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Smart Money Support/Resistance + ATAI Volume Analysis —PracticalApplication When these two indicators work together — Smart Money Support/Resistance (Lite) and ATAI Volume Analysis with Price Action — the chart begins to speak a clearer language: one defines where the reaction zones form, and the other explains what happens inside them. The purpose is not prediction but understanding the balance between smart money pressure and retail momentum. 1. Parameter Alignment On the right side of the chart, the green info panel confirms that both indicators share identical configurations. In this example, the lookback period is set to 52, chosen deliberately because it must be smaller than the total number of LTF coverage bars (65). For the Smart Money Support/Resistance indicator, the projection is set to 26 — extending the detected zones forward without adding excessive visual noise. This alignment is crucial; mismatched parameters can desynchronize volume readings and structural boundaries. 2. Reading the Chart In this sample chart, the upper red area represents a Smart Money resistance zone — a region of concentrated selling pressure detected from lower timeframe volume. Simultaneously, ATAI Volume Analysis signals an Overbought (6/7) condition, meaning multiple oscillators confirm exhaustion while seller volume (S.Max) begins to outweigh buyer volume (B.Min). This overlap suggests that liquidity has shifted and the prior bullish impulse is weakening. From here, price may consolidate within the zone or initiate a structured retracement toward the blue support area, previously defined by accumulation volume. The red projected path simply visualizes one potential structural scenario; it is not a prediction or trade signal. 3. Broader Context This example serves only as a demonstration of how these two tools interact when properly tuned. Different assets and timeframes naturally yield unique structures and behaviors, yet the principle remains consistent: define the territory first with Smart Money Support/Resistance, then interpret market behavior within it using ATAI Volume Analysis. This content is for educational purposes only — not financial advice. User feedback and practical observations play a key role in refining future versions of both indicators.
NASDAQ:TSLAEducation
by ata_sabanci
2
Explaining the Lower Timeframe Function and Its Role in Trading Introduction Candlesticks on higher timeframes summarize long periods of trading activity, but they hide the internal balance of buying and selling. A daily candle, for instance, may show only a strong close, while in reality buyers and sellers may have fought much more evenly. To uncover this hidden structure, Pine Script offers the requestUpAndDownVolume() function, which retrieves up-volume, down-volume, and delta from a chosen lower timeframe (LTF). Function in Practice By applying this function, traders can measure how much of a move was supported by genuine buying pressure and how much came from selling pressure. The function works across timeframes: when analyzing a daily chart, one can select a one-minute or one-second LTF to see how the volume was distributed within each daily bar . This approach reveals details that are invisible on the higher timeframe alone. Helper for Data Coverage Lower-timeframe data comes with strict limitations. A one-second chart may only cover a few hours of history, while a one-minute chart can stretch much further back. To make this limitation transparent, a helper was implemented in our code: it shows explicitly how far the available LTF data extends . Instead of assuming full coverage, the trader knows the exact portion of the higher bar that is represented. //══════════════ // Volume — Lower TF Up/Down //══════════════ int global_volume_period = input.int(20, minval=1, title="Global Volume Period", tooltip="Shared lookback for ALL volume calculations (e.g., averages/sums).", group=grpVolume) bool use_custom_tf_input = input.bool(true, "Use custom lower timeframe", tooltip="Override the automatically chosen lower timeframe for volume calculations.", group=grpVolume) string custom_tf_input = input.timeframe("1", "Lower timeframe", tooltip="Lower timeframe used for up/down volume calculations.", group=grpVolume) import TradingView/ta/10 as tvta resolve_lower_tf(bool useCustom, string customTF) => useCustom ? customTF : timeframe.isseconds ? "1S" : timeframe.isintraday ? "1" : timeframe.isdaily ? "5" : "60" get_up_down_volume(string lowerTf) => = tvta.requestUpAndDownVolume(lowerTf) var float upVolume = na var float downVolume = na var float deltaVolume = na string lower_tf = resolve_lower_tf(use_custom_tf_input, custom_tf_input) = get_up_down_volume(lower_tf) upVolume := u_tmp downVolume := d_tmp deltaVolume := dl_tmp //──── LTF coverage counter — counts chart bars with valid Up/Down (non-na) 〔Hazel-lite〕 var int ltf_total_bars = 0 var int last_valid_bar_index = na // new: remember the bar_index of the last valid LTF bar if not na(deltaVolume) ltf_total_bars += 1 last_valid_bar_index := bar_index int ltf_safe_window = ltf_total_bars var label ltf_cov_label = na // label handle for the “coverage” marker Use in Strategy Development Because both the main function and the helper for data coverage have been implemented in our work, we use the Hazel-nut BB Volume strategy here as a practical example to illustrate the subject. This strategy serves only as a framework to show how lower-timeframe volume analysis affects higher-timeframe charts. In the following sections, several charts will be presented and briefly explained to demonstrate these effects in practice. In this example, the daily chart is used as the main timeframe, while a one-second lower timeframe (LTF) has been applied to examine the internal volume distribution. The helper clearly indicates that only 59 one-second bars are available for this daily candle. This is critical, because it shows the analysis is based on a partial window of intraday data rather than a full day. The up/down volume split reveals that buyers accounted for about 1.957 million units versus sellers with 1.874 million, producing a positive delta of roughly +83,727. In percentage terms, buyers held a slight edge (≈51%), while sellers were close behind (≈49%). This near balance demonstrates how the daily candle’s bullish appearance was built on only a modest dominance by buyers. By presenting both the margin values (e.g., upper band margin 13.61%) and the absolute money flow, the chart connects higher-timeframe Bollinger Band context with the micro-timeframe order flow. The annotation “Up/Down data valid starting here” reinforces the importance of the helper: it alerts the user that valid LTF volume coverage begins from a specific point, preventing misinterpretation of missing data. In short, this chart illustrates how choosing a very fine LTF (1 second) can reveal subtle buyer–seller dynamics, while at the same time highlighting the limitation of short data availability. It is a practical case of the principle described earlier—lower-timeframe insight enriches higher-timeframe context, but only within the boundary of available bars. Analysis with One-Minute LTF In this chart, the daily timeframe remains the base, but the lower timeframe (LTF) has been shifted to one minute. The helper indicates that data coverage extends across 353 daily bars, a much deeper historical window than in the one-second example. This means we can evaluate buyer/seller balance over nearly a full year of daily candles rather than just a short slice of history. The up/down split shows buyers at ≈2.019M and sellers at ≈1.812M, producing a positive delta of +206,223. Here, buyers hold about 52.7%, compared to sellers at 47.3%. This stronger bias toward buyers contrasts with the previous chart, where the one-second LTF produced only a slim delta of +83,727 and ratios closer to 51%/49%. Comparison with the One-Second LTF Chart Data coverage: 1s gave 59 daily bars of usable history; 1m extends that to 353 bars. Delta magnitude: 1s produced a modest delta (+83k), reflecting very fine-grained noise; 1m smooths those micro-fluctuations into a larger, clearer delta (+206k). Interpretation: The 1s chart highlighted short-term balance, almost evenly split. The 1m chart, backed by longer history, paints a more decisive picture of buyer strength. Key Takeaway This comparison underscores the trade-off: the lower the LTF, the higher the detail but the shorter the history; the higher the LTF, the broader the historical coverage but at the cost of microscopic precision. The helper function bridges this gap by making the coverage explicit, ensuring traders know exactly what their analysis is built on. Impact of TradingView Plan Levels Another factor shaping the use of this function is the user’s access to data. TradingView accounts differ in how much intraday history they provide and which intervals are unlocked. ◉ On the free plan, the smallest available interval is one minute, with a few months of intraday history. ◉ Paid plans unlock second-based charts, but even then, history is measured in hours or days, not months. ◉ Higher tiers extend the number of bars that can be loaded per chart, which becomes relevant when pulling large volumes of lower-timeframe data into higher-timeframe studies Conclusion With requestUpAndDownVolume(), it becomes possible to see how each symbol behaves internally across different timeframes. The helper function makes clear where the data stops, preventing misinterpretation. By applying this setup within strategies like Hazel-nut BB Volume, one can demonstrate how changing the lower timeframe directly alters the picture seen on higher charts. In this way, the function is not just a technical option but a bridge between detail and context.
