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Volume Price Level Trading

  • #201
  • Jan 11, 2013 6:25am Jan 11, 2013 6:25am
Quoting Mediator
Hi VPLT Trader,

maybe my contribution helps to find good and strong price-levels.

In the picture below you can see that i marked only medium and strong levels, where the blue line thickness indicates the levels of interest.
For evaluating these levels, I simply generate a Renko-Chart with boxsize of 5. ('0' and '5' prices are only relevant).

What you can also see, that (very often) a peak in volume marks a local high/low and indicates a reversal in priceaction.

Kind Regards

Mediator

Attachment
I've never really liked Renko charts, mainly because I never found a use for them. This, however, is an interesting application of them. Thanks!
  • #202
  • Jan 11, 2013 11:07am Jan 11, 2013 11:07am
Candle 8 simply supports candle 7. Market doesn't have much interest with price being around 1.3260 and would rather it be heading up past 1.3270 where the price level is.

Candle 10 (after canlde 11 is finished), confirms our price level because there is a volume peak here. Even if you ignore the volume peak, candles 9&10 market is telling us price is pretty solid on 1.3270.

We know price has to go somewhere from 1.3270 at sometime. The market likes it much more when price is going up to and even through 1.3270 price level. So that would seem that long is the choice. However, take another look and rememebr that the market will want price to move.

Candle 4 is the largest upward price reach, crosses our price level at 1.3270 and has the highest volume. At candle 4, nothing wrong with putting a long order in, but we must be aware that chasing an unknown price level above 1.3270 is full of risk. If you believe at this moment price will break through 1.3270 then your order is at or below 1.3270.
However, by the time we get to candle 11, we should be bailing from our long trade. By candle 11 there is a definite shift in market for price to go down, and here is why:

Candle 10 is the key. Candle 7,8,9 is a general run up of price towards 1.3270 and volume does exactly what you would expect..so again a long trade is not out of the question...but risky because we have no info above 1.3270 and that is a "bet" on a breakthrough.
However, candle 10 will bring you to your senses. Price dropped and volume kept climbing. Candles 11,12 all this is saying no breakout, still stuck on 1.3270 as a limit.

From candle 6, 9, 13, all climb backs in price to 1.3270....but can you see that each one is decreasing in volume to the one previous. Volume wise candle 6 is less than 5; 9 is less than 10, and 13 is less than 10,11,12. So there is no break out up that will happen.

I'd just be watching this thing for now.

NEXT CHART....
A little after this chart (in the next chart) you should be able to catch the 1.3250 to 1.3270 move. It's a simple trade between our price levels. The volume talk, that peak when price drops like a bomb (candle 35) and hits 1.3250, what is it confirming? Our price level at 1.3250. Peaks exist at price levels.

(36) When price climbs and volume rises, confirmation of the price level and the interest up and away from from 1.3250 (go long).
(37) When price drops and volume drops, swift kick to your (butt) to go long.
(39) And look where your candle crosses on the next volume peak...1.3270.



Quoting m4ntas
Three firs candles witj red arows formed price level at 1.3250
Candles 1, 4, 10 formed price level at 1.3270
Candle 2 - Down. Price opened above and closed below our price level, there was less interest in price being above 1. 3270 after price crossed the 1. 3270 price level
Candle 3 – UP. With low volume. Interest (volume) is down in a higher price.
Candle 4 – our level confirmation.
Candle 5 – Down – price moves away from our level, volume decreases
Candle 6 – UP, near our level, volume down, market shows less interest in beeng at our price level...
  • #203
  • Jan 11, 2013 6:34pm Jan 11, 2013 6:34pm
VPLT TRADING
Practical Trading

This is a step-by-step approach to trading with VPLT on EUR/USD M15.

I'm going to start us of in "no mans land" - Jan 10th 2013. No reason, other than it is in the middle of a surging upwards price move, and we have a huge volume peak. Good as place as any to start.
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  • #204
  • Jan 11, 2013 6:46pm Jan 11, 2013 6:46pm
First job as always is to find a price level. Next volume peak along and we end up with a price level at 1.9000. Not the best for accuracy, but it gives us a starting point, we can quickly find where the market was at on this chart.

