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Volume

Volume price Volume price is my term meaning the average price for a certain traded volume in a certain period of time. As an example, I took the BTCUSD chart To find out at what level the largest volume is traded, there is a tool called "Fixed Volume Profile" FRVP (located on the sidebar, in the Tools for Measurement and Forecasting cell). Here I stretched it for the period from November 14, 2020 to August 03, 2023 POC the orange line in my case (it's so convenient for me) shows the same maximum volume, and if you put a horizontal line with a price display in its place, we will see the price of 16752.88 - this is the price of volume. That is, the largest volume was traded at this price. A fixed volume profile can be applied on any segments of the chart, for example, from high to low, or from low to low, or from high to high, or in the sideways. What does this give us? Firstly, we understand at what price large capital gained or gave away its position. Secondly, it forms the most powerful level for a certain time period (time frame). And finally, the volume has a price.
COINBASE:BTCUSDEducation
by InHoldOut
3
How to work with liquidity grab?Hello everyone👋 Today we will discuss how to effectively work with areas of increased liquidity. Actually, it would be appropriate to make this post after we have examined how order flow is formed in the market in order to understand the technical aspect of working with liquidity. Therefore, first, we will provide some introductory information using a long position as an example. When a trader buys an asset, they usually set a stop loss at a certain level or, if they don't use protective orders, their position will have a liquidation price depending on the chosen leverage. Based on this, when a specific price level is reached (stop loss or liquidation), their asset will be sold with a market order that will match the nearest limit order. Hence the conclusion: any exit from a losing position, as described above, is someone else's entry into a position with a limit order, often at a favorable price. This is how the positions of all major market participants are accumulated. So, we simply need to estimate where the maximum number of active stop losses is located and make a trading decision based on that. Most often, stop orders are located in the following zones: 1️⃣Obvious levels with equal highs/lows. 2️⃣Above/below any high/low in an obvious trend. After identifying such zones using our indicator or independently, you can take trades in the direction of liquidity grab (counter-trend trades with high potential but also high risk) or wait for actual liquidity grab and confirmation to enter a trend trade. In the next post, we will explore the technical aspect of liquidity grab for a deeper understanding of the topic. We look forward to your questions. Happy trading!
Education
by PhantomFlow
How to Use Volumes to Improve Your TradingVolume is one of the most basic indicators that traders encounter. While it’s regularly overlooked in favour of more sophisticated indicators, volume analysis is a powerful tool that can help traders gauge trends, spot reversals and confirm breakouts. In this article, we’ll discuss the basics of trading volume, how to interpret it, and show you some popular volume-based indicators. What Are Trading Volume Indicators in Technical Analysis? Trading volume refers to the total number of units traded for a particular asset over a specified period. For forex pairs, volume is expressed in lots; for stocks, it measures the number of shares changing hands; and in Contract for Difference (CFD) markets, it’s the number of contracts being traded. Volume is a crucial piece of information for traders, as it helps them gauge the strength of price movements, assess liquidity, and measure market sentiment. Generally speaking, higher volume implies increased activity and attention and may signal that volatility is about to enter the market. In practice, volume is typically represented by bars at the bottom of a trading window. A given candle will also have a corresponding volume bar, which usually changes colour depending on how the candle closes. For example, if an asset closes above the opening price of its candle, the candle and volume bar will both be green. Beyond the standard volume indicator, there are other tools that interpret and plot volume in different ways. These indicators often present the volume data in the form of charts, histograms, or oscillators, making it easier to spot trends, reversals, and breakouts. How to Use Volume in Trading First, let’s look at three of the most common ways to use a volume indicator in technical analysis: confirming trends, identifying reversals and breakouts, and analysing liquidity and market sentiment. Confirming Trends One of the most effective uses of volume is for confirming a price trend. When a movement is accompanied by a high volume, it suggests that the market believes the trend will continue. Conversely, if a price movement occurs on a low volume, it may mean a lack of conviction, indicating that a trend might be weak and that a reversal could be imminent. The easiest way to think about this is in terms of supply and demand. In a hypothetical bull trend, demand will outweigh supply. When the trend first begins, demand might be high, causing the trend to progress upward on strong volume. As the asset becomes increasingly expensive, demand falls, leading to a drop in volume. Identifying Reversals and Breakouts Traders also often use volume to spot potential reversals and breakouts. As described, decreasing volume in a trend can signal that a reversal is inbound. When this lines up with a critical support/resistance level, traders can begin to anticipate that a reversal is likely to occur. Similarly, when an asset breaks through a key support or resistance level on a strong volume, it suggests that the breakout may continue in that direction. Analysing Liquidity and Market Sentiment Volume is also essential for assessing an asset’s liquidity. High volume implies high liquidity, making it easier for traders to enter and exit positions without slippage or high spread costs. On the other hand, an asset with low volume and liquidity may be more susceptible to sudden volatility and greater costs. For most forex traders, liquidity is usually not an issue, especially in major pairs. But for stock traders, low liquidity can cause issues like being stopped out prematurely or struggling to enter/exit at their preferred price. Lastly, analysing volume can provide insights into market sentiment, revealing whether most traders are bullish or bearish. For example, the start of the 2020 Coronavirus market crash saw volume increase significantly in the S&P 500, well beyond levels seen over the previous year. This was a sign to traders that sentiment had become extremely bearish. Popular Stock Volume Indicators Beyond the regular volume bars, there are several volume indicators frequently used by traders. These aren’t just day trading volume indicators or limited to stocks. Instead, they can be applied to a wide range of markets across virtually any timeframe. Accumulation/Distribution (A/D) The Accumulation/Distribution (A/D) index, developed by Marc Chaikin, is designed to measure the cumulative flow of money in and out of an asset. It helps traders identify whether a stock is being accumulated (bought) or distributed (sold) by the market participants. The A/D line is calculated by adding or subtracting a measure of volume, depending on the relationship between the closing price and the high and low prices of the day. When the A/D line rises, it signals that buying pressure is strong, while a declining A/D line indicates selling pressure. Divergences between the A/D line and an asset’s price can also be used to spot potential trend reversals. Chaikin Money Flow (CMF) The Chaikin Money Flow (CMF) indicator, also developed by Marc Chaikin, takes the A/D line a step further. It calculates an average of the A/D values over a