AMEX:BTGEducation
by ata_sabanci
4
The Compression Break: Identifying the Spring Before ExpansionDifficulty: 🐳🐳🐳🐋 (Intermediate) This article is for traders who want to recognize and trade explosive moves that form after periods of tight price compression. Perfect for those familiar with structure, volume, and volatility concepts. 🔵 INTRODUCTION Price doesn’t move in a straight line — it breathes. It expands when there’s imbalance, and it compresses when the market is building energy. The most powerful moves often start with a compression phase — a tight, controlled price range — before a sudden breakout. Learning to spot these “springs” before they snap can give you trades with excellent risk/reward ratios and clear invalidation points. 🔵 WHAT IS COMPRESSION? Compression occurs when price volatility shrinks, and each swing becomes smaller than the last. It looks like price is being “squeezed” between converging support and resistance levels. Common causes of compression: Liquidity build-up before a major session open Market waiting for a news release or key event Institutional positioning before a drive The tighter the range, the bigger the potential release. 🔵 WHY IT MATTERS Compression is important because: It reveals where the market is balanced and undecided It creates a high-energy environment — a small push can trigger big moves It offers tight stop-loss placement and clear breakout targets Think of it like a coiled spring: the more it’s compressed, the more explosive the release. 🔵 HOW TO IDENTIFY COMPRESSION 1️⃣ Price Action Clues Consecutive smaller candles with overlapping ranges Lower highs + higher lows (triangle formation) Reduced wick size in the final stages before breakout 2️⃣ Volume Clues Declining volume during the squeeze Sudden volume spike as breakout begins 3️⃣ Volatility Clues ATR (Average True Range) dropping to local lows Bollinger Bands narrowing (optional) 🔵 TRADING THE COMPRESSION BREAK Step 1: Define the Box Mark the high and low of the compression range. This will be your breakout reference. Step 2: Wait for Volume Confirmation Avoid jumping in on the first tick outside the box. Wait for a volume surge or strong close beyond the boundary. Step 3: Trade in the Breakout Direction Entry: After confirmed breakout close Stop Loss: Inside the compression range Target: Equal to the height of the compression box or previous swing high/low 🔵 EXAMPLE SCENARIO Price compresses for more then 10 bars into a tight range Volume steadily declines → ATR hits a local low A big body bullish candle breaks above range high with 2× average volume Entry at breakout close, stop inside range, target = box height projected upward or 1:2 RR 🔵 ADVANCED TIPS Align with higher timeframe trend for higher probability Watch for false breakouts (liquidity sweeps) before real move Combine with order blocks or VWAP to refine entries Use session timing — many compression breaks happen at market opens 🔵 CONCLUSION Compression is the market’s way of loading a trade with potential energy. When you spot it, you’re seeing the buildup before the burst. Trade it with patience, volume confirmation, and proper structure, and it can become one of your highest-probability setups. Have you traded compression breaks before? Share your best example in the comments!
Education
by BigBeluga
11
Inside a Candle: How to Read Hidden Order Flow Without a DOM Difficulty: 🐳🐳🐳🐋🐋 (Intermediate+) This article is for traders who want to understand the “story” behind a candle’s shape — and learn to spot aggressive buying/selling, absorption, and traps without needing footprint or order book tools. 🔵 INTRODUCTION Most traders see candles as static shapes — green or red, big or small. But each candle is a battlefield of orders . Even without access to a DOM or volume footprint, you can still extract valuable information from just the candle's body, wick, and context . 🔵 ORIGINS: WHERE CANDLESTICKS COME FROM Candlestick charts trace back to 18th-century Japan, where rice traders needed a way to visualize price movements over time. A legendary trader named Munehisa Homma , who traded rice futures in Osaka, is credited with developing the earliest form of candlestick analysis. Homma discovered that price wasn’t just driven by supply and demand — but also by trader psychology . He created visual representations of market sentiment by tracking: The opening and closing price of rice The highest and lowest price reached during the session This system became known as the “Sakata rules,” and it laid the foundation for many patterns still used today — such as Doji, Engulfing, and Marubozu. Western traders only began using candlesticks widely in the 1990s, when analyst Steve Nison introduced them to the broader financial world through his book Japanese Candlestick Charting Techniques. Today, candlesticks remain one of the most powerful and intuitive ways to visualize order flow, momentum, and market psychology — even without a Depth of Market (DOM) or depth of book. In this article, you’ll learn how to read hidden order flow by analyzing: Wick length and positioning Body-to-range ratios Candle clustering and sequences 🔵 HOW A CANDLE FORMS Before you can read a candle, you need to understand how it comes to life . A single candle represents the full auction process during its time window. Here’s how it builds, step by step: Candle opens — this is the open price . As price moves up during the session → the high] updates. As price moves down → the low] updates. The final traded price when the time closes → this becomes the close price . The wick = price areas that were tested but rejected The body = where the majority of aggressive trades occurred If buyers push price up quickly but sellers slam it down before the close — the candle will have a long upper wick and close near the open, revealing seller absorption. Understanding this flow helps you recognize traps, fakeouts, and reversals in real time. 🔵 CANDLE BODY: WHO'S IN CONTROL The body of the candle reflects the result of the battle between buyers and sellers. A wide body with minimal wicks means dominance and commitment. Big body, small wick → clear conviction In an uptrend: buyer aggression In a downtrend: panic or aggressive selling Small body, long wicks → indecision, absorption, or trap Often appears near tops/bottoms Indicates both sides were active but neither won clearly www.tradingview.com 🔵 WICKS: THE SHADOWS OF REJECTION Wicks are not just “leftovers” — they show where price was rejected after being tested. Long upper wick = seller presence or absorption at highs Long lower wick = buyer defense or trap spring Double wick = liquidity sweep / false breakout Use wick direction to spot: Failed breakouts Smart money traps Exhaustion candles 🔵 HIDDEN ORDER FLOW PATTERNS 1️⃣ Absorption Candle A large wick with little movement afterward — shows that big orders absorbed market pressure. 2️⃣ Trap Candle A candle that sweeps above/below a key high/low and closes opposite — classic smart money fakeout. 3️⃣ Imbalance Candle Large-bodied candle that closes near the high/low with no wick on the other end — implies one-sided aggression (and often leaves an imbalance). 🔵 CLUSTERING & SEQUENCES MATTER Never read a candle alone. The sequence of candles tells the full story: 3+ rejection wicks near resistance? Liquidity building before breakout or trap Bearish engulfing after long upper wick = smart money selling into retail buying Tight-range dojis + volume spike = compression before expansion Context + volume + structure = hidden flow decoded. 🔵 PUTTING IT TOGETHER: A REAL EXAMPLE Price breaks above previous high Candle closes with long upper wick and smaller body Next candle opens, dumps fast, leaving imbalance behind Buyers trapped — move likely to continue down This is how you read order flow from candle anatomy . 🔵 TIPS FOR MASTERY Use a lower timeframe (1M–5M) to see microstructure Watch how wicks behave near S/R or OBs Confirm with volume spikes or delta-style indicators Use replay mode to slow down the story and study cause/effect 🔵 CONCLUSION Every candle is a message. You don’t need expensive tools to read order flow — just your eyes, context, and curiosity. Learn to see candles not as symbols, but as evidence of behavior . Absorption, imbalance, and traps are all visible if you look closely.
