System Improvisation-Thought process!

Some of us are fixed in the idea that Vol is the Fuel to drive the engine , Price ,can it not be like this that the motion having less Friction moves smoothly.

Volume follows even in Intraday ,Price is the main .

Most of my self coded indicators are without vol.
"Buy - Hold " is the bench mark extremly difficult (almost impossible)to beat,my only focus & effort nowadays is to narrow the huge gap of performance & that can only be done by trading both side with high leverage.

First of all Asishda i don't see this as Price Vs Volume but rather Price & Volume.

How do you define 'less friction'? To me (& my perceptions may be erroneous) this would be Demand volume scoring over supply volume (& if we could incorporate Float into the picture all the better - i.e. a 3-variable correlation - how volume affects Float & how change in float affects change in price).

The 'critical point' you refer to would be one where this tussle between Demand & Supply volume reaches a peak, a climax (Hence you have a large volume bar as it is really a summation of Demand + Supply volume)*. This is also probably a level where the float reaches & crosses a critical threshold. After the 'breakout' prices may well continue to move in the breakout direction (even make larger moves than the breakout day) on relatively smaller volume simply because the Supply volume has decreased although there may or may not be an increase in Demand volume [in fact the latter is more likely to decrease (till fresh supply comes in) due to the free float progressively reducing; a phenomenon more perceptible in low float stocks - like them keep hitting UC on lower & lower volume].

But to quantify Demand & Supply volume we need to make a clean segregation of the two and for doing so what 'fuel' do we have on the daily charts - just a volume bar depicting the whole day's volume (not even an OHLC) like it's been added as an afterthought (This depiction, this traditional structure of the chart itself is enough to inculcate a bias towards price, to condition the psyche of an unbiased, unprejudiced onlooker).

Again i stress the fact that this not to undermine the importance of price in any way. (But i'd also love to have an OHLC of float with volume )

Regards,
Kalyan.
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* may take more than one day (for the 'tussle' to produce a decisive outcome, resulting in 2-3 consecutive moderately high vol bars) and may even happen over a period (explaining perhaps some of the 'false'/'whipsaw' breakouts)

Absolutely right. Buy-Hold is the best benchmark (although many short-term traders would be infuriated at the very mention of Buy-hold). One way to beat it i think would be to get a clean depiction of the intermediate trend as well as the countertrends (again of an intermediate duration w.r.t. all countertrends during the period) and play them both. Even better would be a 'rotation system' where we keep shifting/rotating our allocation amongst multiple stocks based on Momentum i.e. to say we stay in during the high momentum phases & stay out during the low momentum phases of the aforesaid (intermediate) trends and countertrends. (And the best probably would be to first select the aforesaid 'multiple stocks' based on Fundamentals - and it doesn't have to be a 'static' list; here the 'rotation' would be based on changing Fundamentals - including macroeconomic ones having a sectoral effect. This can be further confirmed with some form of Relative Strength).

Regards,
Kalyan.

P.S. I also don't think it can be done with the late entry-exits of the Turtles. We need to do better then that both in terms of 'trend (as well as the countertrends it's interspersed with) catching' as well as Entry/Exits.

And a footnote.

Isn't the term Momentum as used in TA a misnomer? It's really the VELOCITY (the first derivative dX/dt - where X stands for whatever entity whose ROC you want to measure; true Momentum would be the second derivative).

Jurik rightly calls their 'Momentum' indicator the RVI (probably means Relative VELOCITY Index).

This also has it's implications. While we seek the perfect smoothing filter (smooth & zero-lag) we think nothing of the underlying we're trying to smooth. Why do we HAVE TO use 'X'? Why not it's 1st or even 2nd derivative? With this even the humble, vintage SMA (& that too longer period ones) might give us what we want.

Regards,
Kalyan.

Momentum is measured by p = m*V, where m = mass and v = velocity, and, where mass is constant, and velocity is a first derivative. Mass is generally ignored in trading (or volume/value traded is considered equivalent to mass) and momentum is simply measured as velocity. By finding the second derivative, you are indirectly considering acceleration, or force, or dp/dx (or d^2Y/dx^2).

Neat.

Clear. Thanks Oxy.
In any case, the concept is more important than the nomenclature (But did cause some confusion during my early TA days - wondered why they kept calling it 'Momentum' more so when they called it's ROC - i.e. the 2nd derivative, 1st of Velocity - accelaration, as you have mentioned)

Regards,
Kalyan.

Wrong.......

dear kk.
concept of float analysis by steve wood.......useful.

u r in right path.
so far position trade concern......volume precede price