My approach to trading is based on the objective evaluation of the “Energies” in the markets.These energies are often measured by technical analysis indicators.
In my first 2 trading courses I share the first 5 energies which are:
- Support/Resistance (blockage to the first 4 energies).
One of the most common questions I’m asked is why I didn’t include volume in the first 5 energies.
The answer is quite simple.
The first 5 energies are ones that I use in consideration of every trade I make. Therefore they are the most important. Volume is not used in every trade – for example, you can’t use volume to trade the spot Forex market since it doesn’t trade through a centralized exchange.
Many teachers say that volume is more important than any indicator because volume, like price, is a reality unto itself. In other words, volume IS what it is. It isn’t an “indicator.”
Most indicators are based on price and/or volume (and sometimes also “time”).
That distinction is important, but doesn’t mean that their “raw data” is easier to read for trading purposes than excellent indicators that can pull “meaning” from that raw data.
In my method, price, volume or any single indicator is essentially meaningless.
Where we find “meaning” (a probability scenario worthy of risking our money) is when many or all of these “Energies” align saying the same thing at the same TIME. This, like in a court of law, gives us a preponderance of the evidence that puts the odds on our side. It doesn’t mean that we’ll be right every time, but we will be more times than not.
Volume is a SIXTH ENERGY that I add to my charts. I use both the standard volume histogram (that plots the raw data of volume) and also a volume indicator that makes it easy to interpret that data at a glance.
Exactly how I use volume in my trading will be revealed later this month when I launch my Swing Trading Course, which is the first Intermediate Level Course I’m making available in electronic format for home study (previously only taught in my live seminars).
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