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Trade Anatomy - ramblings of an old-timer

  • #101
  • Jun 6, 2010 7:36pm Jun 6, 2010 7:36pm
do you think a good book to read on volume is master the markets by tom williams ive been reading that over the weekend has opened my eyes to something new thats for sure?

regards damien
i pull the trigger when others are fearful---me
  • #102
  • Jun 6, 2010 7:43pm Jun 6, 2010 7:43pm
Definitely.

As long as you absorb the general concept and apply it to live charts, as opposed to trying to see it as a complete trading system and following it like a robot.

Also, bear in mind Tom is primarily a software vendor now. You do NOT need expensive software to master this style of trading.

Kind regards,

O N D

Quoting damosdmf
do you think a good book to read on volume is master the markets by tom williams ive been reading that over the weekend has opened my eyes to something new thats for sure?

regards damien
  • #103
  • Jun 6, 2010 7:46pm Jun 6, 2010 7:46pm
yeah thats the only annoying thing about the book it has all the promo crap through it for his system im just using atm hiddengaps volume type analysis do you mind if i put the book on this thread? i have it saved to my computer.

regards damien
i pull the trigger when others are fearful---me
  • #104
  • Jun 6, 2010 7:52pm Jun 6, 2010 7:52pm
Damien, I would appreciate a look at the book. If you dont post it up here could you PM it too me?
  • #105
  • Jun 6, 2010 7:55pm Jun 6, 2010 7:55pm
It's available here, along with some other interesting things...

http://www.forexfactory.com/showpost...48&postcount=1
  • #106
  • Edited 8:43pm Jun 6, 2010 8:30pm | Edited 8:43pm
also the gaps in forex are they the exact same thing as explained in that book. because that book was for stocks? im probably to far ahead here but was curious? i will add my chart of the pair im watching atm.

regards damien
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i pull the trigger when others are fearful---me
  • #107
  • Edited 5:11pm Jun 7, 2010 4:19pm | Edited 5:11pm
Quoting Old_Not_Dead
Based upon what has been revealed in this thread so far, who can now spot trade opportunities? Whomever is brave enough, go ahead and post them and I'll add some comments. I'll also post some of my own once I've seen how solid the understanding is

Kind regards,

O N D
Hi OND

Would you have considered this a trade setup ? Heavy selling absorbed by the smart money (on the bars in blue) takes out the weak hands, which is then confimed by the bars in pink which are on low volume; no more supply. 'Two bar low (approx) and higher close' bounce of 50% fib provides a long entry order above the 2nd bar. 1st target is around the green area above which has been a support/resistance flip. Stop is below the 2 bar low.

Thanks,

Astellas
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  • #108
  • Jun 7, 2010 6:04pm Jun 7, 2010 6:04pm
Hi Damien

Apologies I couldn't get to this earlier. There are some flaws in your analysis that I'll try to highlight by posting another chart.

Kind regards

O N D

Quoting damosdmf
also the gaps in forex are they the exact same thing as explained in that book. because that book was for stocks? im probably to far ahead here but was curious? i will add my chart of the pair im watching atm.

regards damien
  • #109
  • Jun 7, 2010 6:38pm Jun 7, 2010 6:38pm
Here we go Damien (and others)....

Point 1
Large bearish bar with increased volume following a low-volume price increase in previous 12 hours. Move is genuine.

Point 2
Volume gradually decreases as we head into the weekend. That particular down-move was only ever intended to be a short-term one.

Point 3
Attempt to head lower again. Too much demand (too many buyers) so 'big money' know their attempt to drive down price will meet resistance (and will therefore become too expensive). Buying therefore continues until.....

Point 4
Buyers lured into a perfect trap. Bottom pickers and counter-trend traders are slaughtered and price is pushed down to close around the low.

Volume has dropped off again but look out for sellers getting back onboard for tests of 4350 and 4250.

As for gaps, no different to stocks really. Forex markets are operational for longer periods of time but are still not 24/7 so price will always have times where it shifts over the weekend, for whatever reasons. Don't accept the old cliche that 'gaps always fill' but they usually do as a gap leaves trapped trades/traders and therefore action/volume if price returns there.

