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Volume Price Level Trading

  • #461
  • Feb 15, 2013 3:03am Feb 15, 2013 3:03am
Very interesting thread Subscribed!
I'll try and read from the start through the week-end. Thank you for your teaching and effort Spudfyre (and all others participants).
'the quieter you become, the more you are able to hear' - Ram Dass
  • #462
  • Feb 15, 2013 1:48pm Feb 15, 2013 1:48pm
Hi, This is an interesting thread. I like the idea of just looking at volume (no indicators needed) for trading
  • #463
  • Feb 15, 2013 3:14pm Feb 15, 2013 3:14pm
You can't lose being in postive pips. Don't think about what you "missed", think about what you got. You've got a thousand more opportunities to make 5 pips vs 30 pips. I know, seems ridiculous at $1 a pip or less to take 5 pips....but at $10 a pip or more....it's serious money making when you do that 5-10 times a day. Put the time in and perfect the $1 pip.

Move that S/L. Take those 5 pips. There will be plenty of trades that S/L won't get hit and you'll ride a big candle. Great! But don't hunt them, just take your pips, learn to take your pips...that's so hard...but when you can take positive pips "all" the time, you will be a money machine. It adds up quick. Walmart makes money "5 cents" a sale....think about it.

VPLT is an excellent way to trade into positive pips...the secret is not to forecast and set yourself to take the positive pips when they show themselves. This will keep your losing trades to a min and you will find "pots of pips' every now and then for the big bonus. Just move the S/L.

VPLT gives you constant trade opportunities and most will find positive pips, even when the market goes against you....so use that. Take the pips.
You miss nothing if you close a trade with positive pips...you make money.



Quoting Waez
Excellent VPLT on EU this morning.

Entry 2 pips above candle 1 @ 1.3396, [email protected], [email protected] R:R>1:1. Trade triggered during candle 2 and quickly went to +7 and then I moved SL to BE+1. When the trade was +10 I moved SL to BE+5 which got hit. As you can see price then hit original [email protected].
At candle 5 price goes down - volume up. I was not around at the time but would have entered 2 pips below 5 and then another winning trade with huge potential.

Spudfyre...
  • #464
  • Feb 15, 2013 3:32pm Feb 15, 2013 3:32pm
Volume bars are relative to each other (i.e. the volume number doesn't matter). Having said that you will get "noise" at lower volume levels, where the market may just range. Sometime you have to look at volume only above this "noise". -- that's not a rule though...volume and price movement is not relative...i.e. price can still move a lot on little volume or vice versa.


I don't see the long trade here.
You have a price level indicated at 1.3445 from a volume peak...correct.
3 candles later there is another price level at 1.3440 with a volume peak.
Now after this there is a long signal, but it gets slammed with a good sized down candle and up volume....so interest is till down and away from the 1.3445 and 1.3440 levels, this is a short signal...here we go short.

Where you entered long, a good assumption would be a new price level around 1.3435. Nothing wrong at 1.3430, but I would have put it at 1.3435 when it showed as a volume peak.
Next...volume down, price up. (still short)
Then, volume up, price down (still short)
bang...big volume up, price down (still short)
exit on next candle or move S/L to max pips and stay short.

Run the options of a volume peak and new price level forming on continual rising volume bars....it usually leads you to the right path.


Quoting colbru
Hi

I've take a loss on the following chart.
I have two defined levels at 3430 and 3445.
I took a long at the close of the arrow bar. SL was palced at a 1:1 RR
Any comments please? should I have taken the trade off after the two low volume up bars?
But the third up pin bar at higher volume gave me confidence and I kept the trade.

Attachment
  • #465
  • Feb 15, 2013 5:24pm Feb 15, 2013 5:24pm
Quoting Spudfyre
You can't lose being in postive pips. Don't think about what you "missed", think about what you got. You've got a thousand more opportunities to make 5 pips vs 30 pips. I know, seems ridiculous at $1 a pip or less to take 5 pips....but at $10 a pip or more....it's serious money making when you do that 5-10 times a day. Put the time in and perfect the $1 pip.

