point is at.

In my honest opinion, VOLUME is king because even price can be re-adjusted using the buy - sell volume differential traded to obtain the TRUE price (a bit similar in fashion to what VWAP tries to do).

Over the past 3 - 5 years, I have been working on my own volume technique which I call VAP (Volume Adjusted Price). It has proven to be very accurate and useful in pointing out where the TRUE price is located. This technique is purely my work from scratch to finish but is not yet available in public space.
  • #720
  • Nov 11, 2019 8:05am Nov 11, 2019 8:05am
Quoting pipcenturion
Volume as given on the trading terminal is not so useful...
We have beat this subject to death (literally). I have mentioned this in numerous posts all through out the thread. I see no value in explaining it again, but do encourage you to read this thread in its entirety.

Quoting pipcenturion
...What is of value it the effective NET volume (the buy - sell differential)...
This entire threat is devoted to this subject and as you can see (IF you read it), I feel it is of great value and has improved the effectiveness and accuracy of my trading (both entries and exits). My goal in starting this thread was to exchange ideas and start a conversation. And this is what I see you are trying to do...welcome!

Quoting pipcenturion
...Over the past 3 - 5 years, I have been working on my own volume technique which I call VAP (Volume Adjusted Price). It has proven to be very accurate and useful in pointing out where the TRUE price is located. This technique is purely my work from scratch to finish but is not yet available in public space.
This sounds a great deal like "cumulative delta" which I have not yet explored in depth but I do know some colleagues who do use this with great success. I understand that you may not want to post about it, especially if it is your "edge", however would you be opposed to simply post some charts and show us how you use this tool?
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