Wednesday, August 24, 2011

What happened to Volume?

In my chart setup, there is no volume. Sasi writes "about your strategy - I am quite surprised to see you not using volumes which I thought till date was the basic necessity'.

Well, yes, Sasi. Volume is certainly important. Now, here is a confession. I rarely look at volume. This simply means that I am comfortable with using price alone to identify trend, and, setups. I have done some work with raw volume and I could not find a correlation between price behavior and volume movment. I know that text books talk about the importance of volume and I respect these ideas. It is probably my failure to identify relationships.

But, a number of volume indicators are used in my strategies - Money Flow Index is a favorite. So, volume with price does help when used in strategies.

Sudhin says "but u have never answered most questions reaised here why?"

My Notes: When I find a question which is easy to answer, mainly because I understand that topic, I do reply quickly. However, I will try to respond to more questions.
Deepak Longani writes "Sudarshan ji me not been able to understand what is this "The deep blue line represents a 34 period zero lag moving average" can you please explain regards"

My Notes:
In the chart shown, there is a deep blue colored line. I am referring to this line. This is a moving average. The moving average is calculated with 34 periods as the lookback. Now, a number of new moving averages types have come up in recent years. This one is called a zero lag average. The commonly used ones are the simple moving average (SMA) and exponential average. Zero lag should be used independently - when it is rising the trend is up, when it is falling the trend is down.



Nikhil said...

the msg is simple.. 'Use what works for you.'

Sasi Uppuluri said...

Thank you for reverting on my comment sir :)

daytrader said...

Dear Sir

thanks a lot for sharing ur setup publicly, now i have a question

many of times u share on this blog and on TV 15 min rule ,if ur setup give a signal in first 5min bar will u initiate a trade or still u wait for 15min,

thanks and regards
ur follower