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I am finding it helpful, though I am still learning, I said in my OP. It just makes sense. I was a profitable Forex trader before FXCM left the US market, but traded only price patterns, fibs and horizontal support and resistance, no volume consideration at all. I got fed up with all the regulatory crap happening with Forex and switched to futures, and it has been a roller coaster for sure ( barely profitable)
Since adding volume into the equation, I am a lot more consistent, but still have lots to learn. It just makes sense to me the more I think about it. The big money/smart money only gets in when they feel they can make money right? When do we know they are getting in? When we see and increase in volume. If price is making a move, but the volume is low, that is you and me trading our little 1-10 contracts. But if "something big" is about to happen, watch the volume. Here's a trade I made yesterday on CL. I don't usually like to jump in right away but everything lined up so I did:
So you can see I get a nice Bullish Engulfing, and volume is above average, and stochastic has tested O/s twice and is moving up so I enter. I am excited as price is going up and volume is staying above normal!. But then Price stalls, and closes two narrow candles and then a wider bearish candle. Is the move over already? What does volume say? The volume is very low, so if there were any "real selling" going on, and the move was over, that would be accompanied by an increase in volume, so I stay in.
The next candle is bullish on increasing volume and then a narrow bearish candle completes on low volume, and stochastic has entered over bought and has rolled over. I decide to exit and two candles later we get a bearish engulfing supported by higher than normal volume, but I was away from PC so I missed it - it was the better trade. ButI think you get my idea. Price action - actually any signals - should be confirmed by volume.
Then after that down move was over, you can see another trade I took long, using volume to confirm both the Engulfing signal and the VS (volume spike). Once again, volume didn't continue to support the rise in prices so I exited.
So that's my take, I am probably not entirely right and off a bit, but as I said I am much more consistent.
1. 'Big money' is always or most often right. I'm not so sure if that's true.
2. 'Big money' or volume always enter for a directional play. Big volume can just as well be a hedge (the primary function of futures markets).
I'm not so sure if it's correct. At least not often enough. Also, can't big volume be aggregate of small volume...? I've heard that 'big money' have smart algorithms or plays to conceal their hand or true intentions.
Nice chart though. And good to hear you're making progress.
Are those color coded bars part of the order flow suite or something else?
Hey, good points, and if I ( you? ) was great at this, I'd be working for or with the smart money and not here! We don't know why or who, is entering. And we do know that the smart money does place incremental batches of smaller orders to conceal their intentions.
But what we do know is that a REAL move in price is accompanied by HIGHER than normal volume. Check out this chart of CL today using 8Range bars instead of traditional time price candlesticks:
The colored bars are part of the free Volume Above / Below Indicator form NeoHarmonics, and MTPredictor.