Tatsiana Ketrar
All of us have probably heard about volume trading strategies. Some people assume that volume trading is some kind of a trading “Holy Grail”. The thing is that every strategy and approach has its own advantages and disadvantages. In this article we will try to take a closer look at volume trading. Masterforex-V Academy will help us with that.
Volume Trading
Not so long ago, Masterforex-V Academy conducted a webinar dedicated to volume trading. Maxim Gun was the host of the webinar. He explained his approach to analyzing the market.
In particular, he says that traders usually view the trend only as a momentum, a price curve. They see price patterns like head and shoulders. They place trend lines and build channels to see the price fluctuating within them. They pay attention to MA intersections. Dozens of technical indicators, hundreds of patters gradually lead to herd thinking.
As a result, traders stop understanding the market. They cannot see the timing as well as the best places and conditions to use certain tools. Ultimately, indicators fail to generate winning signals, leading to losses. Traders get confused within the network of timeframes, charts, indicators and patterns.
So you know what makes the difference between amateurs and winning professionals? It is all about understanding the simple truth: There has never been and will never be any 100% templates and patterns when it comes to trading financial markets. This is the greatest illusion in the trading environment, a big trap that catches millions of mediocre traders worldwide since they believe in some “Holy Grails” that can generate decent stable profits for them easily and constantly.
Learning to Trade the Right Way
There is an alternative way to learn how to trade like a professional. Here is an example taken from the recent webinar on volume trading conducted by Masterforex-V Academy:
Ok, let’s assume we trade EURUSD. At this point, the closest level of resistance is located at 1.2990. We can clearly see that the price has already rebounded from it 3 times. Consequently, we may conclude that the resistance is fairly strong, at least strong enough to purchase around it. It is wiser to short right at the level in hope that the price will rebound from it.
What happens in reality? The level is broken slightly and then the price goes 50 points back to make stop-loss orders close intraday trades, turning them into losers. It is common knowledge that most intraday traders place stop-loss orders above/below strong levels.
Some strategies and approaches include certain setups that imply opening a trade on the first-second testing. They say the pattern will work then! And how!
Look! The second bearish attempt is successful since the price has broken below the level:
This is only one of those multiple instances when the market catches the crowd’s stop-loss orders. I’m sure you can find hundreds of such instances on your own after looking at price chart closely.
Now let’s built an engine into our trading strategy. The engine is based on the interaction of the smart money (big-scale capital) and the so-called crowd (the herd). When we see this relation, price patterns become secondary. We can see the essence of any pattern. The secret is that thousands of combinations of patterns, presents and indicators are just the consequence of this relation. They look differently but are caused by the same reason, which is the aggressive driving power - the smart money. Therefore, the only thing we actually need to understand is the way the smart money thinks and which side they take. This is the only major conditions to open a trade in the right direction and at the right time.
The bottom line:
All those presets, indicators and patterns are secondary since they reflect the consequences of the interaction between the smart money and the crowd. When you identify the moment when the smart money enters and leaves the market as well as the direction in which it drives the market you can open and close winning trades at the right time.
To learn more about volume trading, please visit Masterforex-V Academy’s webinar. The closest one is scheduled for September 13th.
Tatsiana Ketrar
