The Trader's Book of Volume: The Definitive Guide to Volume Trading by Mark Leibovit

Author:Mark Leibovit
Language: eng
Format: epub
Published: 2019-02-22T16:00:00+00:00

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Relevant equations and supplementary material can be found at www.mhprofessional.com/tradersbookofvolume.

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PART ONE

THE IMPORTANCE OF VOLUME IN TECHNICAL ANALYSIS AND HOW BASIC VOLUME ANALYSIS WORKS

Chapter 1

VOLUME BASICS: A TRADER’S VIEW

Is it volume which causes price changes, or do price changes cause volume—the hen or the egg, which came first?

—H. M. Gartley, Profits in the Stock Market

Back in 1934, R. W. Schabacker commented in Stock Market Profits, his 300-page treatise on trading: “In our entire study of Plate V we have given no consideration to the factor of volume of trading, though this is another highly important and valuable angle of the technical approach to short-swing trading.”

Having recognized the value of volume, he spent only three paragraphs discussing this highly important and valuable tool. Why was so little consideration given to volume? One explanation is that the data required for Volume Analysis were largely unavailable at the time and reserved only for the eyes of an elite group of market participants, an “insiders’ club” comprising floor traders, market makers, and institutions.

Today, with the development of sophisticated desktop trading interfaces along with more readily available market data, traders can access information that was previously in the exclusive realm of insiders. This more accessible data flow has opened the door into the realm of Volume Analysis and the strategic deployment of volume-based indicators, oscillators, and overlays to enhance trading performance.

In this chapter, we challenge you to rethink any preconceived notions of price and volume as they relate to your trading strategy and offer you a short primer on the basics of volume.

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