Education
by BigBeluga
26
Building Liquidity: What It Really Means🔵 Building Liquidity: What it really means Professional traders often need liquidity (buyers and sellers) to enter/exit large positions without moving the market too much. This means manipulating the market within a pre-determined range, which serves as the operating center for everything that follows. 🔹 How is liquidity built Price Ranging: Sideways consolidation before big moves attracts both buyers and sellers. False Breakouts (Stop hunts): Price may briefly break support/resistance to trigger retail stop-losses and fill institutional orders. News Timing: Pro traders often execute during or just before major news when volatility brings liquidity. 🔹 How can you spot a Liquidity-building zone 🔸 Volume Unusual spikes in volume: Often indicate institutional activity. Volume clusters at ranges or breakouts: Suggest accumulation/distribution zones. Volume with price divergence: Price rises but volume falls = possible exhaustion. Volume rises and price consolidates = potential accumulation. 🔸 Price Action Order Blocks / Imbalance zones: Sharp moves followed by consolidations are often pro trader footprints. Break of Structure (BoS): Institutions often reverse trends by breaking previous highs/lows. Liquidity sweeps: Price moves aggressively above resistance or below support then reverses = stop-loss hunting. 🔸 News Reaction Watch pre-news volume spikes. Look for contrarian moves after news — when price moves opposite to expected direction, it often reveals smart money traps. Analyze price stability post-news — slow movement shows absorption by pros. Wick traps and reversals around news events = stop hunting. 🔸 Narrative is Everything Higher timeframe trends show intent. Lower timeframes show execution zones. Look for alignment between timeframes in a specific direction. 🔹 Why do whales move the market in an orderly manner To fill large positions at optimal prices. To create liquidity where there is none. To trap retail on the wrong side of the move. To trap other whales on the wrong side of this move. To rebalance portfolios around economic cycles/news. 🔹 Professionals never forget what they've built When you track price, volume, and news, you’ll find specific bars that form areas that are the foundation for the short-term direction. This is pure VPA/VSA logic, the interplay of Price Analysis ,Volume Analysis and News, where each bar is not just a bar , but a clue in the story that professionals are writing. When you monitor volume, price, and news together and perform multi-timeframe analysis, it becomes clear what the whales are doing, and why. 🔹 From the chart above The market reached a weekly resistance level and then pulled back slightly after whales triggered the stop-losses of breakout traders. Prior to the breakout, whales had accumulated positions by creating a series of liquidity-rich buying zones on the daily timeframe. It's essential to understand the broader context before choosing to participate alongside them—whether you're planning to buy or sell. 🔴 Tips Use volume and price analysis together, not separately. Monitor any unusual volume bars before economic market news. Monitor news and volatility spikes to detect traps and entries. Combine this with liquidity zones (support/resistance clusters). Build a "narrative" per week: What is smart money trying to do? A smart trader understands the tactics whales use, and knows how to navigate around them.
COINBASE:BTCUSDEducation
by AlgoFuego
Volume Droughts and False Breakouts: Your Summer Trading TrapsThe market’s heating up — but is your breakout about to dry up? Here’s a word about the importance of summer trading success (helped by volume — the main character). ☀️ Welcome to the Liquidity Desert Summer’s getting ready to slap the market with a whole flurry of different setups. Picture this — the beaches are full, your trading desk is half-abandoned, and the only thing more elusive than a decent breakout is your intention to actually read that big fat technical analysis book you bought last year. And yet, here you are — eyes glued to the chart — watching a clean breakout above resistance that’s just begging for you to hit “buy.” Everything looks perfect. Price rips through the level like it’s made of butter. But there’s just one tiny problem: no volume. None. Nada. Niente. Congratulations. You’ve just bought the world’s most attractive false breakout. 🏝️ Summer Markets: Where Good Setups Go to Die Let’s set the scene. It’s June. The big dogs on Wall Street are golfing in the Hamptons and sipping mezcal espresso martinis, interns are running the order flow, and every chart you love is doing just enough to get your hopes up before crushing them like a half-melted snow cone. This isn’t your usual high-volatility playground. Summer markets — especially between June and August — are notorious for thin liquidity . That means fewer participants, smaller volume, and a much higher likelihood of being tricked by price action that looks strong… until it’s not. And it’s not just stocks. Forex, crypto, commodities — even the bond boys — all face the same issue: when fewer people are trading, price becomes more fragile. And fragile price = bad decisions. 🚨 Why False Breakouts Love Quiet Markets False breakouts happen when price appears to break above resistance (or below support), only to reverse sharply — often trapping late traders and triggering stop hunts. But in summer? It’s a whole different beast. Here’s why: No liquidity cushion : In normal markets, you need strong volume to fuel a breakout. Without that, the breakout doesn’t necessarily have the gas to keep going. Market makers get bored : Thin markets mean it’s easier for a few big orders to push prices where they want. Welcome to manipulation season (there, we said what we said!). Algos go wild : With fewer humans around, algorithms dominate. And they love playing games around key levels. 🧊 The Mirage Setup: A Cautionary Tale Let’s say you’re watching GameStop NYSE:GME stock. Resistance at $30. Price hovers there for days, teasing a breakout. Then — boom — a sudden 6% pop above. You buy. Everyone buys. The trading community goes nuts. “This is it bois!” But there’s a problem. Look at the volume: a trickle. Not even half the average daily volume. Ten minutes later, NYSE:GME is back below $30, your stop loss is hit, and you’re left explaining to your cat why you’re emotionally invested in a ticker. Moral of the story? Don’t trust breakouts when no one’s trading. 📉 Volume: Your Summer Lie Detector Volume is more than just a histogram under your chart. It’s your truth serum. Your smoke alarm. Your buddy who tells you to think twice before jumping in that trade. Here’s how to read it right when everyone else is checking out: Confirm the move : If price breaks out, but volume doesn’t spike at least 20–30% above the average — be suspicious. Look for acceleration : Healthy moves gather steam. You want to see volume growing into the breakout, not fizzling. Watch for volume cliffs : A sudden volume drop right after a breakout often signals that the move is running on fumes. Add Volume Profile Indicators : Just to be safe, you can always add Volume Profile Indicators to your chart — they analyze both price and volume and can highlight what your keen eye might miss. Remember what happened last summer? And how we all learned the downside of something called "carry trade"? Those who were short the Japanese yen remember . 🧠 Context Over Candles: Be a Liquidity Detective Let’s say you see a double top pattern — your favorite. Clean lines. Tight price action. Perfect setup. But now zoom out. It’s July 3. Pre-holiday half-day. No volume. And the S&P 500 SP:SPX has moved 0.04% all day. Still want in? Technical analysis doesn’t work in a vacuum. Chart patterns lose their predictive power when the environment they live in is compromised. And thin liquidity is a compromised environment. 🐍 Snakes in the Sand: How Market Makers Bait Traps Market makers (and large players) are like desert snakes — quiet, patient, and very good at making you move when you shouldn’t. Here’s how they bait traders in illiquid markets: Run stops above resistance to trigger breakout buyers. Dump shares immediately after breakout to trap retail. Ride the reversal as trapped longs scramble to exit. They’re so powerful some say they run the game — and can stop it anytime it’s not going their way (remember the GameStop freeze? ) It’s a psychological game — and in the summer, it’s easier to do shenanigans because most players aren’t watching. Don’t be the one jumping at shadows. Be the trader who expects the trap. 🛠️ How to Survive (and Thrive) in the Summer Slump Not all is lost. You can still trade — smartly. Here’s your Summer Survival Toolkit : Wait for volume confirmation on every breakout. Lower your position size . Less liquidity = more slippage risk. Set wider stops , or better yet, sit out the chop. Focus on trending names with relative strength and solid weight (think: tech titans, oil plays, or financials). Use alerts instead of staring at charts . Don’t mistake boredom for opportunity. And most importantly: Know when not to trade . Discipline is a position too. 🔚 Final Word: This Isn’t the Off-Season. It’s the Setup Season. Summer might feel slow, but it’s not dead. Smart traders know that the best trades of Q3 and Q4 often begin in July — as early trendlines form, consolidation patterns develop, and institutional footprints quietly appear in the tape. So use this time wisely. Don’t force trades. Watch volume like a hawk. And never forget: the best breakouts don’t need hype — they bring their own thunder. Stay cool, stay patient, and trade smart. The mirage may be tempting, but the oasis always belongs to the ones who go far enough and don’t give up. Off to you : How are you navigating trading during the summer months? Staying poolside with one eye on the charts or actively seeking out opportunities while folks catch a break? Share your insights in the comments!