The price level was found by putting green vertical lines through 2 volume peaks. A "clear" volume peak is one where the volume is less on both sides of the volume bar in the centre. Ideally we want 2 peaks that will only give us 1 choice for a price level. Price levels always end in "0" or "5". In this example, the price level can only be 1.9000. Ideally the price level line will pass through both price candles where our volume peaks are, but sometimes like in this example, we have to take a best fit approach.
Attached Image (click to enlarge)
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  • #205
  • Jan 11, 2013 6:52pm Jan 11, 2013 6:52pm
Quoting Spudfyre
Candle 8 simply supports candle 7. Market doesn't have much interest with price being around 1.3260 and would rather it be heading up past 1.3270 where the price level is.

Candle 10 (after canlde 11 is finished), confirms our price level because there is a volume peak here. Even if you ignore the volume peak, candles 9&10 market is telling us price is pretty solid on 1.3270.

We know price has to go somewhere from 1.3270 at sometime. The market likes it much more when price is going up to and even through 1.3270 price level. So that would...
Spudfyre, again thank you for your effort. I hope one day I can read each candle as you would. I just wanted some clarification on the canlde 36 and 37. You said in candle 6, price climbs and volume rises but on the chart, candle 36' volume is lower than the last 2 bars why did you said its rising? And on candle 37, you said volume drops but on the picture the volume is rising up higher than the bar 36. Maybe I missed something. Thanks!
  • #206
  • Jan 11, 2013 7:13pm Jan 11, 2013 7:13pm
Zoom in on the chart.
We have one "loosy" price level set up for a reference point. The devil is in the details, so lets examine some price/volume movement.

(1) Candle 1 marked on chart. So, we don't know anything about market interest about the price, so let's start making notes on what we do see. Prive is down, volume is down from peak. This is a normal market reaction (volume down) after a peak and setting a price level. Interest after all is at the price level. Note that price moved down towards the price level and volume dropped. -- we can't interpret anything more from that. Lot's of assumptions available, but let's ignore those.

(2) The second price candle moves down and the volume goes down. So price is moving away from our 1.9000 price level and interest is less. So, is price going up, away from the price level have less interest than price moving down towards price level? Noted.

(3) Price up and volume up higher than (1) and (2), could be a peak, we wouldn't know yet if this was real time, so we'll pretend we are assuming it is a peak as we would if it were real time. So the volume rise makes sense because we need to draw a new price level. We know the price level must be above (2), otherwise our volume peak would have been at (2). And the price level goes through (3). That puts it either at 1.3215 or 1.3220. At this stage where we only see (3), we just have to pick one and wait for (4) to tell us.
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  • #207
  • Jan 11, 2013 7:27pm Jan 11, 2013 7:27pm
The candle and volume identified on the chart by arrows are off. The actual volume to match the candle is the one to the left. Count from the right side of the chart (6 in from right). Should make sense now. That's why I always draw lines between my candles and volumes....easy mistake to do.

Quoting mario777
Spudfyre, again thank you for your effort. I hope one day I can read each candle as you would. I just wanted some clarification on the canlde 36 and 37. You said in candle 36, price climbs and volume rises but on the chart, candle 36' volume is lower than the last 2 bars why did you said its rising? And on candle 37, you said volume drops but on the picture the volume is rising up higher than the bar 36. Maybe I missed something. Thanks!
  • #208
  • Jan 11, 2013 7:33pm Jan 11, 2013 7:33pm
Quoting Spudfyre
The candle and volume identified on the chart by arrows are off. The actual volume to match the candle is the one to the left. Count from the right side of the chart (6 in from right). Should make sense now. That's why I always draw lines between my candles and volumes....easy mistake to do.
Oh! I see... Thanks. Yes it does make sense now.
  • #209
  • Jan 11, 2013 8:01pm Jan 11, 2013 8:01pm
(4) The volume of (4) is less than (3) so now we conformed (3) is a peak. (4)'s price is moving up and volume down, which means that the interest is getting weaker as it should after a price level as the price moves away from the price level. This means the price level must be below (4) so at 1.3215. Price level established.