Move that S/L. Take those 5 pips. There will be plenty of trades that S/L won't get hit and you'll ride a big candle. Great! But don't hunt them, just take your pips, learn to take...
Well, glad I followed suit today protecting the bank. One nice win and 2 BE as shown on the chart attached. I really enjoy this kind of method and as you say plenty of opportunities will show up every day. Really nice of you to share and teach this way of looking at the market. As youīve been pointing out, not anticipating the market but instead looking at what price is doing in relation to relevant PL is the first nut to crack. And then there are good or not so good places to enter. I donīt know if thereīs something to it and remember I know virtually nothing about trading but I`m vary of entering on candles with long shadows and small bodies, so my second entry on 2 I shouldnīt have taken and I also bailed out quickly with -2. The first trade was obviously ok, the second I should have left alone. The third I think was correct and luckily I moved SL to BE when the trade was 5-7 pips in profit.
Spudfyre, when following the flow, that is entering after a volume peak and market is seeking a new PL I use a 2 pip+spread safety distance. When price is drifting away with lower volume from the current PL as at the situation after 4 itīs ok to enter directly at the start of the new candle as in 5. Especially when the price is at such a confirmed PL as 1.3350. What do you thimk of this and Please give your take on good and bad entry situations.

Many Thanks

Waez

http://i45.tinypic.com/ajw36t.gif
  • #466
  • Feb 16, 2013 6:04am Feb 16, 2013 6:04am
Waez,

thanks for posting your last screenshot. I compared it to my actual setup and i see some differences. I see we have the lower 3 PL in common at 1.3310, 1.3330 and 1.3335

But i cant follow you with the upper two PL. You set one at 1.3350 and the other at 1.3370. I set mine at 1.3360 because i see only one PL there.

Can u elaborate how you decided to set these two PL please ?

Thanks,
tex
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  • #467
  • Feb 16, 2013 5:24pm Feb 16, 2013 5:24pm
Quoting tex
Waez,

thanks for posting your last screenshot. I compared it to my actual setup and i see some differences. I see we have the lower 3 PL in common at 1.3310, 1.3330 and 1.3335

But i cant follow you with the upper two PL. You set one at 1.3350 and the other at 1.3370. I set mine at 1.3360 because i see only one PL there.

Can u elaborate how you decided to set these two PL please ?

Thanks,
tex
Hi Tex,

I put the [email protected] mainly because it was the highest PL candle 4 closed at and that price bounced around that level after candle 4, see box D. The [email protected] came in to play with candles 5 and 6 in box E. But looking back at the chart thanks to your questions some interesting things show up. Looking at box A and D itīs clear that an important area of interest for buyers is at PL1.3350-55. Itīs a trigger level for candle 1 which shoots up from PL1.3355 and then several hours later candle 5 which goes off from the same level/area. Box B gives PL1.3380 and box C PL1.3375 and these PL:s obviously creates an area of interest for sellers. Hours later at box E candle 5 exactly touches PL1.3375 with a volume peak that took the energy out of the market. Price then falls and hoovers around PLarea 1.3350-55.

A very interesting question is to analyse the ranging periods. My take on it is that Box D leans at a long bias in relation to what happened in Box A. But maybe Iīm taking to much from irrelevant history in doing this and I hope Spudfyre will comment on this. When the price was ranging in the area 1.3330-35 in the lower middle part of the chart it was difficult to form an opinion of the direction of the breakout.
I find it not at all easy but at the same time itīs absolutely intriguing trying to understand whatīs happening on the charts.

Cheers

Waez

http://i48.tinypic.com/2qa70y1.gif
  • #468
  • Feb 17, 2013 12:52pm Feb 17, 2013 12:52pm
VPLT Transition Trading

Now that you see how price and volume work together, we can get a little more complicated and feast a little more on pips.
Transition Trading with VPLT is identifying the start and end of long cyles. You have probably noticed with VPLT that there are many times when volume peaks are also at price peaks and wouldn't it be nice to know we are at the top or bottom of a price cycle.

Keep in mind exactly what a volume peak is. Simply, a volume peak is the price that the market is most interested in at that point in time.

Now, we know that as we track price levels, they are dynamic and new price levels are set all the time. We also know that there is an upper and lower limit, but how do we trade this? Well let's find out.



First we have to know what a price cycle is. I'll stick to the M15 price chart. Here are the rules of a "short" price cycle:
1. The short price cycle always starts after the close of a long price candle...NEVER during.
2. The short price cycle always ends after the close of a short price candle...NEVER during.
3. The long and short price candles should be significant in length, the more length they have, the more significant they are. Length is measured as the difference between the open and close price. In other words, we are looking for price candles that have some distance between the open and close price. Now, this is as subjective as it is significant. There will be other indications involved to identify our price cycle, but a pure natural short price cycle will have a lengthy long candle to start it, and a lengthy short candle to close it.

This is a typical picture of a price cycle (number of candles will vary):
Attached Image
  • #469
  • Feb 17, 2013 1:38pm Feb 17, 2013 1:38pm
The price cycle like so many things in Forex is easy to see after it is all done, but how do we identify them before they happen?