specific period, typically 20 or 21 days, then divides the figure by the average volume from the same period. This results in a volume average indicator that oscillates between 0 and 1. Generally, a positive CMF value indicates more buying than selling pressure, suggesting a bullish market sentiment. In contrast, a negative CMF value implies more selling pressure, demonstrating bearish sentiment. Traders can use the CMF to identify potential trend reversals, confirm price breakouts, and spot divergences. Its versatility and sensitivity to market movements have led many to consider it one of the best volume indicators for day trading. On-Balance Volume (OBV) On-balance volume (OBV) is a cumulative volume indicator developed by Joe Granville in the 1960s. It adds or subtracts a candle’s trading volume based on whether the asset closes above or below the previous candle. The main idea behind OBV is that volume precedes price, and significant changes in OBV with little price movement can be a sign of a potential move. When plotted, OBV looks similar to the A/D indicator. However, its movements tend to be sharper and more defined, which means it can produce more signals than A/D. Like A/D, a rising OBV line suggests that buying pressure is outpacing selling pressure, indicating that the price may continue on a bullish trend. It’s also a powerful tool for spotting divergences between price and volume. Is A/D or OBV the better buy and sell volume indicator? Ultimately, the answer is subjective and depends on the individual trader. Your best bet is to apply both to a chart and observe their differences. You’ll find both indicators, alongside dozens of other tools, in the free TickTrader platform we offer at FXOpen. Common Mistakes to Avoid When Trading with Volume Like all market indicators, volume isn’t a silver bullet. While it can help traders to make predictions and confirm movements, there are a couple of key mistakes to avoid when trading volume in a strategy. Misinterpreting Volume Spikes One of the biggest pitfalls is misinterpreting sudden spikes in volume. While high volume can indicate a strong trend or the start of a reversal, it’s also wise to be cognisant of the wider context before making a decision to enter a trade. Singular events, like earnings announcements, news releases, or market rumours, can cause spikes in volume. For instance, Federal Reserve interest rate decisions often lead to significant volume entering the market. While the decision may cause a sharp spike in price and volume, the asset can just as easily reverse and take off in the other direction as traders digest additional information. In other words, a volume spike may not necessarily signal a sustainable trend. In these scenarios, waiting for the dust to settle and looking for additional factors to support your bias is best. Overreliance on Volume Data Another mistake to avoid is relying too heavily on volume data alone. While analysing volume is a valuable tool, it should form part of a broader strategy supported by other technical indicators. Volume is a leading indicator, as are the other indicators listed in this article, meaning it can help traders predict future price movements. Therefore, it’s best to pair volume analysis with a lagging indicator, like moving averages or Bollinger Bands, which can confirm a trader’s prediction. For instance, you could look for divergences between price and volume, anticipating a reversal. Once you set a bias, wait for a moving average crossover to confirm the trend and enter in that direction. In doing so, you now have extra confirmation that your prediction was correct. Your Next Steps You now have a comprehensive overview of volume and how it can be a valuable addition to any trading strategy. Wondering what your next steps should be? You can try this: 1. Hop on the TickTrader platform and observe the relationship between volume and price, especially during trends, reversals and breakouts. 2. Test out the three indicators listed in this article. If you find one that you like, search for further resources to expand your knowledge. 3. Backtest a volume trading strategy, logging your results and adjusting your system as you go. 4. Feel ready to put your skills to the test? Open an FXOpen account and put your strategy to work. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
How tops (even if temporary) can occurI can not say how long this Short will last, because I am currently viewing Order Flow and watching Live to look for clues. But at the very least, if you were scalping, here was a great trade. Buying volume exploded high above the last point of Supply, but price did not. Therefore, we can see there is likely Buying Absorption occuring, as we also have upper wicks on the 15 minute candles. It's probably going to drop more here, but depending on what you think of the market will depend on how long you hold this Short. We can see that at least here, you had a profit based on a 15 minute volume analysis. It was a 2% move on Bitcoin within 30 minutes which is fantastic.
COINBASE:BTCUSDEducation
by reiiss7
How bottoms (even if temporary) can occurI was out enjoying myself holding short when this was happening, as I expected lower. I did not get the chance to have a closer look at the volume indicator on Coinbase, which is what I really should have done, as it would have allowed me to buy the bottom. But we all have stuff to do. Now my opinion on the market does not really matter as we have to keep re-analysing what is happening on the chart to look for clues as to whether the current analysis may be right or wrong. In this case, we can analyse Volume entirely using the indicator. So what do we see here? In the yellow circle, we have an initial Selling Climax, which CAN occur in Accumulation. We know it can also occur in Re-distribution, so this is not enough information. However, we can also be wary of an upthrust. I know it's okay to buy before Upthrusts too! So this doesn't really matter, just changes the length of time and height of target of the Long trade. Anyway, we have a second touch, higher then the first, where equal selling volumes failed to push price lower. In this case, we wait for more clues. In the white circle, we have lower volumes of selling, but still constant selling with what looks like no buying. We wait for more clues... Now in the Blue circles, we have, once again, 2 equal points of selling volume where the 2nd one did not push price lower. Since we have already had our Selling Climax, now it is likely we could be in either Upthrust stage if Redistribution, or Secondary Test stage if Accumulation. Either way, we should be expecting price to go up soon after this has happened a 2nd time. Now, the market broke a very important structure, so at this point I would be wary of Longs at this point. Not enough evidence has happened. A small Long would have been okay. Now next, we have a 3rd confirmation point. In the light yellow/orange circle, we have a weak selling volume push down, and price continued to go up with not much selling. I could, at this point, increase my position as my confidence grows. As price rose through the Orange square box and retested it, the retest was with low selling volume. This could increase my confidence even more, and I could even add a little more to my position if I wanted to. Always keeping my Stop Loss below the bottom here. Now, since I was thinking the market would drop and this could just be an Upthrust, I would probably have closed my Long position in the late 25k's, as I knew SOME liquidity is likely to be taken out at least. However, if you are Bullish, this would have been a great Mid term Swing trade. Nevertheless, either way, the Short position higher up was quite obvious to me, and this would have allowed me to Take Profit in a fantastic zone and switch sides. But we are not always staring at the charts, we have lives to live. However, if I do see this LIVE, then I can react accordingly. This is one of the many reasons why the Volume Indicator is THE ONLY indicator I use nowadays.