ATTENTION: DEVIL IN THE DETAILS MOMENT
(5) and (6) simply hold the line...but (5) gives us a warning of things to come. It drops in price and drops in volume - we would expect that if price dropped towards the price level, volume would rise. So, is interest starting to move away from price level? (6) confirms it.

LONG ENTRY NOTICE
(7) is confirmation of (5) and (6). Price is up and volume is up. Now we have our best confirmation that price wants to move away from this price level. Stick a long trade in as close to the close of (7) or right at open of (8).
Long on 1.3220 or above
Stop on 1.3190 (we'll move up after, only for entry)
Exit target 30 pips (1:1) for entry/stop - 1.3250
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  • #210
  • Jan 11, 2013 8:11pm Jan 11, 2013 8:11pm
(8) and (9) are price up, volume up. You could exit at (9) near 1.3250 as that's a good trade or hang on. We have to assume 9 could be a volume peak, so should treat it accordingly that 1.3245 or 1.3250 may be our next price level.
Move the stop to 1.3210.

(10) Exit trade, price up, volume peak. New price level confirmed on (11). 30 pips, that's good to me. You could ride this trade to (11), but then for sure you need to exit when the new price level is confirmed at (10) after (11) closes.

That ends this trade.
Attached Image (click to enlarge)
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  • #211
  • Jan 12, 2013 12:00am Jan 12, 2013 12:00am
Hi Spudfrye

I to have been following volume. My question is: How does your method take into acount the large moves produced by the opening and closing of trading sessions. i.e. London open to Newyork open, London close and Newyork close. Areas of high volitility?

Thanks
trd4gs
  • #212
  • Jan 12, 2013 8:28am Jan 12, 2013 8:28am
Hi Spud,

.............................(10) Exit trade, price up, volume peak. New price level confirmed on (11). 30 pips, that's good to me. You could ride this trade to (11), but then for sure you need to exit when the new price level is confirmed at (10) after (11) closes.

That ends this trade.[/quote]

The light in the tunnel is shining brighter and brighter!!! Thanks for the brilliant, well constucted posts.

Please keep up the good work.

Pete
  • #213
  • Jan 12, 2013 1:45pm Jan 12, 2013 1:45pm
Quoting Mediator
Hi VPLT Trader,

maybe my contribution helps to find good and strong price-levels.

In the picture below you can see that i marked only medium and strong levels, where the blue line thickness indicates the levels of interest.
For evaluating these levels, I simply generate a Renko-Chart with boxsize of 5. ('0' and '5' prices are only relevant).

What you can also see, that (very often) a peak in volume marks a local high/low and indicates a relevant priceaction.

Kind Regards

Mediator

Attachment
Hi Mediator,

Could you pass on the Renko indicator you used and also the 'volume prediction' indicator please?

Obviously, using a Renko chart with volume a price based, rather than time based, volume indicator is needed.

Very interesting chart which I think could be very useful to detect accumumation areas etc. before an upmove. Renko charts are great at giving a different angle on what is going on - I love to see big volume in a small range = big move coming!!

Regards,

Willow
  • #214
  • Jan 12, 2013 8:47pm Jan 12, 2013 8:47pm
Quoting pete123
Hi Spud,

.............................(10) Exit trade, price up, volume peak. New price level confirmed on (11). 30 pips, that's good to me. You could ride this trade to (11), but then for sure you need to exit when the new price level is confirmed at (10) after (11) closes.

That ends this trade.
The light in the tunnel is shining brighter and brighter!!! Thanks for the brilliant, well constucted posts.

Please keep up the good work.

Pete[/quote]I agree with Pete. The more examples Spud is showing the more I can see the light. Spud please continue to post more examples. many thanks!
  • #215
  • Jan 13, 2013 8:43am Jan 13, 2013 8:43am
Hi Spudfrye, I have been following this system and it really helped me have lots of good trades to far. Incredible! Thank you very much for your kind sharing. Just wanna check with you, will this method work on Daily time frame as well, as I feel the volume is not really the intra-day volume any more? Is there any big difference? Regards
  • #216
  • Jan 13, 2013 9:20am Jan 13, 2013 9:20am
Sorry, I can't answer that, as I never trade daily. Something that would need some testing. Open to anyone sharing results!