Well, this is actually fairly simple and systematic. Let's look at a short entry.

First we need some indicators:
Volume (of course)
On Balance Volume (new)
MacD

The On Balance Volume indicator needs to be added to/with the regular volume indicator. On the picture below it is the blue squiggly line on my volume indicator. All are just regular default settings.

What!?! OBV? OBV is a measure of buying and selling pressure and for us it is exactly that, a pressure meter so we know when volume at a price level is creating pressure.

In the chart below I've labeled three things as 1,2 and 3. These are not in any specific order, just what we are looking for to identify the start of a short price cycle.

1. Our MACD bar has risen above the MACD signal line. Now, also notice that the MACD bars previous are rising up to cycle start, but that they are all below the signal line. Ideally, this is what we want the MACD to look like for a short entry....you may have the bar just below the signal line (as the previous bar) with the other signals "ok"...so risks of early entries are possible. How loose you are to the bar crossing the signal line in your decision process is up to you. Likewise, waiting a bar later is "late" but safer with confirmed signals...sometimes though you will be too late.

2. Our volume is rising (price is rising), we should be anticipating that we are probably at a volume peak and what would we do under VPLT conditions. The OBV blue line is indicating peak pressure on the volume at this price level. SO, we want OBV to be high, very high...at least 75% or higher on our volume scale. Bonus if volume bar crosses above the OBV line, but close is good. If you waited late on this one, you would have the added knowledge that this was a volume peak. You won't always have a volume peak coincide with this signal....volume peaks are typically close by though. Rising volume bars prior to our signal is important.

3. Doesn't look like a very lengthy price candle, but it is lengthy enough. The price candle prior to this may make an easier entry to identify, but it would be early. Not so early to stop out and still give us a good entry, but ideally, the close of candle at "3" is our short entry price. We enter on the open of next candle for short trade.

This is what we want to see for a short entry. This is by far the best and most common short entry signal.
Thing of all these signals as a pressure meter for price, where price is at the highest point (for now) and this pressure will have to be relieved with a price drop.
Attached Image
  • #470
  • Feb 17, 2013 1:55pm Feb 17, 2013 1:55pm
Now of course the start of a short entry is the close of a long price cycle, and likewise, the close of a short price cycle is the start of a long price cycle....well at least in a perfect world.

Let's look at the close of our short trade entry (short price cycle).

Again fairly systematic and routine, where there the volume pressure is gone and price needs to fill the pressure up again.
And who thought Forex wasn't a money machine?

Looking at chart below:

1. Slightly different signal in that the MACD bar has crossed the "0" line and is now below...also that the previous MACD bars descending. You could have had the signal line below our MACD bar..with the MACD bar crossing down through the signal line as the other signal. But it will always be significant when a MACD bar crosses "0".

2. OBV line is way low, we want it way low. Notice the volume bar how's it has climbed. Think about that, we 'd expect from our VPLT knowledge this would end up being (or part of) a volume peak. Also notice the previous volume bars descending (collectively). Volume doesn't have to be spiking here, it could be much lower than our previous volume bars. More important that we have this low OBV value.

3. Exit the short on close. Oh, and a good time to start a long entry....or is it? We don't live in a perfect world....so better to find what good long entries look like.
Attached Image
  • #471
  • Feb 17, 2013 2:11pm Feb 17, 2013 2:11pm
Now you might be saying, "omg we've added even more indicators to what was once a non-indicator system". You don't need the indicators, but they just make our lives a whole lot easier and visual. You could truly trade this on just VPLT but that is like doing math without a calculator. You'll find in the long run if you trade this enough that your dependency on the indicators will fade away. But, I'm helping you cheat and save a couple of years of trading practice.

This is far "more" an odds play, so you may see stops hit a tad more. Sometimes price doesn't always move as fast as we like, but we just keep going and we'll get our loss back and more.

Don't think that price cycles always mean 100 or 500 pips...sometime they can be just 5 or 10 pips in life. Trade the cycle as it is presented to you. Price cycles can have ocscillations within them, and that may stop you out...oh well, you will have moved your S/L and grabbed the positive pips..right?

You should find that this combination of VPLT and indicators will help your VPLT price direction decisions as well. It will also keep you out of some yucky range trades if you don't like scalping with VPLT.

