Bigbear
Volume has always interested me but I have not been able to make head or tail of it. Used to follow Bunny keenly in his thread here
http://www.traderji.com/equities/37083-trading-volume-spread-analysis-vsa.html#post400927
Will follow the bunny's thread for sometime! Let's see how things were!
He finally gave it up.
For instance, my understanding is that market moves up if people are willing to buy more and more at higher prices and falls if people are selling more and more at lower prices. But in your charts above you have marked the reverse.
If people are willing to buy more and more at higher prices who is selling to them?
If people are willing to selling more and more at higher prices who is buying from them?
As volume increases with falling prices you have marked it as Heavy buying. As you can see after every buying that you have marked, the prices have gone done further. As a layman, I would interpret it as heavy selling. (Heavy buying by someone = Heavy Selling by someone else)
The above two questions will answer this too!
Another point is that when large volumes come up, you mark it as Smart money. Since Retail Traders form a very miniscule part of the market when Smart Money sells large volume, it cannot be absorbed by Retail Traders but by some other Smart Money only, or am I wrong in this interpretation?
This will be answered by the same question
Another assumption is that Smart Money is always correct and they make a pile all the time. This assumption does not have any basis other than in our thought, doesn't it? There are so many big players who lose money consistently, MFs don't post profit every year. So many big names fold up every year (MF Global being the recent example). So how do you interpret volume in this light.
Smart money is not always correct[ Assumption :They are correct 90%]. And not all smart money is right [ This is taken into consideration]. But when they are correct,they make killing money!
If you can tell how MF allocates money, then answering your question becomes very simple. But i have a logic why they don't make money. I don't know if it is true or not. so no point in writing my assumption
I tried following volume and gave up as it made no trading sense to me. I did not and still do not know how to interpret that other than in the layman terms mentioned above.
The trades i have shown above are only volume based.
I look forward to clarification and better understanding from your insight.