Anatomy of a Trend- Volume by Volume!

Linus · #1 8th February 2007, 02:31 PM

I spend a good amount of time in analyzing volume, the most neglected part, but the most important! You can enter an uptrend before the others and get out when others enter, or do the reverse ie, find early signs of an impending down trend and get out before everybody! Study the volume in detail and alongwith trendlines and a moving average, you can stay ahead!

I am attaching one chart of an uptrend and I am working on a downtrend, and sideways movement and will post these charts in the coming days. Your comments invited!

Best regards,

ss

beginner_av · #2 8th February 2007, 06:05 PM

good stuff...reminds me of joseph granville and his choo choo...just a question...u have pointed a breakout...so if u get a breakout on light volume, wont u take it?

winstonn · #3 8th February 2007, 06:17 PM

Hi sunil,

great work , you know your work reminds me of the old saying: 'Simplicity is the voice of god '

Keep on adding fuel to this thread so that it would be a great place for learning, i really mean it!!!!

thanxs
winston

kedarvb · #4 8th February 2007, 07:09 PM

Hallo,

REALLY GREAT , SUPERB, VOLUME IS STENGTH OF TREND .TREND WITHOUT VOLUME IS JUST HUMAN BEING WITHOUT FOOD & WATER.

BUT JUST WANT TO KNOW THAT AS VOLUME CONSISTS OF TRADE VOLUME AND DELIVERY VOLUME ( DOWNLOADABLE FILE IS AVAILABLE ON NSE SITE.)

SO CAN WE SAY THAT WITH INCREASE IN VOLUME IF DELIVERABLE POSITION ALSO INCREASES IT SHOWS MORE STRENGTH i.e. ACCUMULATION.

I THINK IT WILL MAKE MORE STRENGTH

KINDLY COMMENT

KEDAR

suba_stocks · #5 8th February 2007, 07:21 PM

let me thank you for your good work,may i know whats the thrid chart...i mean name of that chat.first one is candlestick ...second one is of volume and third one ...i couldn't get .

suba

beginner_av · #6 8th February 2007, 08:38 PM

if i am not mistaken, it is the percentage volume oscillator which is the percentage difference between two moving averages of volume.
before using, do check the 12 days and 26 days ema for suitablity and change according to your time periods after backtesting.

rest the guru himself will explain.

winstonn · #7 8th February 2007, 10:01 PM

Hi sunil,

i have attached a chart,
please see it,

i think it has over first two satges of a trend i.e. uptrend sign and correction with low volumes and in in the third stage of buy confimation white long candle.

Would it also undergo further stages like breakout , explosion , latecomer party , change in trend either to sideways or down.

Can i buy it at 125 tommorow?

thanxs

winston

winstonn · #8 8th February 2007, 10:05 PM

Hi,

the chart is of Pidilite Industries Limited

sorry for the inconvience!!!!!!!

thanxs
winston

kkseal · #9 8th February 2007, 10:06 PM

Quote:

Originally Posted by kedarvb

Hallo,

REALLY GREAT , SUPERB, VOLUME IS STENGTH OF TREND .TREND WITHOUT VOLUME IS JUST HUMAN BEING WITHOUT FOOD & WATER.

BUT JUST WANT TO KNOW THAT AS VOLUME CONSISTS OF TRADE VOLUME AND DELIVERY VOLUME ( DOWNLOADABLE FILE IS AVAILABLE ON NSE SITE.)

SO CAN WE SAY THAT WITH INCREASE IN VOLUME IF DELIVERABLE POSITION ALSO INCREASES IT SHOWS MORE STRENGTH i.e. ACCUMULATION.

I THINK IT WILL MAKE MORE STRENGTH

KINDLY COMMENT

KEDAR

Delivery volume also consists of both buys & sells.

I've seen stocks make big upmoves on relatively low delivery volumes. They also fall more rapidly presumably due to the low holding. These are typically the high momentum (high Beta) stks.

What really matters is the relative movement i.e. how much price moves relative to volume. This aspect is captured to a fair degree by the Accumulation-Distribution indicator.

SS has made some excellent observations.

Regards,
Kalyan

ksganesh100 · #10 8th February 2007, 10:09 PM

Quote:

Originally Posted by sunil saranjame

I spend a good amount of time in analyzing volume, the most neglected part, but the most important! You can enter an uptrend before the others and get out when others enter, or do the reverse ie, find early signs of an impending down trend and get out before everybody! Study the volume in detail and alongwith trendlines and a moving average, you can stay ahead!

Thanks for your excellent annotations. I trade breakouts and look for volume to provide me vital clues on whether the pullback is a sell off or more like a "coiled spring" setup.

In a nutshell, I like to segregate P-V behavior into the following broad categories:

1. Price increasing with increasing volume in a swing - sustainable move
2. Price increasing with decreasing volume - Crowd losing conviction in the move, watch out and be ready to close positions.
3. Consolidation with low volume - dry up situation

I know I might be mixing PV principles and trading strategies here, but I would really appreciate it if you could answer a few questions:

1. Do you trade breakouts or the first pull back after the breakout ?
2. Would you exit if you see a cross in the PVO even if the price isn't showing any visible weakness ?
3. How much of a volume do you like to see on a breakout bar ? ( I like more than 1.5 times the 65d ema of volume)

Looking forward to more excellent posts from you !

- Ganesh

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