Friday, December 14, 2007
Attention, Users of VolSum, EVRAA, and VolShift
I have coded a
number of unique volume indicators over the years and a kind user just today emailed me to tell me that as of the December 2007 release of Ensign Software, the templates for VolSum, EVRAA, and VolShift are no longer working as intended. Unfortunately, I cannot at this time update the templates, but will let you know when new properly functional templates are uploaded. My very sincere regrets!
Labels: ensign, indicators, templates, volume
Wednesday, November 21, 2007
LBR is Blogging
I've not been in the trading arena for a while now, but a bug bit me today and I wandered around in one of my favorite pursuits: things Richard Wyckoff. If you don't know who that is, it's understandable. He was active in the early 1900s, but his influence continues to resonate, especially his ideas of "smart money" and the idea that volume reveals their tracks, information which is tradable! However, this is not a digression on Wyckoff In the wonderful way of meanders, that search lead me to fresh, but related nugget.
Linda Bradford Raschke (a.k.a. LBR)has a blog, in fact, since July of this year.
Her trading website is full of tradable information and the blog is a pleasant, but related, diversion.
Labels: market-buzz-gurus, volume
Saturday, October 07, 2006
Bid/Ask & Equivolume
One idea that surfaced very quickly after Howard's introduction of the
new features was to highlight price having high Ask/Bid ratios. For my purposes, I color bars green/red for up down and when the Ask or Bid ratios are above 75% they go dark green/red, and above 85% they go yellow/orange.
"Big" volume always relative to surrounding price action. In this chart, price is near a "relative" top, the upper 180ma Bollinger, so big up volume may show over-enthusiasm, esp. as the BBands were pretty flat. I'd look for reversal sign, but lunch kinda got in the way. You can really see the low volume when the "twiggy" bars show up. Nevertheless, the alert trader got rewarded. Moral of the story: avoid pasta for lunch if you like to trade the afternoon.
Here's an idea:
Top 10 Chart Patterns and Setups for MarketDelta™ has a few links, in particular the MarketDelta Strategy Guide, that might give the volume trader a few ideas and strategies that can be used with the Bid/Ask and Equivolume displays within Ensign. Of course, MarketDelta™ clearly offers additional information in the display not in Ensign, but that's not the point. A student scrounges and scarfs all over the place!
[click for larger image]
Labels: chart-analysis, volume
Thursday, October 05, 2006
Equivolume, an article
I've recently written an article on Ensign Software's implementation of Equivolume, which Howard Arrington has published in the
September 2006 Trading Tips Newsletter. It is also cataloged on my
amg's Trading Articles page.
Since EW's equivolume roll-out, I've converted all my charts to this format and have had some opportunities to observe their use in real time intraday trading. One user setting suggested by a friend was to increase the "Candle Minimum Spacing", which especially enhances "fat boy candle" visualization. You can also experiment with the "Bar Spacing in pixels" setting to reduce the overlap as needed. (see first image below)
A comment on the example. As I mention in the article, equivolume on volume-bar charts is counterintuitive, ie, often a thin-bar ("twiggy") represents what a wide-bar ("fat boy") does on time, tick, or range charts. Because I use various minute based charts, I thought to experiment with a 30-second (half-minute) chart so that I wouldn't have to "re-adapt" when scanning my workspace charts. Perhaps my timing was good, but the 30s chart did make for some interesting "scalping" setups today and so I thought to show them as examples.
[click to open a larger image]
Labels: ensign, trading-method, volume
Sunday, September 17, 2006
EquiVolume, Box, X-Swing, EVRAA
This is from earlier in the week, showing a decent coming-out-of-lunch scalp opportunity using various methods combined on a single chart. It was such a sweet confluence, I thought it would be useful for illustrating various techniques.
Click to enlarge
(1)
EquivolumeThe equivolume indications were the primary motivation for posting this chart. As I mentioned in
an earlier post, Equivolume seeks to visually display the price-volume relationship for any specific bar. The skinny "Olive Oyl" bars on the downside drift during the lunch hour indicate little participation, a clear alert to watch for a reversal.
(2)
Alan BoxI use the 10m chart for "big picture", so at this point I would switch to a 1m or 300V type display. Nevertheless, the Alan Box shows an "up angular" that has not previously been violated, ie, touched by price, just under the drifting Olive Oyl bars, which is an indication of support. I've added a Fisher-ized fast RSI with slow average to the mix, which is also indicating upside bias (the red/white average) with the fast indicating the pullback. More on the RSI I use later.
(3)
X-SwingOne of the benefits of using X-Swing is what I call "bias". Not a mental bias, but rather, a technical indication of price pressure. In this case, price is traveling about half-way between the 180ma top Bollinger (dark black line at top) and it's mid-point (ie, 180ma), the white dots near the bottom, and both are still "up". Likewise, both the 40ma and 120ma are up and price above those. Finally, the faint "gold" 10/13ma pair slope is also up.
Not nearly as much thought as words are involved in this assessment as X-Swing is a visual method. One glance indicates "up", again, preparing the trader for a reversal signal. The first green bar after the downside drift confirmed the trade, which, again, was better seen on a 300V chart.
(4)
EVRAAIn this case, there were two "post" white EVRAA bars on earlier up bars, which are telling me there may be a bit too much enthusiasm at those points (witness the small pullbacks). But in the context of the price action up to that point, the down "gray" EVRAA bars are fairly small in comparison, so another push up is likely.
