Course on Volume Trading....
I think volume trading is one of the most misunderstood areas of trading. Like any support and resistance it is NOT what it seems. I have long said that volume is an area not a line in the sand. It never has been and never will be. There area a lot of gurus out there at the moment teaching how to use volume with small, tight, stops and lines in the sand. This is clearly wrong. They sometimes get away with this because of the lack of volatility at the moment. Volatility is at its lowest it has ever been. If you go back over the averages over the decades or centuries you can see how skewed this anomaly is at the moment.
Take oil for example which seems to be everyone's favorite trading instrument these days, would you say the past five years have been the norm? If you think so you are missing a lot. Even today if you trade oil with very tight stops I assure you that your system will eventually fail. I have taken the liberty of drawing you out a chart with the major volume areas that control oil at the moment. Can you see the major one by looking at the chart?
No? Well let me help you. The main area that is holding price is the 57.52 area. Just like the 48.33 was and still is holding price on the larger weekly chart.
Price has moved both up a small amount and then down a small amount from here. You are going to say, "yes there have been up and down trends" . I am going to clearly tell you that there have been no such thing. This is simply the volume area determined by the big banks or central banks who are providing the liquidity in the markets at the moment. Price can be moved up or down from here relatively easily by adding or subtracting orders in the market. Yes they are derivatives and in reality they don't really exist but they do when you are trading. Price could and probably would if you were over leveraged move to the 55 area or the 59 area relatively easy. You think it is a big move. It isn't. Just simply up or down movements from the 57.52 area to shake out and blow out stops of the market participants. Price will go where there is the most profit to be taken and that is how it works.
It never ceases to amaze me how traders put on trader levels of the day. There is no such thing. You simply hope that you are in the right direction. Yes you might catch a nice bounce but there has to be a reason for price to bounce and you have to see where the stops might be run or I assure you your own stop will be run.
That is why say you decide to take an offer to trade money where you have to pay a monthly fee to be allowed to trade the firms money. You might look at this as an easy way to be capitalized. However here is the thing. There is little to no risk to the people supplying the money.
Why?
First of all they are quite certain that over time you will lose. That is why they keep the daily limits where they are and why your monthly payment is higher based on the supposed cash (which is simply derivatives) they give you. You generally lose because of leverage. That and position size. Note that they tell you the amount of contracts you should be trading given the size of the account. It simply is a recipe for disaster. The larger the account the less leverage you should be using. Especially in today's market conditions.
So today's lesson for you is to learn to recognize the mid point volume area. That is all. Stay away from offers that seem too good to be true also. Check the oil chart below and see what I mean. Really look at it until price movements jump out at you. Keep looking at it until they do. Once you see it in oil which I have helped you with. Pick another chart and see the mid point area where liquidity is distributed on both sides of the market. Ah....now you are beginning to see. Really see.
Take oil for example which seems to be everyone's favorite trading instrument these days, would you say the past five years have been the norm? If you think so you are missing a lot. Even today if you trade oil with very tight stops I assure you that your system will eventually fail. I have taken the liberty of drawing you out a chart with the major volume areas that control oil at the moment. Can you see the major one by looking at the chart?
No? Well let me help you. The main area that is holding price is the 57.52 area. Just like the 48.33 was and still is holding price on the larger weekly chart.
Price has moved both up a small amount and then down a small amount from here. You are going to say, "yes there have been up and down trends" . I am going to clearly tell you that there have been no such thing. This is simply the volume area determined by the big banks or central banks who are providing the liquidity in the markets at the moment. Price can be moved up or down from here relatively easily by adding or subtracting orders in the market. Yes they are derivatives and in reality they don't really exist but they do when you are trading. Price could and probably would if you were over leveraged move to the 55 area or the 59 area relatively easy. You think it is a big move. It isn't. Just simply up or down movements from the 57.52 area to shake out and blow out stops of the market participants. Price will go where there is the most profit to be taken and that is how it works.
It never ceases to amaze me how traders put on trader levels of the day. There is no such thing. You simply hope that you are in the right direction. Yes you might catch a nice bounce but there has to be a reason for price to bounce and you have to see where the stops might be run or I assure you your own stop will be run.
That is why say you decide to take an offer to trade money where you have to pay a monthly fee to be allowed to trade the firms money. You might look at this as an easy way to be capitalized. However here is the thing. There is little to no risk to the people supplying the money.
Why?
First of all they are quite certain that over time you will lose. That is why they keep the daily limits where they are and why your monthly payment is higher based on the supposed cash (which is simply derivatives) they give you. You generally lose because of leverage. That and position size. Note that they tell you the amount of contracts you should be trading given the size of the account. It simply is a recipe for disaster. The larger the account the less leverage you should be using. Especially in today's market conditions.
So today's lesson for you is to learn to recognize the mid point volume area. That is all. Stay away from offers that seem too good to be true also. Check the oil chart below and see what I mean. Really look at it until price movements jump out at you. Keep looking at it until they do. Once you see it in oil which I have helped you with. Pick another chart and see the mid point area where liquidity is distributed on both sides of the market. Ah....now you are beginning to see. Really see.
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