SP:SPXEducation
by TradingView
15
Why Volume Bar Colors Can Mislead You█ The Truth Behind Volume Bars — What Do Green and Red Actually Mean? Most traders learn early on that green volume bars mean bullish activity, and red bars mean bearish pressure. But is it really that simple? What does volume truly reflect, and are we making assumptions that can mislead us? █ What Volume Actually Is Volume represents the number of shares/contracts traded during a specific time interval. Every transaction includes both a buyer and a seller. So, volume itself doesn’t distinguish whether a trade was bullish or bearish. Instead, platforms color volume bars based on price movement: Green: If price closed higher than it opened. Red: If price closed lower than it opened. Some platforms, like TradingView, allow you to color volume based on whether the price closed higher or lower than the previous candle’s close. So YOU, as a trader, have the chance to decide whether to assign volume bars either bullish or bearish! It’s a setting parameter anyone can change. Traders around the globe might look at the same volume bar, but some interpret it as bearish, while others interpret it as bullish. What is the most correct way? █ The Assumption Behind the Color This coloring assumes that: A rising price means buyers were more aggressive (lifting the ask). A falling price means sellers were more aggressive (hitting the bid). This is a proxy — an approximation. It simplifies market pressure into a binary outcome: if price goes up, it's bullish volume; if it goes down, it's bearish. But the market isn't always so binary. However, the assumption is only an approximation of buying vs. selling. In reality, every single trade involves both a buyer and a seller, so volume itself isn’t inherently “buy” or “sell” – what matters is who initiated the trades. As one trading expert explains, talking about “buying volume” vs “selling volume” can be misleading: for every buyer there is a seller, so volume cannot be literally split into purchases and sales​. Instead, what traders really mean by “bullish volume” is that buyers were more aggressive (lifting offers) and drove the price up, whereas “bearish volume” means sellers were more aggressive (hitting bids) and drove the price down​. The colored volume bar is essentially a proxy for which side won the battle during that bar. █ Why This Can Mislead You Price might close higher, not because there were more buyers than sellers (there never are — every trade has both), but because buyers were more urgent. And sometimes price moves due to other forces, like: Short covering. Stop-loss runs. Liquidity vacuums. This means a green bar might not reflect strong demand, just urgency from the other side closing their positions. ⚪ Example: Take the well-known GameStop short squeeze as an example. If you looked only at the volume bars during that rally, you’d see a wall of strong green candles and high volume, which might suggest aggressive bullish buying. However, that interpretation would be misleading. Under the surface, the surge wasn't driven by fresh bullish conviction — it was massive short covering. Traders who were short were forced to buy back shares to cover their positions, which drove prices even higher. The volume was categorized as bullish, but the true intent behind the move had nothing to do with new buying pressure. This demonstrates why relying solely on volume color or candle direction can lead to false conclusions about market sentiment. Does this simple up/down volume labeling truly reflect buying vs. selling pressure? To a degree, yes – it captures the net price outcome, which often corresponds to who was more aggressive. For example, if many buyers are willing to pay higher prices (demand), a bar will likely close up and be colored green, reflecting that buying interest. Conversely, if eager sellers are dumping shares and undercutting each other, price will drop, yielding a red bar that flags selling pressure. Traders often use rising volume on up-moves as confirmation of a bullish trend’s strength, and high volume on down-moves as a warning of distribution, which indeed aligns with traditional analysis​ That said, the method has important limitations and nuances, documented both anecdotally and in research: ⚪ Volume is not one-dimensional: Since every trade has both a buyer and seller, one cannot literally count “buy volume” vs “sell volume” without more information. The green/red coloring is a blunt classification based on price direction, not an actual count of buys or sells. It assumes the price change direction is an adequate proxy for the imbalance of buying vs. selling. This is often true in a broad sense, but it’s not a precise measure of order flow. ⚪ Intrabar Dynamics Are Lost: A single bar’s color only tells the end result of that interval, not the story of what happened during the bar. For instance, a 4-hour candle might be red (down) overall, but it could have contained three hours of rally (buying) followed by a steep selloff in the final hour that erased the gains. The volume bar will be colored red due to the net price drop, even though significant buying occurred earlier in the bar. In other words, a large red bar can mask that there were pockets of bullish activity within – the selling just happened to win out by the close of that period. Without looking at smaller time frames or detailed data, one can’t tell from a single color how the buying/selling tug-of-war progressed within the bar. ⚪ Gap Effects and Criteria Choices: The choice of using open vs. close or previous close can alter the interpretation of volume. As discussed, a day with a big gap can be labeled differently under the two methods. Neither is “right” or “wrong” – they just highlight different perspectives (intraday momentum vs. day-over-day change). Traders should be aware that colored volume bars are an approximation. A green volume bar under one method might turn red under the other method for the same bar. This doesn’t mean volume changed – it means the classification scheme changed. For example, a stock that closes below its open but still higher than yesterday will show a red volume bar by the intraday method but would be considered an “up-volume day” in OBV terms (previous close method). ⚪ No Indication of Magnitude or Commitment: A single color also doesn’t convey how much buying or selling pressure there was, only which side won. Two green volume bars might both be green, but one could represent a modest uptick with tepid buying, whereas another could represent an aggressive buying spree – the color alone doesn’t distinguish this (other than one bar likely being taller if volume was higher). Traders often need to consider volume relative to average (e.g. using volume moving averages or looking for volume spikes) to judge the significance of a move, not just the color. █ Summary The coloring of volume bars is a visual shortcut, not an exact science. It’s a guess based on price direction — useful, but imperfect. Understanding this helps traders avoid reading too much into what a green or red volume bar actually means. ----------------- Disclaimer The content provided in my scripts, indicators, ideas, algorithms, and systems is for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or a solicitation to buy or sell any financial instruments. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
COINBASE:BTCUSDEducation
by Zeiierman
27
Ranging? Not Really. The Big Guys’ Plan Is Already Set…Ever wondered what the crowd is really doing behind the candles? This video breaks down how to read Cumulative Volume Delta (CVD)— from retail behavior to sentiment charts, and why the market doesn’t always follow logic. ✅ When price moves one way but the crowd trades the other... ✅ When sideways markets aren’t as neutral as they look... ✅ When emotions take over—and how to spot it in advance. We’re lifting the hood. The engine’s running. Let’s see what drives it.
TRADENATION:XAUUSDEducation
by supremum_ar
LiteCoin (LTC) - Chart reading with Weis Wave with Speed Index Lesson 15 Methodology: 1. Largest up volume wave at the bottom after while (probable buyers but let's confirm using AVWAP and Weis Wave with Speed Index and it's Plutus Signals. 2. Placed AVWAP at the beginning of the previous down wave and wait for price to pullback to it. 3. Price Respects AVWAP. 4. Abnormal Speed Index 40.8 is a sign that price has a hard time to move down. 5. Enter Long on PL signal. ... and up we go!!!! Target Fib area which was reached! No entries now - Fib could risky!
Education
by TradeTheVolumeWaves
Trading with multiple VAMAsI want to show you how to analyse multiple timeframe VAMAs for trading opportunities. This is an interesting approach that can reveal valuable market structure information. For this example I am using a 15m, 1h and. 4h VAMA, but you can use this on lower or higher timeframes as well. First, let's understand what each timeframe VAMA represent in this case: The 15-minute VAMA indicates short-term trends and momentum The 1-hour VAMA reveals intermediate trend direction The 4-hour VAMA represents the broader market structure When these VAMAs overlap on your lower timeframe chart (15m in this case), they create what we might call "zones of interest." Think of it like layers of support and resistance that have different degrees of significance based on their timeframe. Here's how we can interpret and use this information: Convergence Zones When multiple VAMAs cluster in a tight price range, this creates a significant zone of interest. For example, if your 15-minute, 1-hour, and 4-hour VAMAs are all within a narrow price band, this often indicates a strong support or resistance level. These zones typically exhibit one of two behaviors: Price Bounces: When price approaches a convergence zone from above or below, it often respects these levels. The more timeframes that have converged, the stronger the zone becomes. A bounce from such a zone with corresponding volume can present a high-probability trade opportunity. Zone Breaks: If price successfully breaks through a convergence zone, especially with increased volume, this often signals a strong trend continuation or reversal, depending on the direction of the break. Hierarchical Trending You can identify the strength and maturity of trends by examining how the different timeframe VAMAs are arranged: Strong Uptrend Structure: 4H VAMA lowest 1H VAMA above 4H 15min VAMA above 1H This "stacking" of VAMAs shows a healthy trend structure. The higher timeframe VAMAs act as dynamic support levels in an uptrend (or resistance in a downtrend). Trade Entry Opportunities Alignment Trades: Look for moments when all VAMAs are pointing in the same direction and properly stacked. These situations often present high probability setups. For example: In an uptrend Price pulls back to test the 15-minute VAMA while the 1H and 4H VAMAs continue trending up.This creates a "buy the dip" opportunity with multiple timeframe confirmation. Divergent Zone Trades: When the faster VAMAs (1min, 15min) show divergence from the slower ones (1H, 4H), this can indicate potential reversal points: If the 1min and 15min VAMAs start curling up while price is testing the 1H VAMA as support. This divergence in shorter timeframes while respecting longer timeframe support can signal a reversal opportunity. Breakout Confirmation: Use the multiple timeframes to confirm breakout trades: When price breaks above a convergence zone Look for the faster VAMAs (1min, 15min) to cross above the slower ones Volume should increase during the break The previous resistance zone (marked by the VAMAs) should become support
Education
by jpkxyz
How To identify the Jesse Livermore Buy PatternAs traders, we're always on the lookout for reliable patterns that can give us an edge in the market. One such pattern, popularized by the legendary trader Jesse Livermore, is the Accumulation Cylinder with Widening Mouth. This pattern is a rare but potentially explosive formation that can signal a significant price move. What is the Accumulation Cylinder with Widening Mouth? The Accumulation Cylinder with Widening Mouth is a technical analysis pattern where the price of an asset moves back and forth between two non-parallel lines, creating a cylinder-like shape. Over time, the "mouth" of the cylinder widens as the price continues to fluctuate within the pattern. This pattern is often seen during periods of consolidation, where the market is accumulating before a potential breakout. Key Characteristics Non-Parallel Lines: The price moves between two trendlines that are not parallel. Widening Mouth: The distance between the trendlines increases over time. Consolidation: The pattern typically forms during a period of consolidation, where the price is ranging within a defined area. Volume: You must see that the volume size is as pictured in the schema. This post is real evidence that such a pattern does exist. In addition, you can see that the consolidation period takes time to develop... No need to rush... Also, if you have not got on it from the start, by looking at the past, you can estimate that the runup is just starting, so you can still get some of the cream. The Plus and Minus are showing increasing volume vs decreasing volume.