Quoting FX_Starter89
Hi Spudfrye, I have been following this system and it really helped me have lots of good trades to far. Incredible! Thank you very much for your kind sharing. Just wanna check with you, will this method work on Daily time frame as well, as I feel the volume is not really the intra-day volume any more? Is there any big difference? Regards
  • #217
  • Jan 13, 2013 9:35am Jan 13, 2013 9:35am
The bottom line is it doesn't change a thing. However, I'm aware of it...the same way I keep one eye on the market news while trading. I wouldn't go as far as saying it ever affects my trading, and generally I just stick to VPLT. Call it a time to be more focused in on the details of what the market is doing.

Quoting trd4gs
Hi Spudfrye

I to have been following volume. My question is: How does your method take into acount the large moves produced by the opening and closing of trading sessions. i.e. London open to Newyork open, London close and Newyork close. Areas of high volitility?

Thanks
trd4gs
  • #218
  • Jan 13, 2013 11:50am Jan 13, 2013 11:50am
The Big Picture VPLT

Want to know how to make pips in a ranging market?
Want to know which way to trade for a break out?
Well here you go:

Take a look at the big picture. The chart below has 3 price levels; blue (low), red (middle), green (top). Each peak volume has been identified with one of 3 coloured vertical lines. These vertical coloured peaks, correspond to the price level they affect. So a volume peak where a price candle intersects a blue price level line will have a blue vertical line.
White vertical lines price candles cross 2 price levels, so ignore those for this example.

All price/volume moves are relative to each other. Always remember this!
Volume is not independent from price movement - always together.

So from this, the rest is easy:
Ignoring the white vertical lines....and moving from left to right
2 red vertical line volume peaks are lower than the next 2 green vertical line volume peaks (market interest long)
Then 2 red lower than green (market interest long)
Then 2 blue lower than red and green (market interest long)

So ideally, you would buy long on price candles at or below our blue price level. But at red and green price levels you can still by long, as that is where market interest is. So, now we can rank our price levels:

Blue longs require lowest stop - low risk, optimum long
Red longs
Green longs we trade to break out require highest stop - highest risk, poorest long returns

So you can keep following this pattern along the range, where the green price level has the highest volume (interest) and the blue level has the lowest volume (interest). This is a long market interest. Keep trading long from the blue and you just walk the volume up through the break out at the right of the chart.

Volume, Price and Price Levels...VPLT. It's all relative.
Attached Image (click to enlarge)
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  • #219
  • Jan 13, 2013 12:16pm Jan 13, 2013 12:16pm
Quoting Islander
Hi Spudfyre - your thread's header caught my eye and a brief look has confirmed that I need to read it.......the reason is clear - here is a chart that I keep minimized as Sonic's PV Histogram has a couple of nice alerts which I call Activity Alerts! When combined with Wider Ranged Candles I pay attention The chart was posted elsewhere in a private forum.
Regards
Islander
All the stars, class of 2007, coming out the wood work. Nice to see you back Spud and Islander!
  • #220
  • Jan 13, 2013 12:32pm Jan 13, 2013 12:32pm
Here's a big picture VPLT with a market swing.

Our highest price level green has the lowest volume, so market direct is short.
This flows through red, blue and purple, with purple price level having the highest volume

Then market swings, where the next purple peak volume is the lowest, so time to go long.
When we hit the green price level, volume is highest....long.
If we can buy lower than green price level, say at the red price level long, so much the better.

Ideally we are buying long at the lowest price level, but if we are in a long market and price is rising and market interest is still long, then keep buying long at each price level. You may miss the optimum long price level buy, but don't miss the rest.

Stops are always 1(min) or 2 (max) price levels away....target pips at least 1:1 to stop. This is at entry, you can exit at any time with a pip gain. A pip gain is always a win. You should always move stops to get pip gains...even if you miss the "big one". Don't let ego guide your decisions. Take your pips. Gamble with pips earned, not your money.
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