COINBASE:BTCUSDEducation
by reiiss7
Correlations of Retail Stock Traders & Carl Jung's Archetypes Carl Jung, a renowned Swiss psychiatrist and psychoanalyst, introduced the concept of archetypes as universal patterns or symbols that reside in the collective unconscious. Carl Jung's archetypes , rooted in the collective unconscious, offer profound insights into human behavior and decision-making processes. (archetypes example would be the Devil and Angel on your shoulder, Jung beleives there is more to it that good and evil) Retail stock traders, operating in a dynamic and often volatile market, are not exempt from these archetypal influences. Let's explore the correlations between Jungian archetypes and how they impact the decision-making process of retail stock traders when executing trades. The Hero Archetype: The Hero archetype drives traders to conquer challenges and attain success. Within retail stock trading, this archetype encourages traders to take calculated risks, seize opportunities, and exhibit unwavering confidence in their decision-making abilities. While the Hero can inspire bravery and determination, traders must be mindful of impulsive and overly aggressive behaviors that may lead to irrational choices. The Sage Archetype: The Sage archetype embodies wisdom, knowledge, and the pursuit of truth. Retail stock traders influenced by the Sage archetype engage in extensive research, analysis, and due diligence before executing trades. They seek to understand market dynamics, uncover patterns, and leverage their intellectual prowess to make informed decisions. However, an excessive reliance on analysis may result in analysis paralysis, inhibiting timely execution. The Jester Archetype: The Jester archetype represents humor, spontaneity, and irreverence. In the world of retail stock trading, this archetype may manifest as traders who adopt a lighthearted approach and embrace risk with a sense of playfulness. Jester-influenced traders may be inclined to explore unconventional trades, pursue novelty, and seek excitement. Nevertheless, caution must be exercised to avoid impulsive or reckless decision-making. The Caregiver Archetype: The Caregiver archetype embodies compassion, empathy, and a desire to nurture others. In retail stock trading, traders influenced by this archetype prioritize socially responsible investing, seeking companies aligned with their values. They consider sustainable practices, ethical considerations, and impact investing as integral components of their decision-making process. However, emotional attachments to causes may cloud judgment, necessitating a balanced approach. The Magician Archetype: The Magician archetype symbolizes transformation, power, and the ability to manifest desired outcomes. Traders influenced by the Magician archetype possess intuitive market understanding and employ strategies that seem almost mystical. They may rely on technical analysis, precise timing, and sophisticated algorithms or trading systems. However, an overreliance on intuition without grounding in tangible data may result in unreliable decision-making. The Shadow Archetype: Carl Jung's concept of the shadow archetype represents the darker, suppressed aspects of the psyche. In retail stock trading, the shadow can manifest as greed, fear, impulsivity, or an inclination toward unethical practices. Traders must confront their shadows and acknowledge the potential biases and emotional influences that can cloud judgment. By bringing the shadow into conscious awareness, traders can make more objective and rational decisions. Impact on Decision-Making Process: The interplay between these archetypes and the shadow profoundly affects the decision-making process of retail stock traders. Awareness of these archetypal influences enables traders to leverage their strengths while mitigating potential pitfalls. Recognizing the shadow archetype's presence allows traders to confront their biases, manage emotions, and make more rational and ethical decisions. Understanding the correlations between Carl Jung's archetypes and the decision-making process of retail stock traders sheds light on the intricate psychological factors at play within financial markets. By recognizing and integrating these archetypal influences into their decision-making process, traders can enhance self-awareness, improve emotional regulation, and ultimately make more balanced, informed, and profitable trading decisions.
AMEX:SPYEducation
by thebearfib
1
What Is the Difference Between VWMA vs VWAP?When trading in the financial markets, having the right tools and indicators can make all the difference. Two popular indicators used by traders are VWMA and VWAP, both of which factor volume data into their calculations. But what’s the difference between the two, and which one should you consider using? In this guide, we’ll break down both indicators, show how they’re calculated, and discuss the key differences. What Is VWMA? VWMA stands for Volume-Weighted Moving Average. It’s a lagging technical indicator that’s calculated similarly to a Simple Moving Average (SMA) but taking volume into account. In essence, a high volume will have a greater impact on the VWMA, offering traders a more accurate representation of an asset’s price trend than non-volume weighted moving averages. We can see the similarities when comparing the calculation of the SMA to the VWMA. If you wanted an SMA over three periods, you’d use: 3-Period SMA = (Close 1 + Close 2 + Close 3) / 3 Close here refers to the closing price of an asset. Meanwhile, to calculate a VWMA, the formula is: 3-Period VWMA = ((Close 1 * Volume 1) + (Close 2 * Volume 2) + (Close 3 * Volume 3)) / (Volume 1 + Volume 2 + Volume 3) One advantage of VWMA is that it can filter out noise from small price movements that don't have a significant impact on trading volume. It can also help traders identify the strength of a trend by showing if price movements are accompanied by increasing or decreasing trading volume. Ultimately, traders use VWMA in much the same way as they use other moving averages. For example, they may look for the price to cross over or under the VWMA line to determine whether an asset is bullish or bearish. However, combining the SMA and VWMA indicators can be a powerful technique. A divergence between the two can be used to gauge the strength and direction of a trend. In the chart above, a bearish trend was signified by the VWMA (blue) sitting beneath the SMA (orange). As a result, the crossover signalled a change in market direction. What Is VWAP? VWAP stands for Volume-Weighted Average Price. It’s similar in principle to the VWMA, but rather than being a moving average, it shows the ratio of an asset’s price to its total trading volume in a given trading session, known as its anchor period. Consequently, it produces an average price that stays relatively static throughout a trading day, compared to a moving average, which closely follows prices. The VWAP calculation is reset at the start of each trading day. The actual steps involved are slightly more complicated: 1. Calculate the typical price from the session's first candle, using (High + Low + Close) / 3. 