Volume and Price Action

Many futures traders have embraced Market Profile* as a method for understanding value. A significant other portion of traders have embraced price action. AlphaReveal really excels in surfacing unique volume information that can be used by both price action and volume profile trained traders. The ability to see how the price action, overall volume or activity, resting limit orders, and order flow work together proves extremely compelling and provides exclusive benefits.

A short setup that makes use of order flow and price action is described below:

  1. General selling activity or weakness. This can be measured by using the summary stats on the Volume Inventory Tracker display.
  2. Light buying at a new high. The VIT is extremely useful for reading this. 
  3. Dominant selling activity comes in. The order flow that is dominant can be tracked by using the OrderFlow Monitor with the PressureVolumeTM.
  4. Sell at market or use the Q-TrackerTM to pick a spot for a limit offer. The Q-TrackerTM shows where traders are pulling or adding bids and offers.

One of the misconceptions about order flow trading is that it requires the trader to be be very aggressive. While it is true that sometimes being aggressive works well, there is a real benefit in watching how the order flow and price action develop over time. Often, it is from such a relaxed perspective that good opportunities present themselves.

*Market Profile is a registered trademark of the Chicago Board of Trade.

Wednesday, March 27, 2013 10:13:00 AM Categories: education

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Risk Disclosure:

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure:

Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

 

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