Today’s video explores the idea of volume confirmation and why it does or doesn’t matter.
- Volume = Measure of Participation
- Always equal number of buyers and sellers.
- More demand than supply = prices rise
- More supply than demand = prices fall
- Price charts are the footprints of money.
- Volume reveals big buyers vs. small buyers
- Individuals = retail traders = small money
- Institutions = big money = hedge funds, pension funds, endowment funds, banks, = pooled money
- Assumption = high volume day = institutions buying or selling.
- Low volume day = lack of institutions
- High volume up day = accumulation
- High volume down day = distribution
- Price is the sentence, volume is the punctuation
- High volume day = exclamation point = adds legitimacy, urgency to what happened that day.
- Breakout or a trend reversal on high volume = more believable
- Breakout or a trend reversal on low volume = more suspect
- Was that THE Bottom? Or just A bottom?
- How much emphasis do I put on whether volume CONFIRMS a move?
- Price always trumps NO MATTER WHAT. Trend reversed higher, it’s bullish.
- Price trend is up = Bullish.
- Price trend is up with higher volume during the reversal = More confidently bullish
- Price trend is up with lower volume during the reversal = Less confidently bullish
- When I hear people argue that the bullish trend is a fakeout because of low volume. This means they’re bearish or there are other factors.
- Volume during recoveries is ALWAYS less than volume during crash.
- Volume AVG
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