the power of the proper volume of analysis can not be overlooked. Unfortunately, the ability to correctly read the volume is not easy to discuss and freely available. Off-the-cuff remarks such as "increased volume is bullish on the progress and increase the volume of the drop is bearish" are bantered around, but that's how it goes. proper use and application volumes can make for some pretty amazing insights into price action, especially when leaning or swing trading support and resistance points or zones of the estuary.
I set up my charts with a few extra measure of volume. I use a normal volume histogram that can be found almost all software packages. However, if there is a large volume spike skewing the ability to correctly read the volume will edit the data accordingly. Next add a 10-day moving average of volume. It gives me a guide on what is below average or above average volume on any given day. Finally I added the 2-standard deviation of 20-day volume average. In essence this is like the upper Bollinger band volume average. It shows me where the ultra-high volume occurs.
the team has added extra we can quickly assess the personality on the volume, and to benchmark against the surrounding volume. The exact volume of reading is not important. The concept of relative volume is the key.
I'm going to make reference to the Smart Money throughout this article. definition can be used for Smart Money:
a group of professional users who act in unison to a certain level, and points of time to change the order of supply and demand.
Smart Money as someone who constantly buy lows and sell highs. Let me say that this is not a bunch of dealers around the ring trying to manipulate the price. We do not need to know who or why, but these people want to follow. We also look at their footprints and their fingerprints are displayed within the daily volume. Smart Money will show their hand by selling into strength and buying weakness. Now as Smart Money can change the order of supply and demand, we can therefore determine that the strong price action of May, in fact, include weakness and poor price action of May, in fact, contain the power. I appreciate that goes against most of the things I've ever learned about volume, but it is important to keep this thought in the back of your mind. The increased supply and therefore the weakness can occur over the price of power. Increased demand and thus the power can come to weakness in the price.
The first thing to understand about the volume is that it is not in itself the volume we are interested in the main misconception is to think that for every buyer has a seller, and turn the volume of the void. That this is indeed the case, then the price just does not make a move. What drives the price of fear and greed of buyers and sellers. Therefore, the relationship and interaction between volume and price, which shows us what is really happening in the market. Consider the volume as an effort by the price action as a result of these efforts. If the sellers are desperate to exit then it will be more inclined to sell on the offer, and not sit back on the offer. If there is not much demand to buy below market price then you are going to be driven lower until they met or sellers are not willing to keep the price was lower. Also, if customers are desperate to buy the offer and not sit on the offer. If buyers are desperate and there is not much above the market supply then you will see prices move up to those customers are met or not they want to keep the prices any more.
mantra volume analysis:
"What is the result of efforts ?"
Ever heard the truth, "buy the rumor, sell the fact"? Do you ever wonder why the price goes down after a positive announcement? Do you think Smart Money new facts and good news in advance and therefore they do for a long time? I think so. So, when he announced the good news in the market weaker hand to jump and start buying and Smart Money to take the opportunity to resolve their positions in the demand for power.