2. Multiply the volume of that candle by the typical price (Volume * Typical Price). 3. Calculate the sum of (Volume * Typical Price) from the first candle to the current one. 4. Calculate the sum of the volume from the first candle to the current one. 5. Divide the sum of (Volume * Typical Price) by the sum of the volume to get the VWAP. Because the VWAP is calculated using the first candle of a trading day, it’s best-used intraday on low timeframe charts, like the 1-, 5-, or 15-minute. Its value is virtually identical across all timeframes. Thankfully, traders don’t need to perform any of these calculations themselves. In the free TickTrader platform offered by us at FXOpen, you’ll find both the VWMA and VWAP indicators ready to start using within minutes. A key advantage of VWAP is that it can offer traders an idea of the "fair value" of an asset. This is in line with the idea of mean reversion, which states that prices tend to revert to their average over time. If an asset trades below its VWAP, it could be considered undervalued. Likewise, if an asset is trading above its VWAP, it could be considered overvalued, and traders may look for potential opportunities to sell the asset. However, sustained price action above or below the VWAP may also indicate a trend. Note that mean reversions and these trends aren’t mutually exclusive; an asset may soar well above the VWAP, revert back to it, and then continue much higher in a strong bull trend, like in the chart above. In this way, the VWAP can be used to effectively trade pullbacks and identify entries that align with higher timeframe trends. What Is the Difference Between VWAP and VWMA? While both VWMA and VWAP use volume data to provide a more accurate representation of an asset's price trend, several differences exist between the volume-weighted average price vs volume-weighted moving average. Calculation The first distinction is in the calculations. VWMA is an N-period moving average of the closing price, weighted by trading volume. VWAP, on the other hand, takes into account high, low, and closing prices and is anchored to a specific session and weighted by trading volume. Sensitivity Due to their differing calculations, VWMA tends to follow prices closely and is more sensitive, while VWAP is less reactive to fluctuations in both price and volume. This means that the slope of the VWMA changes more frequently, making it better suited to determining trends at-a-glance, especially when combined with other moving averages. VWAP, meanwhile, can be useful for identifying short-term deviations from the average, which may provide valuable trading opportunities based on mean reversion. Timeframe Another critical difference relates to the applicable timeframes. Like other moving averages, VWMA is timeframe agnostic, meaning the way it reacts to price changes is the same across all timeframes, whether monthly or 1-minute charts. VWAP is typically calculated using a single day’s price data, so if you try to apply VWAP to daily charts or above, it won’t indicate much at all. It’s much more effective on intraday timeframes, especially 1-hour or below. Trading Strategy Because of the differences above, trading strategies for the volume-weighted moving average vs VWAP can be quite different. VWMA can be more effective for identifying trends and may present more trading opportunities if using a short period, like 10 or 20 candles, due to its heightened sensitivity. It also has more use for swing trading or position trading strategies. VWAP is better suited to mean reversion strategies and gauging the fair value of an asset intraday. While it can be used in a trend-following approach, it may not be as effective at identifying long-term trends due to its focus on a single trading day. Instead, traders should look to identify a higher timeframe trend and then trade pullbacks to the VWAP in anticipation of trend continuation. Which One to Use Choosing between VWMA vs VWAP ultimately depends on your trading strategy and preferences. If you’re looking for a moving average that may more accurately reflect the trend of an asset, then VWMA may be a better choice. On the other hand, if you want a more static indicator that can offer mean reversion trading opportunities on intraday charts, then VWAP could be preferable. Experimenting is the best way to determine which is right for you. You can try applying both in the TickTrader terminal to see how the price responds to each across different timeframes, noting your observations. When you feel ready to put your choice into practice, you can open an FXOpen account and evaluate your strategy in live markets. Good luck! This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
Understanding VWMA - Accu/Dist - OBVBlue flag showed us the decline of The A/D line, before entering sideways. Sept 30th, showed the lowest price and the lowest OBV line. When price crossed up VWMA (black flag), there was a significant rise of OBV line, while The A/D line was still in sideways mode. Jan 19th, when the price and VWMA are still in the sideways, the A/D line slightly rose up meaning there was an adding volume action. Even though The up-days fewer than the down-days (OBV line declined). March 16th, price crossed up VWMA, the OBV line moved up, and The A/D line has been rising up since Jan 19th.
NYSE:MCDEducation
by allenadarts
📊 Volume Profile: IndicatorsThere’s a reason why trading volume has been a standard indicator on every piece of charting software over the last 30 years… it provides a crucial edge. Volume provides you with logical insight into the activity of market participants at varying price levels. Volume analysis helps traders to become more reactionary to price movements rather than trying to predict where price will go next, as is the case with most technical indicators. 📍Key takeaways about volume Key takeaways about the normal volume indicator plotted on the X-axis in trading: 🔹Volume Indicator: The normal volume indicator measures the total number of shares or contracts traded during a given time period. It is commonly displayed as a histogram or line chart, with the X-axis representing time. 🔹Liquidity: Volume is a crucial metric as it provides insights into the liquidity of a security. Higher volume generally indicates greater market participation and liquidity, making it easier to buy or sell the asset without significantly impacting its price. 🔹Confirmation: Volume can confirm the validity of price movements. In an uptrend, increasing volume supports the bullish move, suggesting strength and conviction among buyers. Conversely, declining volume during an uptrend may signal weakness or lack of interest. The same principles apply to downtrends. 🔹 Breakouts and Reversals: Volume analysis is often used to identify breakouts and potential trend reversals. A significant increase in volume during a breakout suggests a higher probability of a sustained move, while decreasing volume near a support or resistance level might indicate a potential reversal. 