Kind regards,

O N D
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  • #110
  • Jun 7, 2010 7:03pm Jun 7, 2010 7:03pm
It's not a horrible trade but I wouldn't have taken it, because:

 

  1. I don't use fibs so wouldn't have been thinking in terms of 50% area.
  2. There was no serious volume behind the move. It was only ever going to be short-lived.

I guess there is an entry on the bar that closes around 1.0542 and it'd be good for around 60 pips (after you posted the chart, an extremely low volume up bar closed at 1.0616 and was the signal the move was over).

Kind regards,

O N D

Quoting Astellas
Hi OND

Would you have considered this a trade setup ? Heavy selling absorbed by the smart money (on the bars in blue) takes out the weak hands, which is then confimed by the bars in pink which are on low volume; no more supply. 'Two bar low (approx) and higher close' bounce of 50% fib provides a long entry order above the 2nd bar. 1st target is around the green area above which has been a support/resistance flip. Stop is below the 2 bar low.

Thanks,

Astellas
  • #111
  • Jun 7, 2010 7:27pm Jun 7, 2010 7:27pm
Hello O n D,

Love your thread, and where your'e going with it.

It's always a pleasure to witness a master at work, especially one with such class and sophistication, a true old fashioned 'gentleman'.

One 'old' guy to another; thank you for your willingness to make a contribution and try to give something back. Your presence and knowledge will certainly serve to enhance the lives of all who visit FF.

Chief
  • #112
  • Jun 7, 2010 7:35pm Jun 7, 2010 7:35pm
thanks for replying to my chart OND im still in the learning phase of volumes and need as much ctitisicm good or bad as i can get.

regards damien
i pull the trigger when others are fearful---me
  • #113
  • Jun 7, 2010 7:36pm Jun 7, 2010 7:36pm
Most kind, chief - thank you

I'm especially pleased to see you here as I have already become aware of the wisdom, insight and positive intentions of your postings. I am aiming to avoid throwing too much into the mix too early in this thread as so little time is spent absorbing the TRUE basics by inexperienced traders. Good habits are hard to learn!

Please do contribute as you see fit though. Or take over if I die before I reach a climax, ha!

Kind regards,

O N D

Quoting chief1oar
Hello O n D,

Love your thread, and where your'e going with it.

It's always a pleasure to witness a master at work, especially one with such class and sophistication, a true old fashioned 'gentleman'.

One 'old' guy to another; thank you for your willingness to make a contribution and try to give something back.

Chief
  • #114
  • Jun 7, 2010 7:37pm Jun 7, 2010 7:37pm
No problem Damien - persevere with faithful determination and I'll continue to do all I can to assist your journey

Kind regards,

O N D

Quoting damosdmf
thanks for replying to my chart OND im still in the learning phase of volumes and need as much ctitisicm good or bad as i can get.

regards damien
  • #115
  • Jun 8, 2010 6:42am Jun 8, 2010 6:42am
this is a trade im currently in its in demo while im learning this volume analysis any thoughts OND or anyone using this style. i know im vague on my descriptions lol i dont want to seem like an idot if im wrong lol. i have a strange suspicion im using my volumes completely the wrong way and seeing bullish when i should be seeing bearish?

regards damien
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i pull the trigger when others are fearful---me
  • #116
  • Jun 8, 2010 2:14pm Jun 8, 2010 2:14pm
Hi OND,

First off I'd like to thank you for continuing the learning process for newer traders. I'm 3/4ths of the way through Feb's thread and have read the posts that you've provided. I look forward to learning everything I can from this thread and at some point hopefully providing something. Thanks
  • #117
  • Jun 8, 2010 4:15pm Jun 8, 2010 4:15pm
Quoting Old_Not_Dead

Please do contribute as you see fit though. Or take over if I die before I reach a climax, ha!

Kind regards,

O N D
Hi OND

I see you're a comedian as well

I have my eye on the 2 markets below. May I ask what your thoughts on these would be (charts below).

Gold

Double top on daily, but seeing less volume on the 2nd top compared to the 1st top. Entry (short) would be below daily PB. The lack of volume on the recent down-bar (4 bars from the end) concerns me though as I would have liked to have seen greater volume on this if supply was overcoming demand.

AUDUSD

Strong bullish engulfing daily bar off double-bottom. Lots of climatic volume seen on first part of double-bottom. What concerns me is the 2nd to last bar. This was on relatively high volume, which I would not expect to be the case if floating supply had been taken out the market. My entry (long) would be on a retrace back into the body of the bullish bar, where I would be monitoring for a setup.

