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Hi Zane,
I have had similar problems dealing with volume. Richard Armes' book
"Volume Cycles in the Stock Market " has been helpful. Equivolume or
Candlevolume plotting with Metastock is useful.
The difficult thing about volume is that it can mean opposite things
depending on the context. You can interpret price without volume, but not
volume without price.
Divergences are important. One of my custom indicators examines the slope
of the volume linear regression.
Good luck. If you find further insights, let me know.
Michael
At 10:59 AM 2/7/98 -0600, you wrote:
>Things are kind of quiet right now, so I'll post a question that has been
>troubling me. I am a short-term trader (three days to a couple of weeks). I
>want to use volume to help my trades. I have tired testing Volume
>Oscillators and Volume ROC in my trades, but they both seem to give me as
>many false signals as good signals.
>
>I am beginning to think that volume may not be such a good indicator for
>buy and sell signals on short-term trading. A straight Volume indicator
>seems to be as good as any I have found, and it's not all that good. I have
>read that some traders don't use volume at all, and that other traders
>don't agree on what volume signifies on the chart.
>
>I was trying to get my volume indicator to tell me two things when I was
>testing it.
>
>First, when the market is moving sideways, I was trying to separate the
>real MA uptrend buy signals from the false by looking for increase volume.
>(Which does not always happen. Sometime volume even goes down, stays about
>the same, or goes flat, on the start of an uptrend.)
>
>Second, after I am long, and the trend is going up, I want to separate the
>false tops from the real top. That is, there are always several adjustments
>on the way to the resistance level top, and I thought volume might help me
>locate them so I would not sell to fast when the price crossed my MA. If
>volume would tell me what was going on (or give me some suggestion) during
>these adjustments, I would know if I should get out then, or wait and see.
>
>I have pushed price indicators to *my limits.*(Not your limit, buy mine.) I
>can't seem to get much more out of them no matter what I try. I was hoping
>to find some way to use volume to give me that extra 3% edge. But, to me,
>volume is just too weird. Sometimes it acts like it has no connection with
>price, and other times it is right on the money.
>
>I am looking for a volume indicator that you think works, and under what
>circumstances. (Remember that I am a short-term trader, and that it has to
>work with my trading.)
>
>Regards
>Zane Kori
>Abilene, Texas
>
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