• Australian (ASX) Stock Market Forum

Volume vs. Indicators

Discussion in 'Stock Market Nuts and Bolts' started by katya1, Nov 10, 2015.

  1. katya1

    katya1

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    Probably not until you feel the pointlessness of working with indicators by yourself, you will not be able to refuse them. However, for a person who recently came to the stock exchange, indicators can help to understand one important thing, namely, to understand the meaning of systematic trading. System trading is the key to success, because you learn to act consistently (because in certain circumstances you do certain actions).
    But why do indicators not work? Why are they often being delayed and output after the market went in our direction? Why can the value of the indicator stay in overbought or oversold zone for quite a long time?
    In order to understand all this, you need to understand how to calculate the indicator.
    Here's a diagram that should completely change your whole idea about the market and about the indicators, respectively.

    Will -> Volume -> Price -> Indicator
    1. The indicator is derived from the price.
    2. The price is derived from volume.
    3. The volume is derived from the will.
    I.e. the values are quoted in this latest link. This formula, which just converts the current value of the market price.
    I think now it becomes clear why working with indicators does not bear in itself any sense.
    Partly, even working with the schedule of prices will be difficult for the trader because he will not understand how the price has appeared.
    What is this "will"? Will is interest in the open position (either long or short). The will appears any market participant, at any time, at any price.
    It is clear that traders with small volumes are not able to manage the market. That is why you should enter the market only when a big player starts to operate.
    We cannot penetrate into his head and find out what he's going to do (this is insider information). But, often, there's no need, because all his desires are immediately reflected in the indicators of volume.

    So we can see when a big player opens their stance, and this, in turn, gives us the opportunity to make transactions with a higher likelihood of a positive outcome. Our operations begin to acquire some meaning.
     
  2. Wysiwyg

    Wysiwyg Everyone wants money

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    So you can probabilistically go long or short on any large volume period? Does not the volume period price action indicate (loosely translated) accumulation or distribution?
     
  3. Gringotts Bank

    Gringotts Bank

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    'Will' here is downward. Big increase in volume. Then it pops back up. Plenty of similar examples.

    Maybe a longer time frame is important here? Weekly minimum?

    x.png
     
  4. Wysiwyg

    Wysiwyg Everyone wants money

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    Is this tradeable? Do we buy large volume? What if there is larger volume after? Do we take a 50/50 bet that the large volume is the turning point? There are millions of "examples" of indicators and volume but is anything better than 50/50? Can any be traded with confidence?

    Lots of questions ... few, if any, facts! Ultimately you pays your money and you place your stop loss for when the probability is not there.
     
  5. Gringotts Bank

    Gringotts Bank

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    Yeh, needs testing. Blow off tops coincide wth very high volume, so you'd never follow that money.
     
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