NASDAQ:PLTREducation
by ZoharCho
1
what is Volume?Volume Indicators are technical analysis tools that evaluate the strength of a trend or price movement based on trading volume, which represents the number of shares, contracts, or units of an asset traded over a given period. Volume indicators provide insights into the participation and conviction behind price moves, helping traders confirm trends, spot potential reversals, or detect breakouts. Why Volume Matters Volume reflects market activity and interest: High Volume: Suggests strong participation, confirming the validity of price movements. - Low Volume: Indicates weak interest, often leading to uncertainty about the sustainability of price moves. For example: In an uptrend, rising prices with increasing volume confirm the bullish trend. - Conversely, falling prices with increasing volume confirm a bearish trend. Popular Volume Indicators On-Balance Volume (OBV): OBV measures cumulative buying and selling pressure by adding volume on up days and subtracting it on down days. Signal: If OBV rises while the price is flat, it indicates hidden buying pressure, suggesting a potential price breakout. Volume Weighted Average Price (VWAP): VWAP calculates the average price of an asset weighted by volume, providing a benchmark for institutional traders. Signal: If the price is above VWAP, it\u2019s considered bullish; below VWAP is bearish. Volume Oscillator: The Volume Oscillator compares short-term and long-term moving averages of volume. Signal: Positive readings indicate increasing volume momentum, while negative readings suggest declining momentum. Chaikin Money Flow (CMF): CMF measures buying and selling pressure by analyzing volume and price movement. Signal: A positive CMF indicates accumulation (buying), while a negative CMF indicates distribution (selling). Accumulation/Distribution Line (A/D): Tracks the flow of money into or out of an asset by analyzing volume and price close relative to its range. Signal: Rising A/D suggests accumulation (buying), while falling A/D suggests distribution (selling). How to Use Volume Indicators Confirm Trends: - Use volume to validate price movements. For example, a breakout above resistance is more reliable with strong volume. 2. Spot Divergences: - If price moves up while volume decreases, it could indicate a weakening trend and a potential reversal. 3. Detect Breakouts: - Sudden spikes in volume often accompany significant price breakouts from consolidation patterns. 4. Evaluate Trend Strength: - Increasing volume during a trend suggests strength, while declining volume signals weakness. Limitations of Volume Indicators False Signals: High volume alone doesn\u2019t guarantee a sustainable price move. - Market Context Needed: Volume behavior differs across asset classes (e.g., stocks vs. cryptocurrencies). - Timeframe Sensitivity: Volume signals can vary based on the chosen timeframe. By understanding and using volume indicators effectively, traders can gain a deeper perspective on market dynamics and improve decision-making.
BITSTAMP:BTCUSDEducation
by CRYPTONIC_trend
Stock Market Logic Series #12 TradingView is so awesome that they let you change any piece of the chart . You can use this chart template for visual clarity. FYI, all my chart templates, are for visual clarity trading purposes, you can choose anyone that looks good for your eyes. So in this chapter in the series #12 lets see what we have here. 1 - The trendline is still alive. 2 - On the correction, you can see that there is a high volume on the upside. So it means that the puppet master is buying. 3 - You could see that there are 3 down candles, on increasing volume, but their spread is smaller and smaller. So it means that the puppet master also buying on the downside, also, stops where hit there strongly, and many people stopped out directly into the hands of the puppet master, classic puppet master move. 4 - The biggest volume is on the up side ! since this is the last (recent) piece of information, this is what counts! so currently, the chart is LONG biased. 5 - Crack pattern AWARENESS- if the price will test the low, it will be the crack pattern and then the price can go down up until $105 again. It will also be a break of trendline so it makes sense that there will be a fast SHORT move. But if the price goes to test $135 and then makes $140 push, it will be a failure of the crack pattern, which increases even more dramatically the LONG bias. WHY? Because if it is short... the crack pattern should materialize... since it can't materialize... it means it is not short, so it is LONG. #### I already showed the same exact logic, in AMD, failed crack pattern (in the past posts). #### 2 & 3 & 4 Examplify beautifully my concept of FORCE of the puppet master.
NASDAQ:NVDAEducation
by ZoharCho
6
Beyond Basic Candlestick Pattern AnalysisLearning to Recognize Who Is Controlling the Stock Price There is a plethora of training on Candlestick Pattern Analysis and interpretation, and yet this remains one of the most problematic areas for Technical Traders who want to trade at the expert level. Once the basics of Japanese Candlestick Patterns are understood, it is time to move up to the next tier of analysis. That is being able to recognize not only where a pattern is, but also who forms that pattern, why they are capable of creating that pattern, what automated orders generate that pattern, and which Market Participant Groups react or chase that pattern. Nowadays it has become critical to include Volume with Candlestick Analysis, because this provides the basis for recognizing which Market Participant Group created that candle pattern. Candlestick Pattern Analysis at the expert level involves more than just one to three candles. Instead it includes a larger group of candles in the near term. This is what I call "Relational Analysis." This is especially useful for Swing Traders, Momentum Traders, Velocity Traders, Swing Options Traders, and Day Traders using Swing Style Intraday action. The NYSE:RAMP chart is an excellent example of a Candlestick Pattern for Swing Style Trading. See where High Frequency Traders (HFTs) took control of price, and gapped the stock down for one day on extreme volume. Selling did not continue the following two days, and Volume was above the Moving Average, but much lower than the High Frequency Traders' spiking Volume pattern. This was the first accumulation level for this stock. Dark Pools started buying the stock even though High Frequency Traders were selling, since they typically miss this initial buy mode of the giant Institutions. High Frequency Traders typically create the final gap down to the low which, if it reverses quickly, indicates a Buy Zone area for the Dark Pools. These patterns are what I call "Shifts of Sentiment." They happen in bottom formations where buying is generally dominated by the Largest Institutions' quiet accumulation. The next phase will be when Professional Traders and then High Frequency Traders discover the Dark Pool accumulation. The bottom is not complete, but it shifts sideways if more Dark Pools decide to buy.