🔹Divergence: Volume can reveal divergence between price and market sentiment. For example, if prices are rising but volume is decreasing, it could suggest that the rally is losing steam and a reversal may be imminent. Similarly, increasing volume during a price decline might indicate selling pressure and further downside potential. 🔹Confirmation of Patterns: Volume can provide confirmation or invalidation of chart patterns such as triangles, head and shoulders, or double tops/bottoms. Higher volume during pattern formations enhances their reliability, while low volume can cast doubt on the pattern's significance. 🔹Watch for Extreme Volume: Abnormal spikes in volume can indicate significant market events, such as earnings releases, news announcements, or institutional buying/selling. Unusual volume can lead to increased volatility and potentially offer trading opportunities. 🔹Relative Volume: Comparing current volume to historical average volume helps gauge the significance of the current trading activity. Higher volume relative to the average may imply increased interest, while lower volume might suggest a lack of conviction or reduced market participation. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
35
📊Volume Profile: Components & Concept📍What is a volume profile? A Volume Profile is an advanced charting indicator that displays total volume traded at every price level over a user specified time period. 📍Volume Profiles Uses: 🔷 Identify Key Support and Resistance Levels for Setups 🔷 Determine Logical Take Profits and Stop Losses 🔷 Calculate Initial R Multiplier 🔷 Identify Balanced vs Imbalanced Markets 🔷 Determine Strength of Trends 📍Volume Profile Components: 🔹Point of Control (POC): Price level where the most volume traded for the session. Commonly referred to as the POC. 🔹Value Area (VA): Price range in which a user specified percentage volume was traded for a session. Volume profile traditionalist use 70% as it close to 1 standard deviation from the mean. The Point of Control is used as the mean on a volume profile. 🔹Volume Area High(VAH) : This represents the price level at which the highest volume of trades occurred during the analyzed period inside VA. It indicates a significant level of trading activity and is often considered a key resistance level. 🔹Volume Area Low(VAL): Conversely, the Volume Area Low represents the price level with the lowest volume of trades during the analyzed period inside VA. It signifies a level of low trading activity and is typically considered a support level. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
3
Unlocking the Power of Volume: Combining Volume with TAIn our previous blog posts, we explored the importance of volume analysis in understanding indicators that can be used for volume analysis. Today, we'll delve deeper into how combining volume analysis with technical analysis can provide valuable insights for traders and investors alike. We will do so by laying out a strategy that anyone can use that will utilize volume. The Significance of Volume in Technical Analysis We have previously discussed how volume plays a crucial role in technical analysis. It is essential to examine volume patterns alongside price action, as it helps traders determine liquidity and identify potential trading opportunities. When combined with technical indicators, volume offers a more comprehensive view of market activity and can enhance decision-making in trading. Indicators to Combine with Volume Analysis Here are some popular technical indicators that traders can use in conjunction with volume analysis: 1. Moving Averages Moving averages (MAs) are one of the most widely used technical indicators, as they help traders identify trends and potential support and resistance levels. The two most commonly used moving averages are simple moving averages (SMA) and exponential moving averages (EMA). We'll use a short-term EMA (e.g., 9-day EMA) and a long-term EMA (e.g., 21-day EMA) for a strategy later in this post. 2. Relative Strength Index (RSI) The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. It ranges from 0 to 100, with readings below 30 indicating oversold conditions and readings above 70 indicating overbought conditions. The RSI can help traders identify potential trend reversals and entry/exit points. The Strategy That Incorporates Volume 1. Identify Trend Direction First, apply the 9-day EMA(shown in white) and the 21-day EMA(shown in purple) to your price chart. The trend direction is determined by the relationship between the two moving averages: Uptrend: The 9-day EMA is above the 21-day EMA Downtrend: The 9-day EMA is below the 21-day EMA Sideways: The moving averages are intertwined, with no clear direction 2. Confirm Trend Strength with RSI Apply the RSI to your chart, and use the 30 and 70 levels as reference points: For uptrends, look for the RSI to stay above 30 and preferably above 50. For downtrends, look for the RSI to stay below 70 and preferably below 50. 3. Analyze Trading Volume Compare the volume levels during the trend to the average volume over a specific period of your choosing using your desired volume indicator (see previous post on volume indicators). If the volume is above average during the trend or is rising, it confirms its strength. Conversely, a decreasing volume may signal a weakening trend or a potential reversal. 4. Entry and Exit Points Long Entry: In an uptrend, look for the RSI to pull back below 50, and then cross back above it. Confirm the entry with increasing trading volume. This indicates a potential buying opportunity. Short Entry: In a downtrend, look for the RSI to pull back above 50 and then cross back below it. Confirm the entry with increasing trading volume. This indicates a potential selling opportunity. Exit Points: Use the moving averages as trailing stop-loss levels. For long positions, exit when the 9-day EMA crosses below the 21-day EMA. For short positions, exit when the 9-day EMA crosses above the 21-day EMA. Practical Tips for Combining Volume with Technical Analysis Here are some practical tips for effectively integrating volume analysis with technical indicators: 1. Use Multiple Timeframes Analyze volume patterns and technical indicators across different timeframes to identify potential trends and reversals more accurately. We always recommend a top-down time frame approach, starting at higher time frames and working down to your desired time frame for entries. 2. Look for Volume Confirmation When a technical indicator signals a potential trading opportunity, confirm it with volume analysis to ensure the move is supported by strong market activity. 3. Monitor Divergences Divergences between volume and price action can signal potential trend reversals or continuations. Keep an eye on these discrepancies to make informed trading decisions. Conclusion: Combining volume analysis with technical indicators can help traders and investors make more informed decisions about market trends and potential trading opportunities. By understanding the relationship between volume and price action and incorporating this knowledge with technical analysis, traders can unlock powerful insights and enhance their overall trading strategy.
