No, not at all.Originally Posted by ;
No, not at all.
Subs. Thank you
Regards
Hi DonPato,
whenever you have some time, can you clarify a little how do you find those three theories?
Cheers
They are not accurate (contract rollover, hour difference) but very near. A good broker with good volume (many customers, very good LPs) should give good readings. I was a non-believer in volume too, but you can find useful things you can get from it.
Outstanding coding saksif...I wonder if you would be prepared to share it? The histogram on delta volume appears very much like one I coded for the futures e-minis, but with outside bid, ask quantity I wonder how that information is extrapolated? At any rate I would like to refer back to your photos now if I could. They show excellent examples of just two of the concepts I came to understand trading futures.
Again, I agree with this 100%. . .later today I will show how my idea formed of these theories, but you are correct. There's no centralized exchange in the Currency Market market and consequently no clearing house to enroll the true volume, at any level, ie, that volume that is really being transacted. Even futures can simply reveal what's BEEN transacted. . .not what is waiting to transact...(order book) at any given level. . .at least my platform simply shows pending orders 10 points below or above current price.
That having been said, I think there's value in tick volume. . .in reality I an many traders I understand use constant tick volume as candle charts to trade with. I THINK. . .this concept for me personally remains unproven in Currency Market. . .that by assessing the tick volume your broker provides you can show on a broad basis the concepts of orgasm, fatigue, and absorption. I feel these come with a few caviats. Utilize the totality of the daily tick volume - I am unsure tick volume is beneficial in intraday trading. . .for the reasons everyone here has recorded. These stages don't necessarily happen in order, so can seem arbitrary. This is true regardless of what market you trade. Like anything else in Currency Market, your broker controls what you see, thus by using daily charts with sufficient stops, he can't gap price to hunt your stop. . .at not without drawing a lot of attention to what he's doing. . .this are bad for business.
I will try. . .so lets start with a simple explanation of what these theories are. The easiest to see and understand (and what the majority of people call fatigue ) is the idea of Climax Volume.
This the place where the order flow is controlled by one side or the other, and contributes to large candles with very tiny wicks. You can see these usually in two overall areas of your chart. . .the start of a change, and somewhere near the end of the move. Every loion is caused by various things. The first (near the start of a change ) is really where the stops from the dominant order flow have already been run, flooding the market with orders and pushing it in one direction quickly. . .my mentors affectionately call this, the woosh. The other place where you will see that this is toward the end of a movement, where opposing order flow provides up (again stopping out) and also the late trader (usually the retail guy after his MACD or Moving Average) jumps on the tendency and also things that this movement will continue...
So here's the order flow concept question to consider. Once everyone who is going to participate, HAS in fact participated, what happens to price? Think about this for a moment. . .lets say long. . .once everyone who wants to buy HAS in fact purchased. . .who's left to keep on driving prices higher? Has this happened to youpersonally? You see a strong move on the market and you believe its has all of the standards (you were educated to look for) and you also get on too. Shortly then, price does NOTHING, or even starts going back. What happened?
You're taken in by ejaculation volume. Everyone was now on board and no one is left to push prices any higher. Our friend just posted some superb case of this with his own indior. . .and proves that the tick volume in Foreign Exchange CAN be used in a very similar manner to that of futures
Lets take same chart without the renko indior (I presume its renko pubs he's using)
You can clearly see here the orgasm both started and completed each swing movement. . .but over that. . .they were precursers to the end. If you're one who trades reversals, (and BTW everybody who is a fashion trader should be searching for that change at the base of a retrace) then your biggest question is obviously, when is this change likely to be over? This maybe can provide you an idea. . .wait for that orgasm move to show up first. . .then move to the fatigue, and finally the absorption to turn your entry with the smart money.
Another example from the e-minis themselves. . .this is where my thought arises.
Notice the red candles at the conclusion of this final move down. . .climax volume. This coding is a bit different as I have access to buy/sell info. Each red candle has 3x the selling quantity as buying quantity.
Note also the delta volume under every candle. . .Also notice near the peak of this move down. . .the orgasm. I'd love to utilize this to additionally illue the concept. . .that of exhaustion. . .next article
Exhaustion:
This state where price continues to move in the path usually preempted from the previous orgasm. But on always lower or less volume. Technicians call that this momentum. I strongly disagree. While price continues to move in the direction of this trend (at last as far as they have defined it). . .the volume shifting that price is lower and lower. Even on volume, price stays moving. . .this is largely because there's actually not opposing order flow to battle it. Thus because the dominance is established, most new entries are at the same direction and because of very little opposing order flow, (to take the other side of their trade), price continues to tick in this way in an attempt to entice new conflicting order flow to fill the orders which are left in the market.
Many explain this as momentum, screaming, grinding. Its nothing more than exhaustion since the larger orders happen in and what little conflicting order flow there might be is from these larger orders, taking profits out and suckering in the new entries.
In the futures market I've been in a position to quantify this as any candle in which the dominant order flow drops below the average while at the same time the conflicting order flow rises above the average. (Average can be what ever you would like it to be). Here is an illustration
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