NYSE:RAMPEducation
by MarthaStokesCMT-TechniTrader
1
How to Use Stock Volume in CFD TradingHow to Use Stock Volume in CFD Trading Volume is one of the fundamental aspects of all markets. If you're wondering, "What does volume mean in the stock market?," you're about to discover how this critical measure of shares traded can unlock deeper insights into market trends and investor behaviour. We delve into how to use stock volume to improve your trading, offering practical approaches for confirming market sentiment, trends, reversals, and more. What Is Volume in the Stock Market? The volume in the stock market definition refers to the total number of shares traded during a specific time frame. It's a vital indicator of market activity and investor interest in a particular stock. High volume often signals strong investor interest and market movement, either upward or downward. Conversely, low volume may indicate decreased interest or uncertainty in a stock. In essence, it provides insights into sentiment, helps confirm trends, and aids in identifying potential reversals or breakouts. As we walk through the varying insights volume offers stock traders, you may gain the best understanding by applying your knowledge to real-time charts. Head over to FXOpen’s free TickTrader platform to see how volume affects hundreds of unique stocks. Volume and Market Sentiment When considering volume in a stock, meaning its traded shares, its relationship with market sentiment becomes pivotal. This sentiment, essentially the collective attitude of traders towards a stock, is often inferred from volume patterns. At its most basic, high trading activity during a stock's price increase is often seen as a confirmation of positive sentiment, showing trader confidence. Such a scenario often reflects a robust demand overpowering supply. In contrast, if a stock declines on high volume, this may signal negative sentiment, suggesting a strong selling pressure. This situation typically indicates that investors and traders are actively offloading their shares. Volume and Price Movement So, how does volume affect stock prices? Volume acts as a force behind price movements, as discussed. However, its impact isn't always straightforward. A stock might rise on low volume, which can be a sign of caution, as it may indicate a lack of conviction among traders, potentially making the price rise unsustainable. Similarly, a drop on low volume might not necessarily signify a bearish trend but rather a temporary lack of interest. Additionally, the number of shares traded can be crucial in identifying a stock’s tops or bottoms. For instance, a sudden spike after a long period of price increase might signal a top, as it could represent a final push by exhausted buyers before a reversal. Similarly, a significant increase in market activity at a low could indicate a bottom. Identifying Trading Signals with Volume Learning how to trade volume involves recognising nuanced trading signals that volume fluctuations can offer. Beyond the basic interpretations of high or low volume, traders look for specific patterns or anomalies in activity data to make informed decisions. One key signal is the volume spike. A sudden increase in trading activity, especially when it deviates notably from the norm, may indicate a significant event or sentiment change. For instance, a volume spike accompanying a breakout from a consolidation pattern might confirm the strength of a new trend, offering a buying opportunity for traders. Conversely, an unexpected, sustained drop in interest during a steady trend might be a warning sign. This could suggest that the current trend is losing momentum and might be nearing its end, reflecting a potential exit point or even a reversal opportunity. Another aspect to consider is the trend over time. Gradually increasing volume in a trending market reinforces the trend's validity and vice versa. Overall, trading volume isn't just about high or low numbers. It's about understanding the context of these changes and how they align with price movements. Volume Indicators and Tools When exploring how to use volume in trading, several key indicators and tools stand out. These provide insights into market dynamics, aiding in decision-making: - On Balance Volume (OBV): OBV totals volume during up periods and subtracts it during down periods. A rising OBV usually suggests bullish trends, while a falling OBV indicates bearish trends. It's used to confirm movements or spot divergences. - Volume Price Trend (VPT): VPT combines volume and price change to assess the strength of price moves. An increasing VPT usually indicates strong buying pressure, while a decreasing VPT suggests selling pressure. - Accumulation/Distribution Line: This indicator considers the trading range and the volume. It helps identify whether a stock is being accumulated (bought) or distributed (sold). A rising line usually suggests accumulation, while a falling line indicates distribution. - Chaikin Money Flow (CMF): CMF combines price and volume to measure buying and selling pressure over a set period. A positive CMF usually demonstrates buying interest, while a negative CMF suggests that sellers are in charge. Volume as an Indicator of Liquidity Lastly, volume is a key indicator of liquidity in the stock market. High trading activity reflects that a significant number of shares are being bought and sold, which typically indicates good liquidity. This liquidity may help traders execute trades quickly and at prices close to the market rates, reducing the cost of transactions. Conversely, low volume signals poor liquidity, where fewer shares are traded. In such scenarios, executing large orders may be challenging without significantly impacting the stock. Such a lack of liquidity can lead to larger bid-ask spreads and potentially less favourable execution prices for traders. The Bottom Line As we've journeyed through the intricate world of stock volume, it's clear that understanding volume is more than a skill – it's an essential aspect of savvy trading. From recognising sentiment to navigating various market conditions, volume serves as a powerful tool in your trading arsenal. To put this knowledge into practice and experience the dynamic world of trading, consider opening an FXOpen account. Once you do, you'll have the opportunity to apply these insights in real-time, potentially enhancing your trading journey with informed decisions driven by volume analysis. Happy trading! This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
NASDAQ:TSLAEducation
by FXOpen
3
HFTs gaps: Learn how to enter a stock before a huge gap up.High Frequency Trading companies are market makers/takers that provide liquidity for the public exchanges, and they now use AI. HFTs have a huge impact on your profitability. You can make higher profits from trading ahead of the HFT gaps and riding the momentum upward or downward. In this short video, you'll learn some basics on how to identify the patterns that precede HFT gaps, which I call Pro Trader Nudges . Learn what to look for in Volume patterns and pre-gap price action. Make sure you are not chasing HFTs but riding the wave of momentum they create, just like professional traders do.
PEducation
by MarthaStokesCMT-TechniTrader
2
What are Volume Candles and how to use themVolume Candles are a great chart type you can use to integrate volume analysis into your trading. TradingView is a superb platform that offers this chart type in real-time, so you can immediately get a completely different feel of what the market is actually doing. As an experienced trader, understanding volume candles is crucial in getting a deeper insight into market dynamics. Unlike standard candlestick charts, which focus primarily on price movement, volume candles combine price action with the strength of trading activity (volume). This offers a unique perspective that can give you an edge in reading market sentiment and momentum. What Are Volume Candles? Volume candles are modified candlestick charts where the width of the candle is proportional to the trading volume during the corresponding time period. The typical candlestick elements—open, high, low, and close prices—are still present, but the volume aspect adds an additional layer of information, enhancing the clarity of price action. Key Features of Volume Candles: Height: Represents price movement (just like in regular candlesticks). Width: Indicates the volume of trades within that period. Unique Information You Can Extract from Volume Candles: 1. Volume-Driven Price Action Volume candles show how much trading interest exists at various price levels. When you observe a large volume candle, it tells you that a lot of market participants were active at that price. Conversely, a thin candle signals lower activity. This helps you: A. Identify levels where strong participation occurs (institutional players what I call the puppet master). B. Spot consolidation zones where volume is low, which often precedes significant price moves. 2. Momentum Confirmation High-volume candles that align with price trends suggest strong momentum. Wide Bullish Candles: If you see a wide up candle during an uptrend, it indicates that the buying pressure is backed by solid volume. This gives more credibility to the uptrend and hints at a continued move upward. Wide Bearish Candles: Similarly, a wide down candle during a downtrend signals strong selling pressure. Volume Candle Chart can also be used for day trading purposes where you need to act FAST. This TradingView chart type is extremely good so you don't need to compare the traditional volume bars on the bottom of the chart. IMPORTANT: You must understand the puppet master mentality, which gives you context. *** EXTRA: You can use this theme color.
NASDAQ:COINEducation
by ZoharCho
4
Stock Market Logic Series #10Do you think the above is a coincidence? There are no coincidences in life - only cause and effect. You are where you are because of a cause that is bound to physical and natural laws. The same pressure of physics that works on the airplane wing, or the balloon that wants to push its way up when pressed into water (pool), also works in the stock market. You just have to KNOW how to SEE it. follow my explanation. If you follow the price action, you can see clearly where the high-pressure volume comes in, you can't miss it. It is obviously seen. Then you need to wait for the correction, and you want to see that the correction is demonstrating a low-volume pressure behavior. When you see this low volume pressure behavior, the stock has DRIED UP. This DRYING-UP effect is a key indicator of a probable future LIFT and stock movement. You want to ask yourself the question: Why the stock is not falling down anymore? The question of "WHY" is searching for the cause BEHIND the stock movement. The stock movement is only the effect! In previous posts, I explained the other LOGIC behind this pattern, and explained why the price should not fall down and with a high probability of going up. If you read any of the books of Jesse Livermore, he clearly states that you need to "KNOW" that the stock will move your way, first let the market "SHOW YOU" exactly what will happen, and only then you put in a trade. The KEY CONCEPT in this idea is the DRYING UP OF VOLUME. When you understand the WHY behind the stock movement, buying and selling are emotionless. The focus should be only a trading setups that you "KNOW" it is highly probable to move in your expected trade direction. You "KNOW" because you have stock market LOGIC to back it up. If you want a specific post about Jesse Livermore's trading rules, let me know in the comments. It is always important to make sure that you have the correct perspective on the stock market, otherwise, you get confused. There is only at every given time only ONE side to the market as Jesse Livermore said, "The RIGHT SIDE". This goes back to my idea, that at every given time the puppet master ONLY buys or sells but NOT BOTH.
