Tales of a Technician: Is Volume Confirming the Rally?
August 1, 2022
Today’s video explores the idea of volume confirmation and why it does or doesn’t matter.
Notes
- 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
Read more Tales of a Technician [FREE Content]
Financial freedom is a journey
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
Thanks for this topic I learned plenty. Selective perception and confirmation bias, being stung in the past all play a major role for me. Probably, well most definitely TOO much.