I'll show a long entry and then some variations to entry signals in upcoming posts.
  • #472
  • Feb 17, 2013 2:51pm Feb 17, 2013 2:51pm
Perhaps, make a youtube video.
  • #473
  • Feb 18, 2013 8:55am Feb 18, 2013 8:55am
Quoting Spudfyre
I'll show a long entry and then some variations to entry signals in upcoming posts.
Thank you Spud for this brand new knowledge! I am maybe a slow learner but I will follow you! Please always be kind to reply my question later on. Thank you again!
Pursue the best and share to others!
  • #474
  • Feb 18, 2013 11:37am Feb 18, 2013 11:37am
Thank You Spud for continuing this excellent tutorial. Today we had 2 mini short price cycles. Look forward to your comments.


Quoting Spudfyre
VPLT Transition Trading

Now that you see how price and volume work together, we can get a little more complicated and feast a little more on pips.
Transition Trading with VPLT is identifying the start and end of long cyles. You have probably noticed with VPLT that there are many times when volume peaks are also at price peaks and wouldn't it be nice to know we are at the top or bottom of a price cycle.

Keep in mind exactly what a volume peak is. Simply, a volume peak is the price that the market is most interested in at that point in time.

Now,...
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  • #475
  • Feb 19, 2013 10:51am Feb 19, 2013 10:51am
hey spud
take a look at this trade i took today. it worked out ok.
thank for you help
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  • #476
  • Feb 20, 2013 4:04am Feb 20, 2013 4:04am
Hi, please take a look at the attached pictures of EUM30 and M15. They are covering the same time but giving quite different messages.
I think the M30 shows a clear buy bias, and the M15 is harder to read but to me it hints at a sell bias. Which one would you have followed. I turns out that the M30 was giving the correct info. I had a pending buy order at 1.34100 which didnīt got triggered.
Plesase comment on have you would have done or maybe did in this sitaution.

Regards

Waez


http://i45.tinypic.com/2i11awi.gif

http://i48.tinypic.com/kf31jn.jpg
  • #477
  • Feb 20, 2013 4:30am Feb 20, 2013 4:30am
Hi, thank you Spud for sharing this knowledge! I've been following you since Escalator to pips.
Regarding Waez question, I guess both TF indications might be correct, but you cannot mix interests from different TF, they seem to be very confined to the TF you're analizing.
I've noticed that PL in M5 are slightly different from M15, and if I want to use a shorter TF I have to move fast and do all the analysis again for that period, usually my SL are hit more often and the profit is less.
What works for me is to stick to M15 and use a trailing stop of say 5 pips to protect my profit from sways.
Jumping from M5 to M15 doesn't seem to work very well, I tend to lose "the big picture", and M30 is simply too slow, my SL has to be too far away for my (demo) account.
I must confess that from time to time, if I'm in doubt I take a peek at MTF Stoch just to confirm the direction.
Good judgement comes from experience, experience comes from poor judgement
  • #478
  • Feb 20, 2013 5:00am Feb 20, 2013 5:00am
Hi, a some more charts over M5, M15 and M30 over the same timeperiod. Different PL:s show dependign on what TF you look at.
Spudfyre please give a hint on how to use different TF:s to place trades.

Regards

Waez

http://i48.tinypic.com/2gugt40.gif

http://i50.tinypic.com/9ih3er.gif

http://i48.tinypic.com/1494nbr.gif
  • #479
  • Feb 20, 2013 1:58pm Feb 20, 2013 1:58pm
Quoting jurtzi
Hi, thank you Spud for sharing this knowledge! I've been following you since Escalator to pips.
Regarding Waez question, I guess both TF indications might be correct, but you cannot mix interests from different TF, they seem to be very confined to the TF you're analizing.
I've noticed that PL in M5 are slightly different from M15, and if I want to use a shorter TF I have to move fast and do all the analysis again for that period, usually my SL are hit more often and the profit is less.
What works for me is to stick to M15 and use a trailing stop...
Thanks jurtzi, sounds reasonable.

Regards

Waez
  • #480
  • Feb 21, 2013 2:59am Feb 21, 2013 2:59am
After going through the whole thread I must say that this is one of the most (if not THE most) interesting and useful I ever read on FF.
Yesterday night I tried some manual back-testing and was a bit discouraged since I felt that despite being able to establish the price levels I could not really read the price /volume interaction; nonetheless this morning I decided to try and trade (with ridiculously small amounts of course)
The results are shown on the attached chart (down arrows). I first entered short while the candle was still developing (ignoring Spudfyre's instructions - won't do it again) @1.3460 and got stopped out for a 15 pips loss. I entered again at the end of the candle where I was stopped and took a 15 pips profit that could have been much more ( I had to leave the PC therefore I set the TP to 15 pips)
Hopefully with the help of Spudfyre and all other participants things will improve.
Please comment on the chart.
Regards to all
Attached Image (click to enlarge)
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'the quieter you become, the more you are able to hear' - Ram Dass
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