NASDAQ:POETEducation
by ZoharCho
Decoding Money Flow within Markets to Anticipate Price DirectionI. Introduction In the intricate world of financial markets, understanding the flow of capital between different assets is paramount for traders and investors aiming to anticipate price movements. Money doesn't move haphazardly; it often follows patterns and trends influenced by a myriad of factors, including economic indicators, geopolitical events, and inter-market relationships. This article delves into the concept of money flow between markets, specifically analyzing how volume movements in one market can influence price directions in another. Our focus centers on two pivotal markets: the 10-Year T-Note Futures (ZN1!) and the Light Crude Oil Futures (CL1!). Additionally, we'll touch upon other significant markets such as ES1! (E-mini S&P 500 Futures), GC1! (Gold Futures), 6E1! (Euro FX Futures), BTC1! (Bitcoin Futures), and ZC1! (Corn Futures) to provide a comprehensive view. By employing the Granger Causality test—a statistical method used to determine if one time series can predict another—we aim to unravel the nuanced relationships between these markets. Through this exploration, we aspire to equip readers with insights and methodologies that can enhance their trading strategies, particularly in anticipating price directions based on volume dynamics. II. Understanding Granger Causality Granger Causality is a powerful statistical tool used to determine whether one time series can predict another. While it doesn't establish a direct cause-and-effect relationship in the strictest sense, it helps identify if past values of one variable contain information that can predict future values of another. In the context of financial markets, this can be invaluable for traders seeking to understand how movements in one market might influence another. Pros and Cons: Predictive Power: It provides a systematic way to determine if one market’s past behavior can forecast another’s, helping traders anticipate potential market movements. Quantitative Analysis: Offers a statistical basis for analyzing market relationships, reducing reliance on subjective judgment. Lag Dependency: The test is dependent on the chosen lag length, which may not capture all relevant dynamics between the series. Not True Causality: Granger Causality only suggests a predictive relationship, not a true cause-and-effect mechanism. III. Understanding Money Flow via Granger Causality The data used for this analysis consists of daily volume figures for each of the seven markets described above, spanning from January 1, 2018, to the present. While the below heatmap presents results for different lags, we will focus on a lag of 2 days as we aim to capture the short-term predictive relationships that exist between these markets. Key Findings The results of the Granger Causality test are presented in the form of a heatmap. This visual representation provides a clear, at-a-glance understanding of which markets have predictive power over others. Each cell in the matrix represents the p-value of the Granger Causality test between a "Cause" market (row) and an "Effect" market (column). Lower p-values (darker cell) indicate a stronger statistical relationship, suggesting that the volume in the "Cause" market can predict movements in the "Effect" market. Key Observations related to ZN1! (10-Year T-Note Futures): The heatmap shows significant Granger-causal relationships between ZN1! volume and the volumes of several other markets, particularly CL1! (Light Crude Oil Futures), where the p-value is 0, indicating a very strong predictive relationship. This suggests that an increase in volume in ZN1! can reliably predict subsequent volume changes in CL1!, which aligns with our goal of identifying capital flow from ZN1! to CL1! In this case. IV. Trading Methodology With the insights gained from the Granger Causality test, we can develop a trading methodology to anticipate price movements in CL1! based on volume patterns observed in ZN1!. Further Volume Analysis with CCI and VWAP 1. Commodity Channel Index (CCI): CCI is a versatile technical indicator that when applied to volume, measures the volume deviation from its average over a specific period. In this methodology, we use the CCI to identify when ZN1! is experiencing excess volume. Identifying Excess Volume: The CCI value for ZN1! above +100 suggests there is an excess of buying volume. Conversely, when CL1!’s CCI is below +100 while ZN1! is above +100, it implies that the volume from ZN1! has not yet transferred to CL1!, potentially signaling an upcoming volume influx into CL1!. 2. Volume Weighted Average Price (VWAP): The VWAP represents the average price a security has traded at throughout the day, based on both volume and price. Predicting Price Direction: If Today’s VWAP is Above Yesterday’s VWAP: This scenario indicates that the market's average trading price is increasing, suggesting bullish sentiment. In this case, if ZN1! shows excess volume (CCI above +100), we would expect CL1! to make a higher high tomorrow. If Today’s VWAP is Below Yesterday’s VWAP: This scenario suggests bearish sentiment, with the average trading price declining. Here, if ZN1! shows excess volume, we would expect CL1! to make a lower low tomorrow. Application of the Methodology: Step 1: Identify Excess Volume in ZN1!: Using the CCI, determine if ZN1! is above +100. Step 2: Assess CL1! Volume: Check if CL1! is below +100 on the CCI. Step 3: Use VWAP to Confirm Direction: Compare today’s VWAP to yesterday’s. If it’s higher, prepare for a higher high in CL1!; if it’s lower, prepare for a lower low. This methodology combines statistical insights from the Granger Causality test with technical indicators to create a structured approach to trading. V. Case Studies: Identifying Excess Volume and Anticipating Price Direction Case Study 1: May 23, 2024 Scenario: ZN1! exhibited a CCI value of +265.11 CL1!: CCI was at +12.84. VWAP: Below the prior day’s VWAP. Outcome: A lower low was made. Case Study 2: June 28, 2024 Charts for this case study are at the top of the article. Scenario: ZN1! exhibited a CCI value of +175.12 CL1!: CCI was at -90.23. VWAP: Above the prior day’s VWAP. Outcome: A higher high was made. Case Study 3: July 11, 2024 Scenario: ZN1! exhibited a CCI value of +133.39 CL1!: CCI was at +0.23. VWAP: Above the prior day’s VWAP. Outcome: A higher high was made. These case studies underscore the practical application of the trading methodology in real market scenarios. VI. Conclusion The exploration of money flow between markets provides valuable insights into how capital shifts can influence price movements across different asset classes. The trading methodology developed around this relationship, utilizing the Commodity Channel Index (CCI) to measure excess volume and the Volume Weighted Average Price (VWAP) to confirm price direction, offers a systematic approach to capitalizing on these inter-market dynamics. Through the case studies, we demonstrated the practical application of this methodology, showing how traders can anticipate higher highs or lower lows in CL1! based on volume conditions observed in ZN1!. Key Takeaways: Granger Causality: This test is an effective tool for uncovering predictive relationships between markets, allowing traders to identify where capital might flow next. CCI and VWAP: These indicators, when used together, provide a robust framework for interpreting volume data and predicting subsequent price movements. Limitations and Considerations: While Granger Causality can reveal important inter-market relationships, it is not without its limitations. The test's accuracy depends on the chosen lag lengths and the stationarity of the data. Additionally, the CCI and VWAP indicators, while powerful, are not infallible and should be used in conjunction with other analysis tools. Traders should remain mindful of the broader market context, including economic events and geopolitical factors, which can influence market behavior in ways that statistical models may not fully capture. Additionally, effective risk management practices are crucial, as they help mitigate potential losses that may arise from unexpected market movements or the limitations of any predictive models. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
NYMEX:CL1!Education
by traddictiv
e-Learning with the TradingMasteryHub - Sentiment Analysis**🚀 Welcome to the TradingMasteryHub Education Series! 📚** Are you looking to level up your trading game? Join us for the next 10 lessons as we dive deep into essential trading concepts that will help you grow your knowledge and sharpen your skills. Whether you're a beginner or looking to refine your strategy, these lessons are designed to guide you on your journey to better understand the markets. **📊 What is Sentiment Analysis?** Sentiment analysis gauges the mood of market participants towards an asset or the entire market. By analyzing news, social media, and financial reports, you can determine whether the sentiment is bullish, bearish, or neutral, helping you anticipate market moves. **👥 Who Are the Most Important Market Participants?** The market is shaped by various players: Retail traders, institutional investors, market makers, central banks, high-frequency traders, and arbitrageurs. Each plays a crucial role in price movements and market efficiency. **📈 Why Does Sentiment Matter?** Sentiment drives market behavior. Understanding it allows you to anticipate trends, avoid potential pitfalls, and make informed decisions before significant market moves. **🔍 How to Read the Market Sentiment?** Analyze news headlines, social media, market indices like the VIX, and sentiment indicators like the Put/Call Ratio to get a comprehensive view of market sentiment. **🎯 The Right Indicator** Selecting the right sentiment indicator depends on your trading focus. Use tools like the Bullish Percent Index, AAII Sentiment Survey, and VIX to gain deeper insights. --> ❤️ I love the sentiment indicator by Dreatblitz: Bull Bear Power Trend (BBPT) - I use it to find divergences in price and emotional trends. **👍 Pros and Cons of Sentiment Analysis** **Pros:** Anticipate market moves, identify overbought/oversold conditions, and complement other analyses. **Cons:** It can be subjective, rapidly change, and sometimes lead to irrational market behavior. **🔚 Conclusion and Recommendation** Sentiment analysis is a powerful tool in your trading arsenal. Combine it with technical and fundamental analysis for the best results, and always prioritize risk management. With practice, you'll become adept at reading market sentiment and using it to your advantage. **🔥 Can’t get enough? Don't Miss Out!** Subscribe, share, and engage with us in the comments. This is the start of a supportive trading community—built by traders, for traders! 🚀 Join us on the journey to market mastery, where we grow, learn, and succeed together. 💪 **💡 What You'll Learn:** - The fundamentals of trading - Key technical and sentiment indicators - Risk management strategies - And much more!... Best wishes, TradingMasteryHub
