Notes about SKF on a 3-minute timeframe...
1. I search for patterns of behavior over many successive time periods
2. I try to correlate, in two ways, unusual volume levels with what the price is doing at the same
time
a. Real Time- gives me a feel for velocity of movement and how that affects one's ability
to scalp the move of a given candle.
b. In Review- check candles after time has passed in order to get a feel for how the unusual
volume level affected the longer -term, multi-candle move. Did the volume indicate a
change of direction in price?
3. Technical Analysis priniples apply and I look for stalls at or breaks through support and
resistance for higher probablility entries. Also look for breaks from consolidation areas.
4. I try to think of what is actually happening to the buyers and sellersof the shares as the price
rises and falls. This is new to me as I always saw candles and volume as bars moving on the
screen. By attributing the moves on the screen to the interaction of men and women
actually trading shares, I helps me develop a clearer picture of what is really happening.
What of situations where many shares trade but price does not vary? and what of big price
swings on minimal volume? What are the folks trading shares thinking?
5. Price Follows Volume - ...but, volume levels vary throughout the trading day. In the mid-
day, nice price moves are carried on lower volume levels as compared to the open. I try to
evaluate the affect of volume on a price move within the context of the time of day in which it
happens.
6. I also found that one should "Beware the Ultra-low Volume Candle" as a possible signal of
reversal. eg. See todays SKF chart and look at the 11:42 timeframe as well as the 11:57 and
12:57.... take a look at what follows!
7. Very high levels of volume seem to be imply potential of reversal. eg. See SKF on todays 3-minute chart. Look at the 10:18 am candle. High volume reversal with a long-candle body opens and closes near the end of the price range for that 3-min time period. Appears to be very bullish. Then see that volume declines through 10:24 am but then ramps up again. Profit taking happens at the 10:30 am candle on strong volume but the move up continues! But, look at volume level at 10:36... High volume big price range (wicks/shadows) but the close price is very low to the bottom of the range. Momentum may be shifting. High volume, weak price action, maybe a reversal? (also, beware the false positive) Look at the next two candles 10:39 and 10:42. There's the reversal, and one with a decent measure of conviction by the level of volume indicated as compared to the volume which follows. In fact, the 10:42 volume of 191,000 was the highest through to 1:00 pm when I took the notes for this post. Look at the volume of the candle at 1:06 and what follows it.
1. I search for patterns of behavior over many successive time periods
2. I try to correlate, in two ways, unusual volume levels with what the price is doing at the same
time
a. Real Time- gives me a feel for velocity of movement and how that affects one's ability
to scalp the move of a given candle.
b. In Review- check candles after time has passed in order to get a feel for how the unusual
volume level affected the longer -term, multi-candle move. Did the volume indicate a
change of direction in price?
3. Technical Analysis priniples apply and I look for stalls at or breaks through support and
resistance for higher probablility entries. Also look for breaks from consolidation areas.
4. I try to think of what is actually happening to the buyers and sellersof the shares as the price
rises and falls. This is new to me as I always saw candles and volume as bars moving on the
screen. By attributing the moves on the screen to the interaction of men and women
actually trading shares, I helps me develop a clearer picture of what is really happening.
What of situations where many shares trade but price does not vary? and what of big price
swings on minimal volume? What are the folks trading shares thinking?
5. Price Follows Volume - ...but, volume levels vary throughout the trading day. In the mid-
day, nice price moves are carried on lower volume levels as compared to the open. I try to
evaluate the affect of volume on a price move within the context of the time of day in which it
happens.
6. I also found that one should "Beware the Ultra-low Volume Candle" as a possible signal of
reversal. eg. See todays SKF chart and look at the 11:42 timeframe as well as the 11:57 and
12:57.... take a look at what follows!
7. Very high levels of volume seem to be imply potential of reversal. eg. See SKF on todays 3-minute chart. Look at the 10:18 am candle. High volume reversal with a long-candle body opens and closes near the end of the price range for that 3-min time period. Appears to be very bullish. Then see that volume declines through 10:24 am but then ramps up again. Profit taking happens at the 10:30 am candle on strong volume but the move up continues! But, look at volume level at 10:36... High volume big price range (wicks/shadows) but the close price is very low to the bottom of the range. Momentum may be shifting. High volume, weak price action, maybe a reversal? (also, beware the false positive) Look at the next two candles 10:39 and 10:42. There's the reversal, and one with a decent measure of conviction by the level of volume indicated as compared to the volume which follows. In fact, the 10:42 volume of 191,000 was the highest through to 1:00 pm when I took the notes for this post. Look at the volume of the candle at 1:06 and what follows it.
Thanks so much! I will have to read this when I am not busy watching the Daily Show (ha, ha - just teasing, but he's ripping on Cramer / CNBC again!)
ReplyDeleteMuddy was in chat in the eventing in the other day and I caught part of the conversation about how he trades FAZ..
1) He buy on dips.
2) Only goes long with FAZ, no shorting; doesn't like how FAS moves so doesn't trade that.
3) He watches the DOW for spikes and drops; FAZ then usually follows as it lags a bit.
4) He uses dollar marks as important price thresholds.
5) He averages down scaling in with 100 share buys.
There was a little a more to it, but that was all I caught.
One thing they said was they didnt' think volume mattered with ETFs but obviously it's an integral part of your strategy.
I appreciate your notes.
is that a quote tracker chart in the post below? Have you figured out how to get a moving average to automatically display on every new stock chart you pull up? I've been putting the moving avera up on each new individual chart i open. thanks in advance
ReplyDeleteMark, Yes, it's Quotetracker. You put up your chart of whatever you are following, put in whatever moving averages you want, then you must save it as a template. It will give you the chance to name it, like "Mark 1' or some such thing. You can save any number of them. With the cursor on the chart, right click then scroll down, The bottom two selections are "Save Chart Template" and "Save Chart Template and Reset All." If you do the latter and then click "Create New Template" you can then name it and all your charts will work with the same format.
ReplyDeleteThanks for your tips on Muddy's approach. It's a very simple approach for scalping the FAZ that he uses and therefore, is an excellent one.
ReplyDeleteI like watching volume because it appears to relate to changes over longer time periods on the SKF. It often seems to foreshadow changes. Quick scalps are hard to predict using volume because it's hard to measure the volume that quickly. It's analogous to watching the scenery from a speeding car. If your view is slightly outward; forward or backward, you see everything and you can react with more time. If your view is directly sideways at what is right beside you at the moment, it speeds by too fast to really recognize anything. Volume can race by and you can be on the wrong side of a move in a flash.
I'm trying to get a feel for the slightly longer moves in the SKF, such as yesterday's 9:33am to 9:51am, the 11:21am to 11:48am, etc; as well as the scalps... and it appears that volume can help with this. Of course, staying in for these longer time frames I'm watching takes on a great deal more risk in these very fast moving issues. It is easy when it's done as I do, with fake-money. But, this is what practice is all about, finding what works and what doesn't. Proving myself right and wrong in order to understand it.
thanks
ReplyDelete