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.

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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.
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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.

 

3 comments:

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