Education
by LeafAlgo
Volume Indicators: Using Indicators to Analyze VolumeIn our last post we discussed how volume plays a crucial role in financial trading, providing insights into the strength of price movements and overall market sentiment. Volume indicators are essential tools for traders, helping them make informed decisions based on market activity. In this blog post, we will dive deep into the world of volume indicators, discussing their importance and exploring the best indicators available for analyzing volume in day trading. We will also provide practical examples of how these indicators can be used to enhance trading strategies. The Importance of Volume Indicators Volume indicators can reveal the level of interest in a financial instrument, showing how many shares, contracts, or lots are being bought or sold within a specific time frame . By analyzing volume, traders can better understand the market's momentum and identify potential breakouts, reversals, and areas of support or resistance. Volume indicators can also help traders detect bullish or bearish divergences, where price movements and volume are not aligned, indicating a possible trend reversal. Top Volume Indicators a. Volume-Weighted Average Price (VWAP) VWAP is a popular volume indicator that calculates the average price of a financial instrument, weighted by volume. It is often used as a benchmark by institutional traders to gauge the efficiency of their trades. VWAP can help traders identify trends and potential entry and exit points, particularly for intraday trading. b. Volume-Weighted Moving Average (VWMA) Like VWAP, VWMA assigns more importance to periods with higher volume by calculating a moving average that incorporates volume data. VWMA can be used to confirm trends, as a rising VWMA in an uptrend or a declining VWMA in a downtrend shows that volume is supporting the price movement. c. Money Flow Index (MFI) MFI is an oscillator that measures the inflow and outflow of money into a financial instrument over a specific time frame. It combines both price and volume data, providing insights into buying and selling pressure. MFI can help traders identify overbought or oversold conditions, as well as potential trend reversals. d. Accumulation and Distribution Indicator This indicator measures the cumulative flow of money into and out of a financial instrument, helping traders identify accumulation (buying) and distribution (selling) phases. A rising Accumulation and Distribution indicator suggests strong buying pressure, while a falling indicator signals strong selling pressure. e. Klinger Oscillator The Klinger Oscillator is a volume-based indicator designed to predict long-term trends by comparing short-term and long-term volume flows. It can help traders confirm price movements and detect potential trend reversals. f. On-Balance Volume (OBV) OBV is a simple but effective volume indicator that calculates the cumulative volume, adding the day's volume when the price closes higher and subtracting it when the price closes lower. OBV can help traders identify trends and potential breakouts by comparing price movements with volume data. Applying Volume Indicators in Trading When using volume indicators, it is important to remember that they should be used in conjunction with other technical analysis tools and price action analysis. By combining volume indicators with other technical indicators and chart patterns, traders can develop comprehensive strategies for trading breakouts, reversals, and identifying areas of support and resistance. Conclusion Understanding volume and incorporating volume indicators into trading strategies is essential for traders looking to make informed decisions in the financial markets. By using a combination of indicators such as VWAP, VWMA, MFI, Accumulation and Distribution, Klinger Oscillator, and OBV, traders can better analyze market activity and develop effective trading strategies. If you like our content don't forget to give us a boost and follow our page @LeafAlgo!
Education
by LeafAlgo
Understanding Volume in Trading: An Intro to Trading with VolumeVolume is a crucial component in the world of trading, as it can provide valuable insights into market dynamics and trader sentiment. In this blog post, we will explore the importance of volume in trading, how it can be used to confirm trends and reversals, and the various tools and indicators available to help traders incorporate volume into their analysis. What is Volume in Trading? Volume refers to the number of shares or contracts traded in a security or market during a given period. It is commonly reported as the total number of shares traded during a particular time frame, such as a day or an hour. Volume is a key indicator of market activity and liquidity, providing traders with insights into the strength of a price movement and the potential for future price changes. Why is Volume Important in Trading? Volume plays a significant role in trading because it helps traders gauge the intensity of market participation and the conviction of market participants. A high volume often indicates strong interest in a security, while low volume suggests a lack of interest or liquidity. By analyzing volume patterns, traders can gain valuable insights into the supply and demand dynamics driving price movements and make more informed trading decisions. Using Volume to Confirm Trends One of the primary uses of volume in trading is to confirm the strength of a trend. When a security is experiencing a strong uptrend or downtrend, volume should generally increase as the trend progresses. This is because increased market participation often accompanies strong price movements, indicating that a large number of traders are buying or selling the security. To use volume to confirm a trend, traders should look for the following patterns: 1. Rising volume during an uptrend: If a security is in an uptrend and the volume is steadily increasing, it suggests that the trend is strong and likely to continue. 2. Declining volume during a downtrend: In a downtrend, declining volume can confirm the strength of the trend, as it indicates that sellers are in control and there is little buying interest to push prices higher. Identifying Reversals with Volume Volume can also be used to identify potential trend reversals. When a security's price starts to reverse direction, it is often accompanied by changes in volume. By analyzing these volume patterns, traders can identify early warning signs of a trend reversal and adjust their trading strategies accordingly. To identify potential reversals, traders should look for the following volume patterns: 1. Climactic volume: A sudden, sharp increase in volume after a prolonged trend can signal a potential reversal. This is known as climactic volume and often indicates that market participants are taking profits or closing positions, leading to a change in trend direction. 2. Volume divergence: If a security's price is making new highs or lows, but the volume is not following suit, it can be a sign of a potential reversal. This is known as volume divergence and suggests that the conviction of market participants is waning, possibly leading to a change in trend direction. Volume Indicators and Tools There are several tools and indicators available to help traders incorporate volume into their analysis. Some popular volume-based indicators include: 1. Volume bars: Volume bars are a simple way to visualize the volume of a security over a given time period. They are typically displayed as vertical bars below a price chart and can be color-coded to represent buying (green) and selling (red) pressure. 2. On-balance volume (OBV): OBV is a cumulative volume indicator that adds volume on up days and subtracts volume on down days. It can help traders identify trends and potential reversals by comparing the OBV line to the price movement of a security. 3. Volume-weighted average price (VWAP): VWAP is a trading benchmark that calculates the average price of a security weighted by volume. It is often used by institutional traders to assess the performance of their trades and can provide valuable insights into the liquidity and fair value of a security. Conclusion In conclusion, understanding and incorporating volume into trading analysis can provide traders with valuable insights into market dynamics and trader sentiment. By using volume to confirm trends and identify potential reversals, traders can increase the probability of successful trades and make more informed decisions in the market. However, it is crucial to remember that volume should be used in conjunction with other technical analysis tools to achieve the most accurate and comprehensive understanding of the market. If you like our content don't forget to give us a boost and follow our page @LeafAlgo!
