VOLUME is the ultimate Trading cheat code.
But, most people never use it in the right way – because no one ever taught them how.
Here are 10 psychological triggers to knowing Volume in a better way.
But, most people never use it in the right way – because no one ever taught them how.
Here are 10 psychological triggers to knowing Volume in a better way.
Traditional idea of Volume:
- if the price increases with volume, it is BULLISH
- If the price is increasing without volume, it is BEARISH
- if the price is falling with volume, it is BEARISH
- if the price is falling without volume, it is BULLISH.
- if the price increases with volume, it is BULLISH
- If the price is increasing without volume, it is BEARISH
- if the price is falling with volume, it is BEARISH
- if the price is falling without volume, it is BULLISH.
But this doesn't hold good every time!
Let's look at some examples.
Ex #1: Reliance ( Daily Chart )
Let's look at some examples.
Ex #1: Reliance ( Daily Chart )
#2: SBI ( Daily Chart)
Do you think it can happen only in an uptrend?
Look at these charts!
Ex #3: IGL (Daily chart)
Look at these charts!
Ex #3: IGL (Daily chart)
Are you thinking this can happen only in "DAILY CHARTS"?
Have a look at these charts!
Ex #4 - Bank of Baroda
(Hourly Chart)
Have a look at these charts!
Ex #4 - Bank of Baroda
(Hourly Chart)
Example - #5 WIPRO
( 15 Min Chart)
( 15 Min Chart)
Do you think these are some cherry-picked operators' stocks?
Most of the above stocks fall in Nifty-50!
It is easily understandable that these points bring a lot of doubt and uneasiness as it shakes the basic foundation of 'volume' itself.
Most of the above stocks fall in Nifty-50!
It is easily understandable that these points bring a lot of doubt and uneasiness as it shakes the basic foundation of 'volume' itself.
Look at some indices (at least no one can operate the index)
Ex #6: Nifty Futures chart
Ex #6: Nifty Futures chart
Ex #7: Banknifty Futures
So, what are the Important Lessons to know about Price-Volume?
Lesson #1 Volume Colour cheats you!
If you don't believe, answer this question.
Lesson #1 Volume Colour cheats you!
If you don't believe, answer this question.
So, in your opinion, who has significant participation in the volume?
If your answer is ‘Buyers,’
Then there is a severe mismatch between your understanding and reality because you are giving more importance to the ‘green’ color code of the volume spike.
If your answer is ‘Buyers,’
Then there is a severe mismatch between your understanding and reality because you are giving more importance to the ‘green’ color code of the volume spike.
Sellers should be absent at the resistance to give further move on the upside
But look at the breakout candle. It has a selling wick that is about 70% of the body (means 70% of them are sellers
You have developed a bullish view after looking at the big green color volume spike
But look at the breakout candle. It has a selling wick that is about 70% of the body (means 70% of them are sellers
You have developed a bullish view after looking at the big green color volume spike
Lesson #2
The price can go with more volume, medium volume, and less volume.
The price can go down with more volume, medium volume, and less volume.
Please don't believe this statement until you verify it on the charts!
The price can go with more volume, medium volume, and less volume.
The price can go down with more volume, medium volume, and less volume.
Please don't believe this statement until you verify it on the charts!
Lesson #3 Analyze Each Volume Spike
In the below chart, the price is near the support trend line.
Do you think the price will go upside from here?
In the below chart, the price is near the support trend line.
Do you think the price will go upside from here?
To decide whether the support will hold or not through ‘volume,’ we need to analyze the significant volume spikes.
I have marked Nine significant volume spikes on the chart, and I analyze these spikes below.
I have marked Nine significant volume spikes on the chart, and I analyze these spikes below.
1️⃣ has some buying wick, but the price didn’t go up. Hence, I mark this spike as neutral.
2️⃣ – No wick, but the price fell the next day. Hence, I mark this spike as bearish.
2️⃣ – No wick, but the price fell the next day. Hence, I mark this spike as bearish.
3️⃣– Again there is a big selling wick, and also the price fell later. Hence, I mark this spike as bearish.
4️⃣- Not much wick, but the price fell on the next day. Hence, I mark this spike as bearish.
4️⃣- Not much wick, but the price fell on the next day. Hence, I mark this spike as bearish.
5️⃣ – Big selling wick, but the price went on sideways for the next day. Hence, I mark this spike as bearish.
6️⃣ – There is a slight buying wick, but the price fell on the next day. Hence, I mark this spike as neutral.
6️⃣ – There is a slight buying wick, but the price fell on the next day. Hence, I mark this spike as neutral.
7️⃣– Slight wick on both sides, and the price went upside on the next day. Hence, I mark this spike as bullish.
8️⃣ –Wick on both sides, but the price fell the next day. Hence, I mark this spike as bearish.
8️⃣ –Wick on both sides, but the price fell the next day. Hence, I mark this spike as bearish.
9️⃣–No wick on both sides, but the price fell the next day. Hence, I mark this spike as bearish.
Now there are 9 volume spikes - 6 bearish volume spikes, 1 bullish spike, &2 neutral spikes.
Hence, there is a high probability of the price breaking the support trend line.
Now there are 9 volume spikes - 6 bearish volume spikes, 1 bullish spike, &2 neutral spikes.
Hence, there is a high probability of the price breaking the support trend line.
You can look at the result in the below image.
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