Taking the trade, even for an overly analytical trader, was straightforward. :)
More on Equivolume Fine tuning of what we see on the charts is needed, especially during transitions such as the lunch hour. The second post bar 11:50am was, in EVRAA language, a clear indication of a pullback, which was immediately confirmed by the down-bar that came in just after it. See too the same pattern on the first post bar at 9:40am. From an equivolume perspective, that skinny-ish bar was also an indication that there was, relatively speaking, little participation. Given that it was the lunch hour, this isn't a surprise, and a slow but steady drift down followed.
Another thing I am watching with growing interest is what I am for now calling "seed volume", on this chart, the green signal bar that came in after the Olive Oyl bar downside drift. Being that opening volume is typically strong, subsequent equivolume bars will, in comparison, be narrower. The "seed volume" bar will not be as chubby as those earlier bars, but in comparison to the preceding bars, it is wider, and acts as a "seed" for growing volume participation, especially when, as in this case, confirmed by other indications.
Here is the 300V chart. Click to enlarge.
Labels: chart-analysis, ensign, trading-method, volume
Wednesday, September 06, 2006
Ensign Beta: Equi-Volume
This must be an exciting development to have lured me out of my bunker!
Ensign Software Beta, which is quite close to production release, adds a few new features that are absolutely delightful. I am going to focus on Howard Arrington's implementation of "Equi-Volume" as this one feature alone should knock any whining "what software should I use" fence sitting trader on their feet running to get this charting software. Oh, did I mention it is $39.99 a month, and no increase with all the new features, and that you can even use Interactive Broker's FREE data feed? Anyway, let's talk Equi-Volume.
The Equivolume concept was developed by Richard Arms, who for many years has provided a
Trading with Equivolume free PDF book on his armsinsider.com website. This little book is well worth your time if you are not yet familiar with this charting technique.
Put in its most simple terms, a box is drawn with the high and low as top and bottom. The width of the box is determined by the volume inside that range: a skinny box is light volume, a chubby box is heavier volume. From Mr. Arm's book
Volume Cycles in the Stock Market:
Ensign has implemented the width part in only the "body" part of the candle, so that the tails are still visible. I quite like this as the tails provide additional sentiment information. Addtionally, in the Dick Arms implementation, the "time axis" is irregular, narrowed or widened by the volume of the boxes. A very clever feature in Mr. Arrington's implementation is that the centers of the candles are keep at equal distance, allowing classic indicators and draw tools to be accurately implemented as the X-axis is uniform. This is done by letting candles "overlap". In this way, the wider bars can still be drawn while not compromising the x-axis.
By the way, even though I am referring to candles, Ensign's implementation also draws Equi-Volume bars, which many traders prefer to candles. It even makes Line-on-Close thicker and thinner. Here is a case of having your cake and eating it too!
Another new feature is "3D" candles, which are simply beautiful and complement Equi-Volume very nicely. Shown below is a quick mark up of today's 3-minute Russell futures chart. I call heavy volume candles "Fat Boys" and light volume candles "Olive Oyls". I have overlaid an
Alan Box on it as well as the basic
X-Swing averages with a set of RSI's for simple divergence and over-sold/over-bot type aide (click to enlarge).
Ensign Software: Try it, you'll like it!
Labels: ensign, volume
Saturday, April 08, 2006
Volume-Bars: What size to Use?
With
Volume-Bars becoming more available to traders, I thought I'd write a short article explaining what they are, how to determine a "good" size to use, and an example of what they look like.
Read more.
Labels: volume
Wednesday, January 19, 2005
Is Volume suggesting a shallow correction?
I asked myself that as I updated the 30m Vold chart. The longer green lines showing the SPX is slightly lower on the close than it was on Jan 4, but still has a net higher Vold. The orange lines are negatively divergent, showing more volume in the decline today relative to Vold on the 13th when the SPX was lower (but in a congestion zone). What to do, what to do.
The weekly ES is on a weak sell signal, with 1163 an interesting support point. A reversal between here and 1163 would likely qualify as sufficient enough a pullback for another run up. Short of a catastrophe, this looks the likely scenario to me.
Labels: bisects-forks-medianlines, chart-analysis, volume
Wednesday, March 24, 2004
Wyckoff's Three Tenet's
The stock market of the 1920s left modern market enthusiasts a rich legacy not only of stories and lore, but analysis methods that continue to inspire emulation.
Perhaps the greatest legacy are the people themselves, the major players of that era. The near mythical actions of Jesse Livermore, Bernard Baruch, and WD Gann were fortunately recorded by journalists of the time. One journalist, Charles Dow, would become known not only by the "little paper" he would found, now known as the Wall Street Journal.
One of Charles Dow's market theories was the idea that markets move up in three swings and correct by 3/8ths. That does sound a bit like Elliott theory, which of course was made far more complicated, er, complex. Readers of my site already know of another simple idea, that of actio-reactio, which was propounded by Roger Babson in regards to the stock market, and itself made more complicated, er, complex, by men such as Gann and later, Alan Andrews. But I digress.
While less well known, no less important are the ideas of Richard D. Wyckoff, who also worked in the finacial markets in the early 1900s. In fact, like Jesse Livermore, he was a day trader! And like Livermore, Wyckoff was also a student of the tape, of price action, and importantly, of volume. While his ideas are more complex than the three tenets listed below, the three are enough to perhaps make you look at price and volume with a fresh and simple view.
The three principles which are the core of Wyckoff are
1) Effort vs Result (Volume vs Price Action)
2) Cause vs Effect (Time in Trading Range relates to How Powerful the Move out of it)
3) Demand vs Supply (Buying vs Selling)
click to open larger
Labels: volume