Many thanks,

Astellas
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  • #118
  • Jun 8, 2010 5:04pm Jun 8, 2010 5:04pm
Astellas,

On your Gold chart you're discussing a double top. I'm aware of what these are, but unclear of what moves are anticipated when one is forming. Being that Gold is in an uptrend, is this just a retracement you're anticipating or a full on reversal to the downside? Just trying to learn here...thanks!
  • #119
  • Edited 6:13pm Jun 8, 2010 5:36pm | Edited 6:13pm

Hi O n D,


Thought I might share an excerpt from something I'm working on in hopes it will help someone understand the basic concept of volume and it's relevance to their trading, and make it a bit easier to grasp. What follows might seem condescending to some, as it may seem too simple and obvious, but it is not intended to be. It is only intended to reduce a vast subject to a basic idea which makes logical sense and can be easily applied.


I'm continually amazed that traders don't put more emphasis on volume in their trading strategies, as it is one of the very few empirical facts we have to draw on in our attempts to understand the market's actions and intentions. If we don't rely on the emperical data available then we are left with only 'gut' instincts.


Traders are taught from day one to focus on trends, price patterns and all forms of hocus pocus 'everybody knows', but they are never taught to think about the intentions of the people who make up that market. And, after all, it is the intentions of the players which we must contend with on each tick. Trading is more psychological and emotional than it is technical. (an entire subject better suited for another time.)

VSA & Wyckoff's work is nothing more than the study of the 'intentions' of the players in the market. If we are able to see the intentions of the players in the market, even just a little, then the 'house edge' is reduced that much more.

Applying the basic idea of volume will improve one's ability to read the market's sentiment (intentions) tremendously, even if one should decide not to learn VSA.

Respectfully,

Chief


Volume & Price


Price creates interest.

Interest creates Demand.

Demand creates Volume.


When price is attractive it creates interest among buyers/sellers. When price is not attractive to buyers/sellers, it creates no interest. Participants are then apathetic.

When there is interest in a price, buyers will want to buy and sellers will want to sell. Participants are enthusiastic and want to participate. This translates into demand for product.

When there is demand, participants then buy/sell. This buying and selling creates the volume we see.

Volume represents interest or demand by Market Makers and the public.

In Forex, Volume is simply the number of transactions that occur at any given price. It doesn't matter to us how large or small those transactions are, only how many.

Volume shows us how much interest there is at that price level.

The greater the volume the more interest or demand there is in that price. The more attractive that price is to the market participants.

The lower the volume, the less interest or demand for that price.

In VSA, we are concerned primarily with the two extremes,

1. Ultra High Volume, extreme or excessive demand, and
2. Ultra Low Volume, reduced or no demand.

When volume reaches Ultra High levels, it tells us the Market Makers and the public are very interested in that price. It is very attractive and is creating a high level of activity.

When volume reaches Ultra Low levels, it tell us the Market Makers and the public have no more interest in that price level. It is no longer attractive to either side.

We want to know when there is a high demand and when there is no demand, these two extremes signal the end or beginning of a change in price.

All other volume in between these extremes simply confirms the amount of interest by the public and Market Makers.

If the volume is increasing as the price is increasing, this shows a continued interest in higher prices.

If the volume is falling off as the price continues to increase, it is showing a declining interest in higher prices. At some point the interest in higher prices will decline so far, that price no longer attracts buyer/sellers and the price will change direction due to the lack of interest or demand.

The same holds true for declining prices.

When there is no interest in price there is no participation and price will change direction.
  • #120
  • Jun 8, 2010 6:32pm Jun 8, 2010 6:32pm
Quoting chief1oar

Hi O n D,


[left][font=Arial]Thought I might share an excerpt from something I'm working on in hopes it will help someone understand the basic concept of volume and it's relevance to their trading, and make it a bit easier to grasp. What follows might seem condescending to some, as it may seem too simple and obvious, but it is not intended to be. It is only intended to reduce a vast subject to a basic idea which makes logical...
thanks chief so your saying the normal old volume has no interest to us just the sudden big volume spikes and sudden low volume ?

regards damien
i pull the trigger when others are fearful---me
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