Update About Volume Spike Indicator

25th January 2011 Charts

Recent Previous Day Charts

I attached two charts. One from last two days, others from Jan 25th when there's no movement at all. I learnt control bar from Coiled Market, to make it short it's about identifying anchor bar.

I researched and reflected myself why I was doing so bad this last two days, one of the primary reason is: I trade every direction that give me signal. Worse, I used micro-wedged pattern breakout which is very dangerous on choppy market. The trade become more ugly when I had an early losses. I tended to trade every signal and cleared my losses with that single last trade. And if it didn't work, I repeated again with higher and higher target profit. In chopped market, I would be killed definitely.

I backtested with EMA and at first it quite good to filter losses. Don't trade when EMA's flat and candles just hanging around there. But after a while, I found out price liked to hanging around nowhere without EMA too. I losed hoped on EMA.

Then I found out, luckily back to Volume Spike Indicator as Cory's said. It's not likely volume spike. It's a big volume entered in a short time period. I liked to call it Volume Momentum. The logic behind this is about insitution trading, big guy trading. I found it hard to rely on the moment volume is moving fast. Not consistent and confusing, until I learnt about Anchor Bar on Austin.

Now, the reason I highlighted the candle before Green Bar because I believed that Big Guy usually accumulating their position before the big move. I marked the green bar indicator as the big move. However, the first initial big guy position is before the momentum volume. I marked it as ANCHOR BAR. And since it is their first postion, they must to defend it. As you can see from the chart, the candle was hard to penetrate the initial one. But once it's broken, it let loosed.

The strategy is only enter the direction of Anchor Bar unless it's broken or another Green Bar appeared. So if it's chopped, I only chopped half the time. And if I chopped half the time, I won't get losing week this week.

And other things is, it also tell us when the big guy is not there at all. Take a look at Jan 25th chart when there's no green bar so it definitely mean no trade. Which is a great idea since it's hard to trade on that choppiness. Others look at beside it green bar with messed around. It's inventory report and you still can trade it after some stopped out with good profit.

The downside for the strategy is you may not trade every day if the green bar wasn't there. You may miss some great opportunity. Patience is everything.

The goodside is you trade with the trend, reduce the choppiness, and filtered the likely bad day to trade.

But highly happened with the Oil Crysis like today, there'll be always green bar appeared. It's like a green light for trading. Once it appear, you can trade whole day, with half the trades, and hopefully better result.