ADVANCED AND UPDATED

VOLUME PROFILE ANALYSIS

PRICE ACTION TECHNICAL ANALYSIS, CANDLESTICK
VOLUME PROFILE, MARKET STRUCTURE, REVERSAL,
AND RSI TRADING STRATAGY

MAX ANDERSON
 I have a strong belief that mastering the use of volume profiles in trading can
significantly enhance your efficiency.

Over the course of my 20-year career, I have coached many traders.

Unprofitable traders have a tendency to trade setups or patterns without
taking context into account.

This is just trading a trend, not a trading method in my opinion.

A trading strategy should specify not just your edge but also the environment
in which you will use it.

When a trader discovers how to use volume profiles to create context for their
transactions, it's usually a "aha" moment.

Volume profiles are the fundamental building block of all of my trading tactics
as an order flow trader. You will have a solid knowledge of how to use volume
profiles by the conclusion of this guide.

Excited? You ought to be, so let's begin.

What Is a Volume Profile

An advanced charting indication called a volume profile shows total volume
traded at each price level during a time period that the user specifies.

Volume Profiles Uses:

 Determine the Setup's Key Support and Resistance Levels
 Identify logical Stop Losses and Take Profits
 Initial R Multiplier Calculation
 Find markets that are balanced versus unbalanced
 Determine Trend Strength

Let's examine the fundamental elements of a volume profile.

COMPONENTS OF VOLUME PROFILE

1. Open, High, Low, and Close: Although volume profile indicators come in
many forms, most of them will indicate the OHLC.

2. Point of Control (POC): A price level where the session's highest volume of
trading took place. formally known as the POC.

3. Value Area (VA): A price range where a session's trading volume fell within a
user-specified percentage range. Traditionalists of the volume profile use 70%
as it is not far from the mean. On a volume profile, the mean is the Point of
Control.

A normal distribution that you might recognize from statistics is shown here.
In a perfect normal distribution—which the markets never are—68.26% of all
data—in this example, trades—occurs within one standard deviation of the
mean. This is the point of control. Hence the 70% that traditionalists use to
establish fair value.

Prices that are "unfair" are those that are over or below fair value and do not
accurately reflect the underlying worth of the traded security.

Read this post on auction market theory if you're unfamiliar with these ideas.

4. A region of high volume in relation to nearby price action is known as a high

volume node (HVN).

5. Low Volume Node (LVN): A region with low volume in comparison to nearby
price movement

When creating context for your transactions, analysis of price in relation to

high and low volume nodes is helpful.

Nodes with high volume behave like gravity. They frequently draw in pricing
and work to keep it there.

Low Volume Nodes, on the other hand, have low gravity. Due to the little
gravitational attraction, the market frequently bounces right over these levels
without being there for very long.
This makes sense as low volume nodes are located in low-liquidity regions with
low participation. High volume nodes, on the other hand, are where the
majority of transactions occurred.

After establishing the fundamental elements of a volume profile, let's examine

several forms of volume profile indicators.

Volume Profile Indicators

Depending on the indicator and charting program you're using, volume profiles
can be set up in a variety of ways.

Let's examine the various indicators and how they should be used.

X-axis Volume
You should be accustomed to seeing volume represented on the x-axis in this
way.
SESSION PROFILE

The volume profile you will most frequently see is the session profile. As an
overlay, the indicator will show traded volume for a user-defined session at
each price level. most frequently daily, weekly, or monthly.

Despite the fact that you have probably seen this volume profile the most
frequently, I personally believe it to be the least useful owing to how the
session profile is usually presented. Analyzing older profiles in comparison to
more recent profiles might be challenging. I choose the candlestick volume
profile because of this.
Candlestick Volume Profile

I personally employ candlestick volume profiles, often referred to as volume

footprints, in all of my trading. Both my short-term scalping charts and my
long-term opportunity zone charts are composed of candlesticks with volume
profiles.

The value of the candlestick volume profile will become extremely clear when
we start talking about volume profile tactics and look at certain trade
situations.