FEducation
by LeafAlgo
📊 Cumulative Volume Delta (CVD)📍 CVD describes the number of contracts bought at the offer minus those sold at the bid. It simply measures the "aggressiveness" of buyers versus sellers. If the sellers are aggressive, they place limit orders instead of market selling and vice versa. CVD is the easiest method to use delta in your trading. 🔹UPTREND EXHAUSTION Price is making new highs but CVD isn't. This shows a lack of interest coming from aggressive buyers who would be needed to continue the price increase. We can expect a short term reversal to the downside. 🔷UPTREND ABSORPTION CVD is making new highs but price isn't. This shows that there is a lot of activity from aggressive buyers trying to push the price higher but their market buy orders are getting absorbed by limit sell orders. 🔷DOWNTREND EXHAUSTION Price is making new lows but CVD isn't. This shows a lack of interest coming from aggressive sellers who would be needed to continue the price decrease. We can expect a short term reversal to the upside. 🔷DOWNTREND ABSORPTION CVD is making new lows but price isn't. This shows that there is a lot of activity from aggressive sellers trying to push the price lower but their market sell orders are getting absorbed by limit buy orders. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
6
Bullish Movement "Off" the Volume Profile. In this scenario, I'm using the DMI in conjunction with the AO, & I've tried to pick a reasonable time frame on the days to analyze. I tried to isolate a DMI "Wave" from any DMI (+) or DMI (-) to a next peak/trough. This is to try isolate the market participants and try to capture both their participation in the market. Once located, I take a Volume profile and Anchor the Volume Weighted Average Prices (with their deviations) to the beginning. Next I simply tried to evaluate what the price averages were doing, (using the AO & DMI) I tried to gauge if there was a dominant or clear trend. Rather I tried to also find any time cyclical patterns of those trends. Using this quick evalution "technique". Here were my results.
JSE:ORNEducation
by mikeonenorth
Follow Through Day's and Market BottomsIt’s said that three out of every four stocks will follow the trend of the general market. It’s also known that the best opportunities come when a bear market ends, and a fresh new uptrend begins. The question is, how do you know when a new uptrend starts? The Follow Through Day A Follow Through Day was defined by William O’Neil as “when one of the major market averages moves up over 1.25% on heavier volume than the previous day.” A Follow Through Day usually occurs sometime between days 4 and 12 of an attempted rally. When to Start Counting Rally Days While the market is in a down trend, you are waiting for the first day the market closes positive to start counting your attempted rally days. The first positive day is day 1 of the rally attempt. On day 4 or later you are looking for the Follow Through Day to occur. How Does a Follow Through Day Fail Not every follow through day works, but no bull market has started without one. All days of the rally do not need to be up, some may be down, however a follow through day officially fails when the low of day 1 of the rally attempt is undercut. When this happens, it is time to start looking for a new day 1 and another follow through day. It is not uncommon to have multiple attempted rallies and failed follow through days before the market begins a new uptrend. Let’s look at a few market bottoms from the past reviewing the concepts covered. Nasdaq 1998 Bottom SPX 1974 Bottom
TVC:IXICEducation
by Amphibiantrading
4
Hunting Breakouts with Bollinger Bands and OBVThanks to zAngus for the idea, here is a simple trading strategy that uses two tools: Bollinger Bands and OBV to find moments when an asset's prices can increase or decrease. First and foremost, please note that this explanation is simplified and only covers the basics. Each individual can develop their own settings and adjustments according to their own preferences. Imagine that you are looking at a price chart of an asset. This chart shows how prices have changed over time. Sometimes prices go up and sometimes they go down. The trading strategy we are going to show you can help you find moments when prices are about to change direction. - Bollinger Bands are lines that show a zone where prices of an asset are likely to stay. These lines have two parts: a middle line that shows an average of prices and two other lines that show the zone where prices should be. The lines widen and narrow based on the volatility of prices. - OBV (On-Balance Volume) is another tool that measures whether more people are buying or selling an asset. If more people are buying an asset, OBV increases, and if more people are selling an asset, OBV decreases. Now, here is how we use these two tools to find moments when an asset's prices can increase or decrease: 1. First, we wait for prices to stabilize for a certain amount of time. This means that prices don't go up or down much during a given period. 2. Next, we look at the Bollinger Bands to see if prices have reached the upper or lower limit. If prices exceed the upper limit, it may mean that prices will increase. If prices fall below the lower limit, it may mean that prices will decrease. 3. To confirm what we have seen in the Bollinger Bands, we look at the OBV. If OBV increases or decreases at the same time as prices exceed the upper or lower limit of the Bollinger Bands, it means that more people are buying or selling the asset, and this reinforces our idea that prices will increase or decrease. 4. We enter the market by buying or selling the asset based on whether we think prices will increase or decrease. 5. We exit the market when prices reach the opposite upper or lower limit of the Bollinger Bands or an important resistance zone. This is a simple strategy, but it can help find moments when an asset's prices can increase or decrease. Remember that you must always use good risk management to avoid losing too much money if the market doesn't follow your forecast. Please note that this Bollinger Bands and OBV breakout trading strategy involves risk and is intended for educational purposes only. Any investments made using this strategy are done at your own risk, and you should always do your own research and seek professional advice before making any investment decisions.
Education
by Julien_Eche
📢 The Broadening FormationA technical chart pattern recognized by analysts, known as a broadening formation or Megaphone Pattern, is characterized by expanding price fluctuation. It is represented by two lines, one ascending and one descending, that diverge from each other. This pattern typically appears after a significant increase or decrease in security prices and is denoted by a sequence of higher and lower turning points. Normally this pattern is visible when the market is at its top or bottom. The greater the time frame is better the pattern will work. 🔹How to identify Generally, the Broadening Formation consists of 5 different swings. But the swing has to have a minimum of two higher highs and two lower lows. A trend line is drawn by connecting point 1 and point 3 while points 2 and 4 are also joined together to draw a line. These two lines create a shape that looks like a megaphone or inverted symmetric triangle. These swings’ highs and lows have to close above or below its pivot line and therefore they will create swing high as pivot high (R1, R2, and R3) and swing lows as pivot lows (S1, S2, and S3). A breakout occurs when the line does not respect its support or resistance line and closes outside the shape after making the 5th swing. 🔹Volume Volume plays an important role when it comes to the recognition of this pattern. In the Broadening Top, volume usually peaks along with prices. An increase in the volume, on the day of the pattern confirmation, is a strong indicator. 🔹Failures This pattern also can be traded when it fails but is necessary to identify the failure perfectly. A failure can be spotted when it fails to break the trend line (upper or lower as the case may be) after completing the 5th swing. Suppose in a bull market condition, this pattern is formed and if it fails to break the upper trend line, traders go short when the price goes below 3rd swing high (R2). Similar is the scenario, when the market is in a bear phase and it fails to break the lower trend line (S2), traders take a long position when the price closes above the 3rd swing high. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
4
Trading with Volume profile there was 3 setup for intraday trading first one after seeing rejection of imbalances ( high risk until we entered the Value again ) take profit @ POC or VAL second one after seeing rejection of VAL ( this one was most valid setup of the day , we rejected imbalances and VAL at the same time , there were clear signs in the footprint ) take profit @ VWAP or POC or VAH or even finding new values at higher prices third one was after breaking of VAH and retesting it ( usually u shouldn't enter at breakouts , cause it might be just liquidity hunt . u should wait for retest of breaking point ) take profit @ new values at higher prices i usually dont like break out trades , but there was another opportunity after seeing absorption behind the vwap .