OANDA:WTICOUSDEducation
by TradingMasteryHub
75: Comprehensive Guide to Volume Profiles and Volume in TradingWhat is a Volume Profile? A Volume Profile is an advanced charting tool that plots the amount of trading activity (volume) across different price levels over a specific period. Unlike traditional volume indicators that only show volume over time, Volume Profiles provide insights into where the majority of trading took place, highlighting key areas of support and resistance, as well as zones of high and low interest among traders. Key Components of Volume Profiles: 1. Point of Control (POC) : This is the price level where the highest volume of trades occurred. The POC is a crucial level because it represents the price at which traders found the most value, making it a strong indicator of support or resistance. 2. Value Area (VA) : The Value Area represents the range of prices where approximately 70% of the volume was traded. This area is divided into the Value Area High (VAH) and Value Area Low (VAL). The VA is significant because it identifies the zone where most market participants were active, providing a clear picture of market consensus on value. 3. High Volume Nodes (HVN) and Low Volume Nodes (LVN) : HVNs are price levels where there was a large amount of trading activity, indicating significant interest and often serving as strong support or resistance levels. LVNs, on the other hand, represent areas with minimal trading activity, where prices tend to move quickly due to the lack of interest. The Importance of Volume in Trading Volume is a fundamental aspect of market analysis, offering insights into the strength and sustainability of price movements. It reflects the level of participation in a market, indicating the intensity of buying or selling at different price levels. - Confirmation of Price Movements : High volume confirms the legitimacy of a price move. For example, a price breakout from a resistance level on high volume is more likely to be sustained than one on low volume. - Reversals and Continuations : Spikes in volume can signal potential reversals, especially when occurring at significant price levels such as the POC or near the VA boundaries. Conversely, a sustained high volume along a trend can indicate its continuation. - Validation of Support and Resistance : Volume at key levels like the POC, VAH, and VAL helps validate these areas as strong support or resistance. When price interacts with these levels on high volume, it suggests that many market participants are active, reinforcing the importance of these price levels. How to Interpret and Use Volume Profiles: 1. Identifying Key Price Levels : - The POC acts as a magnet for price, often drawing the price back to it when it moves away. This level is crucial for identifying potential areas of reversal or consolidation. - The Value Area is where the majority of the trading activity occurs. Prices above the VAH might indicate an overbought condition, while prices below the VAL could suggest an oversold market. 2. Volume and Market Sentiment : - High Volume Nodes indicate areas of significant interest, where prices tend to stabilize due to heavy trading. These areas often become zones of accumulation or distribution, depending on market conditions. - Low Volume Nodes indicate price levels with minimal trading interest, where prices may move quickly and encounter less resistance, often leading to rapid price changes or breakouts. 3. Order Flow and Large Volume Blocks : - Large blocks of volume, particularly at HVNs, suggest the presence of institutional traders or significant market participants placing large orders. These zones are critical because they reflect where big players are accumulating or distributing their positions. As a result, these areas tend to create strong support or resistance levels that can define future market behavior. 4. Dynamic vs. Static Profiles : - Volume Profile Visible Range (VPVR): This type of profile updates as you scroll through your chart, dynamically showing the volume distribution for the visible price range. It’s useful for analyzing the current market context and finding immediate trading opportunities. - Fixed Range Volume Profile (FRVP): This profile is static, showing volume data for a specified price range or time period. It’s valuable for comparing current price action to historical data, helping identify long-term support and resistance levels. Practical Tips for Using Volume Profiles : 1. Customization and Settings : - Adjust the number of rows or ticks per row in your Volume Profile settings to get a more detailed or broader view of volume distribution. More rows will give you finer detail, while fewer rows will smooth out the data, highlighting major trends. 2. Combining with Other Indicators : - Use Volume Profiles in conjunction with other technical indicators like moving averages, RSI, or MACD to confirm trading signals and enhance the reliability of your analysis. 3. Adapting to Different Timeframes : - Tailor your Volume Profile analysis to your trading style. For day traders, shorter timeframes (e.g., 5, 15, 30 minutes) might be more relevant, while swing traders or investors might focus on daily, weekly, or even monthly profiles to identify long-term trends and key levels. 4. Observing Market Reactions at Key Levels : - Pay close attention to how the market reacts when it approaches HVNs, LVNs, the POC, or the boundaries of the Value Area. These reactions can provide clues about future price movements and potential trading opportunities. Volume Profiles offer a deep and nuanced view of market behavior by highlighting where significant trading activity has occurred at different price levels. By understanding the interaction between volume and price, traders can make more informed decisions, identify key levels for entry and exit, and gain insights into market sentiment. Integrating Volume Profile analysis into your trading strategy can provide a significant edge, enhancing your ability to navigate the complexities of financial markets.
CME_MINI:ES1!Education
by seventyfiveinvest
How to read Volume properlyIn this video, I explain how to interpret volume bars in conjunction with price movements. Recognizing large volume bars is crucial for understanding significant market interest, especially when they accompany substantial percentage changes in the underlying asset. These insights can help confirm institutional buying, signal the beginning or end of uptrends, and indicate the start of sell-offs or the end of downtrends. For example, large green volume bars can suggest the start of an uptrend or confirm institutional buying, while large red volume bars can signal the beginning of a sell-off or the end of a downtrend. This indicator simplifies the process of reading volume bars, making it easier to extract valuable insights from them.
NASDAQ:AAPLEducation
by PappyTrading
12
Volumes. Why every trader should be able to work with them.The third “stream” of incoming real data, which simply cannot be ignored when analyzing a chart, is volumes. I’ll try to explain why the third stream, what are the first two. On any chart of a trading instrument there are two scales, price and time. These are two real and independent incoming data streams. All Technical Analysis studies them inside and out. Price behavior is studied in the form of graphic figures, support/resistance levels, candlestick analysis and patterns, trend lines and channels, the movement of waves of price movement, using indicators, Renko charts, tic-tac-toe, etc. and so on. The time scale is divided into seasonality, quarters, trading sessions, sessions for hours before and after lunch, and simply into hours and minutes of possible manipulations (in ICT smartmoney, for example, Kill zones, macros). I would call volumes the third stream of data, the “3rd scale on the chart.” This is an independent and independent flow of data about the turnover of money, or more precisely, contracts traded at a certain time and at a certain price. All indicators and volume analysis tools do not depend on price and time in the direct sense. They work with their data coming from the exchange. A clear example... Any oscillator, for example, depends on the price, is calculated using a formula based on the price value, and produces a certain “averaged” option.” The cumulative delta curve is constructed based on data on the number of contracts traded from the exchange, and does not depend in any way on the price value; it has its own data. Volumes also include not only analysis using various indicators and clusters. And the ability to work with COT reports, open interest and other data from CME. This is also data on contracts traded by different groups of participants. And understanding how options work, all markets are closely related and influence each other. There are many complex risk hedging designs. Nobody wants to lose money. And I think ignoring this data flow and not being able to work with it is, at the very least, stupid. And simply, isn’t it interesting to look inside a candle or figure to see what’s really going on there? The price is in a “triangle or sideways”, accumulation/distribution is taking place, but is anything really happening there? Are you waiting for a rollback to imbalance (FVG), but is there this imbalance there? Are you waiting for a reaction to a level, “liquidity withdrawal”, order block, but is there something or someone inside the reaction or not? By the way, I don’t know the fourth data stream, if you know, please let me know. I'll be happy to study it. I hope the information will be useful. Don't forget to like, subscribe, share with friends, leave comments. All you have to do is click a button, and I love seeing feedback. Thank you.
Education
by Forex_Hoby