Big Volume Bars

At Vtrender we are big believers in tracking volumes in charts both horizontal and vertical.

 

The study of tracking volume horizontally across price is also called volume by price.

 

These represent areas of high activity or points on the chart where the market attracts participants more than other places.

 

The traditional belief is that the more popular moving averages like the 50 and the 200 dma are the areas where the larger participation occurs. However there could be other points on the chart which could attract volume or even a large buyer/ seller. These high volume points represent important supports and resistance and if followed closely can be helpful in forming your targets and supports for your trades.

 

Below are two charts of the Nifty and the BankNifty Sept Futures and I will explain how volume can be tracked in your normal charts too.

 

Bigvolchart Big Volume Bars

 

Big Vol Bnf Big Volume Bars

 

In the above charts I have plotted on a 30 min scale price and volume.

 

The volume pane below has a volume moving average ( in white) which I have compounded by 1.6 times to help me identify volumes which are above normal.

 

The above normal volumes are identified through the shaded green and are above the white Volume Moving average.

 

Next we have taken POC's of the daily bars where the volume has been higher than normal and identified them as red horizontal lines in the chart.

 

On this chart of NF those 3 big recent volume zones are 5407, 5574 and 5822 Sept Futures.

 

If you track intra day closely then the importance of the above numbers need not be stressed more.

 

In the BNF we identify the big volume at 9288 and 10159.

 

Acceptance above these points is price confirming that the trader who bought at these prices is profitable. Also when prices come back to these points the trader may try to defend his position as he may theoretically hold 25% of his position open if he is following sound money management techniques.

 

We don't need sophisticated software to track these volumes.

 

Any good chart which gives you price and volume in 2 panes would do. The naked eye would easily identify the volumes bars which are above average . Next you need to look up the NSE site and identify the day's highest volume on this chart : http://www.nseindia.com/ChartApp/install/charts/mainpage.jsp

 

The correct price is not important and a band of 20 points should do the job.

 

Track this chart everyday. It will take away the pain of tracking a lot of numbers. After all the market has given legitimacy to one of those numbers by marrying volume to it!