OANDA:XAUUSDEducation
by apix7
MACD 1D: X, XD, XDD, and P=M(XD)Andrew M. Kempi 7 January 2023 MACD 1D Methodology: X, XD (X•), XDD (X••), and P=M(XD) Determine Volume psychology and volume mass. P=Mass(Velocity), p=volume(XD), including pascal averaging. The Volume, and price value, is dependent on Velocity (XD). Velocity is dependent on Acceleration. Confirm undeviated direction and trend. Establish location: above or below directional price average. Trend symmetrically around price average. Confirm XDD (X••) acceleration. Identify the Vector utilizing XD (X•).
SP:SPXEducation
by privatepizza111
💎 Analyzing the Various Shapes of Volume ProfilesVolume Profile is a tool that shows how much volume (i.e. the number of trades) is happening at different price levels for a given asset. It is used by traders to analyze order flow and make inferences about market direction, support and resistance, and potential reversal areas. The patterns in a Volume Profile may appear random at first glance, but there are certain recurring shapes that can be used to make predictions about the market. 🔵 P-Shaped Volume Profile A P-shaped Volume Profile is a chart pattern that typically occurs when a market experiences a sharp rise followed by consolidation. The lower part of the P-shaped profile represents low volume rejection, while the wider upper part shows an increase in trading activity at a "fair" price. These patterns are often seen during uptrends, but can also indicate the end of a downtrend and a potential short covering rally, which is seen as a bullish signal. 🔵 b-Shaped Volume Profile A b-shaped Volume Profile is a chart pattern that forms when a market experiences a sharp decline followed by consolidation. It is the opposite of a P-shaped profile and is often seen during downtrends. The upper part of a b-shaped profile represents low volume and an "unfair" perception of price, while the wider bottom part shows an increase in trading activity and a balance between buyers and sellers. If a b-shaped profile appears during an uptrend, it could potentially indicate a reversal. These patterns are generally seen as bearish signals, as they often represent longs exiting the market. 🔵 D-Shaped Volume Profile A D-shaped Volume Profile is a chart pattern that occurs when there is a temporary balance in a market. The Point of Control (POC), which is typically located in the center of the profile, indicates an equal number of buyers and sellers. Some traders view a D-shaped profile as a sign of a choppy or sideways market without a clear direction, while others see it as an opportunity to anticipate a potential breakout in either direction as institutional players build up their positions. 🔵 B-Shaped Volume Profile A B-shaped Volume Profile is a chart pattern that occurs when two D-shaped profiles appear within a specific time period. It is characterized by a single value area and Point of Control (POC), although some traders may divide the profile into two separate "D-areas" with their own value areas. B-shaped profiles are generally seen as a continuation of a trend, but it is important to note which POC is more dominant, as this can indicate whether activity was highest at the top or bottom of the profile. 👤 @algobuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work , Please like, comment and follow ❤️
Education
by QuantVue
2
💡HOW TO OPERATE LATERALITIES WITH THE VOLUME PROFILE💡HI Guys, I will bring here an example of operation, follow the thread On that day, I observed prices trading in a strong resistance zone and close to the 200 descending EMA, so I looked for sales with targets in the support zones. I ended up taking my first take at $1.85 and I went with the targets plotted on the screen as an objective. Yesterday the price was struggling to close the bar above the POC, so I saw context for more selling. See that we have a double top in the POC zone combined with the fibonacci range So I believe in the bottom of laterality test This is a little bit of how I use the VOLUME PROFILE In this case, I am expecting a consolidation operation, so the target zone is usually the central part of the entire trading range, for those who use the VP, they can also use the POC (The POC is basically the zone where most price trading takes place in active) Important points: always on a trading range you will trade against breakouts, because 80% of the time they will fail. Whenever you observe a consolidation mainly in the form of a wide range, use the Volume Profile to make it easier to read, and look for sales with signal bars, confirmation or any SetUp that you use above VAH, and purchases below VAL This update was one of the last of the Volume Profile here on TV I hope you enjoyed this content, consider following me to receive more publications like this one, and leave your like to contribute to my work
Education
by leandrosander_
Bull Bear Power Void - With trending background To get this indicator on your charts (remove the old one from your favs and your chart if you have it already) otherwise just go to this link and add it Welcome to the coffee shop everybody in this video I am discussing the new changes to the bullet bear power void. There have been some changes to the coding because I did see your messages discussing that it was difficult to see the trend ribbon in the background so now you have an entire background that adjusts its color depending on whether the trend is positive or negative or if there is no trend. go ahead and watch the video for the results on that one hand I also took the time to show you guys how to see a Divergence in your volume up against your price. along with that you can also see when you should and should not re-enter the market for a continuation trade. Black background means there is no volume or that profits are being taken off the table. Red background means that the volume is trending bearish. Green background means that volume is trending bullish. One way to spot a Divergence or a slowing down in the trend is when your volume column brakes outside the void at the same time you get an equal color background, Look at the height of that volume candle and compare it to the last time that you got a similar color background with a column breaking outside the void. If your volume Is closer to the void it was in the previous one, then you do not enter this as a continuation trade. If you are trading bullish then your new re-entry has to have more volume than your last re-entry. If you are trading bearish then your new volume has to be lower than your previous volume
Education
by CoffeeshopCrypto
18