Thread: Hey...what about Volume?

One more instance. . .this period in Foreign Exchange:

even without the special coding to color the bars, you can observe the tick quantity drops off dramatically much as price reaches new highs. . .same can be said for the lows viewed here. . .new lows. . .yet clearly NO volume. (momentum? , churning? , grinding?) NO! Fatigue

We come down the notion of Absorption. . .but I'll have to leave that for another day...I've some duties to attend now and will attempt to comment more tomorrow. I hope you find value in what I am attempting to communie here. Please don't hesitate to ask questions, and understand that I'm still developing these ideas so nothing is set in stone quite yet (not for me ).

I believe that using daily tick volume on NY near market, there is enough information to enter and exit trades that may move you to provide at least 3xR, and keep ceases sufficiently from the means of broker's meddling. But that is just MY opinion. . .please don't be afraid to offer yours.

Originally Posted by ;

Exhaustion: This state where price continues to move in the direction usually preempted from the prior climax. But on always lower or less quantity. Technicians call that this momentum. I disagree. While price continues to move in the direction of the trend (at last as much as they have defined it). . .the volume shifting that price is lower and lower. Even on quantity, price continues moving. . .this is largely because there is actually not opposing order flow to challenge it. Thus because the dominance is established, most new entrances...

Hello,

Just how can you define dominant Order flow?

Thanks

Originally Posted by ;

quote Hi, How can do you define notable Order flow? Thanks

Great question...

On my futures I define it because the side of this market that generates the maximum volume in its own direction that contributes to price moving that intended direction. Example: Climax quantity = 3x the otherside's volume. (if buying quantity is 100, and selling quantity is 300 - or longer ), sellers are dominating the market and therefore producing a bearish price bar.

Of course anomalies happen, particularly on very small time frames. I've observed on time frames of 150 ticks or less, that there are often bars where the selling is more than 3x the buying, yet, a bullish bar or a doji will form. These are normally ranges of 2-4 ticks. These observations obtained me. I will need to be at the pc for me to adequately explain that further. I currently am not.

Therefore if purchasing gt; buying AND near lt; open AND close lt; 50 percent of range. . .selling is notable.

Originally Posted by ;

quote All these are usually extremely small ranges of 2-4 ticks. These observations got me investigating the concept of absorption. I will want to be to explain this further. I currently am not. Thus if selling gt; buying AND lt; lt AND open; 50% of range. . .selling is notable.

I use absorption and mini-absorption since the final cause in my trading... very high% of trades will probably reach BE, lots of trades will probably make high RR profits, and few trades will probably strike first SL.

Lively with holiday, family, travel, but should you want to explore farther we can talk.

These signals were programmed into sierra chart using quite similar logic to what you explained.

Best,
N

DonPato,

Posting the same chart with signs as previously, as well as zoomed view of every signal with and inner perspective of this BID vs ASK/OFFER bars at every level. Hopefully this will help illue the point I am trying to make. At the bottom of the chart you'll see Delta and Total Volume for each bar.

There are obviously additional considerations to be made before trading every signal, but I believe these charts are at the exact same spirit as your article regarding absorption, bid/offer divergence with candle shut.

All of the best,
N.

Hey there Nik-Nyc.. .you beat me to the punch line. . .but you are spot on. I have coded something much the same into my trading but do not have the (as I am not really a developer ) which reveals it out by each price level. . .Good for you! You've done what I have tried to do on a much bigger scale. If you are utilizing a 4 tick range pub, I am using tick charts which are considerably bigger compared to the concept is identical. OK. . I suppose I have a little time so that I will get into this last phase now...

However congrats Nik-Nyc. . .this is exactly the concept I am trying to put across. . .as that you put it to trigger trading.

Absorption: This idea is often more difficult for people to grasp as we are taught the the more participants or volume in one direction, the longer price will move in that way. However this is not always correct. . .We all understand that for every buyer there must be a seller. It is a fundamental tenant of the market. Actually there IS NO market unless you have two parties willing to transact from other sides. 1 buyer, one seller. But what happens when the guy who wants to buy as much cash he can absorb all market orders at a particular price until there's absolutely no one left to market?

This will register as an anomaly. Greater selling volume but price doesn't follow suit, or actually goes UP. This is absorption. When an order's volume (how many lots he/she is willing to transact) is so large it can absorb all of the available volume in the opposing side and not permit price to move any further. . .someone or something is coming in with substantial volume and after the sellers are all sold out, price will rise, because this order's volume has not been filled entirely. So with buying volume to transact, price starts ticking higher.

It can be viewed (again in stocks markets) or markets using any fundamental trade, when one side of the order flow cannot move price any further, even though it is transacting more volume than the other side of the order flow. Example. A bearish bar that has more selling than buying but finishes (closes) at least 50 percent of the bar's range off the lows.

Here are a few examples from an earlier screen shot.


There are two different kinds of code at work on these bars. . .both are registering basically the exact same thing, one on delta volume, and also one on total volume. It is this volume concept that I believe will work in the forex market.

USD/CAD - brief...I just entered this trade and it is the perfect illustration of exactly what I THINK we can translate as absorption. Bearing in mind that we're using total tick quantity for 24 hrs, this candle reveals rising quantity and completed bullish after breaking into new highs. But it close below 50 percent of their total range for this day. I've been exploring this for just a short while today on the FX side, and am interested in what others with this kind of experience think. I have found it to be rather consistent, and would require a rule set. . .one that I am working on today.

We should adhere to this trade and find out how it works out.

Summing things up...
Before, or merely as, a swing point is forming, you will find three inevitable phases that the order flow will pass that will provide a sign in the market regarding WHEN you ought to either, take profit in your current trade, input a new position from the other path, or both (stop and reverse). This idea relies on fundamental and well proven order flow theories and work in the market every day. They are:Climax - . EVERYONE. . .fundamentalists, Technical analysts, urge traders, EVERYONE. The volume will be very obvious and easy to see. Exhaustion - Frequently called momentum. Price continues moving in the direction of this orgasm volume (or grinding) on successively lower volume. Even on this lower volume price continues to proceed, due to lack of interest in counter party trade Absorption - The condition where with higher volumes at the management of the dominant order flow, price does NOT last, or even moves contrary to the order flow. All three must be present to get a legitimate swing point to form. Valid in my thoughts as to if I will consider taking action.