You typically have the choice of showing the candle as an out line (as seen
above) or as a single candlestick to the left of the volume profile in most
charting software applications.

After reviewing the fundamentals, let's examine various volume profile tactics
you may apply to enhance your trade.

Volume Profile Strategies

As was already indicated, many novice traders lose money because they don't
consider the context of their transactions and only follow established trading
patterns.

If you're currently at this level, including the following strategies into your set
ups can significantly improve your performance.
1. High Volume Node Retracements

Price closed in the high volume node (value region) shown by the black
candlestick in the volume profile shown above.

Either the buyers or the sellers must become more aggressive than the other
side for pricing to diverge from value.

When this happens, it leaves us with important knowledge. We now know

whether the vendors or the purchasers were the aggressors at that pricing
point. Therefore, if price retraces back, it makes sense to check there for a
trade setup.
As seen in the example above, the level will operate as resistance when the
price is trading below a high volume node or value region.

Price will operate as support when it is trading above a high volume node or
value region

Let's explore this a bit further and examine a genuine case.

A 1 minute chart is on the right and a 2 hour Volume Profile chart is on the left
in the eMini S&P 500 sample above.
According to the 2 hour chart, the market has generally been in a fairly strong
upswing. The HVN of the previous bar, marked in green, is a reasonable area to
initiate a long setup since we know that buyers previously outnumbered sellers
at those price levels.

On the right-hand one-minute chart, I additionally highlighted the price region

of the high volume node. You would be searching for a pattern or indication to
go long whenever the price retraces back to this level.

Price retraced back into the previous HVN, where buyers once more took the
initiative and price surged.

Given that sellers have lately predominated at those price levels, the HVN that
developed above and is marked in red would have been a sensible spot to
partially exit this position.

Of course, this does not guarantee that every arrangement you choose at an
HVN will be successful. The better your trade selection, though, the higher
your win % and R multiplier will be as you start to add more context to your
transactions.

2. Breakouts of Low Volume Nodes

Zones of limited liquidity exist at low volume nodes, when pricing often ignores
them. Remember that these are places with "low gravity" from earlier?

You can examine low volume nodes that are comparable to single prints if you
are familiar with market characteristics.
If you use a breakout technique, looking back at previous low volume nodes
will help you identify pockets of poor liquidity, which may lead to trades that
tear through the LVN and are very profitable.

On a daily chart, I personally monitor Low Volume Nodes and extrapolate such
zones into my scalping charts. Let's look at an illustration.

You can see how price traveled through the Low Volume Node (LVN) with
minimal effort on the LVN that was previously crossed by price, which is
marked in orange.

I try to utilize longer term time frames to track LVNs because I personally don't
trade many break out techniques. My trade management will be a little more
lax when I pick a setup from my daily or weekly chart that reaches one of the
LVN zones since I know the trade has the potential to continue.

You should experiment with different time frames if you trade a lot of
breakout setups.
3. Determine Trend with Distributions
You may gauge a trend's strength and locate probable reversal zones by
looking at the distribution of a volume profile. Let's examine each of the five
forms of distribution.

Characteristics of the Bullish and Bearish Volume Profiles

 Price closes close to highs or lows (bullish or bearish).

 Fair value is eroding as price rises.
 Several HVNs
 less LVNs

Bullish and bearish profiles are helpful in validating trade setups and providing
evidence that a position should be held indefinitely.
Characteristics of the neutral volume profiles for bulls and bears

 Price closes close to highs or lows (bullish or bearish).

 Price closes inside or close to fair value, but it doesn't go over or below

 Trading Captives

A trend's slowdown and probable reversal are indicated by bullish and bearish
neutral profiles. Traders frequently use the phrase "Trapped Traders" when a
neutral profile develops.

Because buyers are either long at the extreme of a session (bullish neutral
profile) or short from the extreme (bearish neutral profile), this phenomenon
is known as stuck trading.

Neutral profiles might serve as a signal to reduce your position size or to look
for possible reversal setups.
A value area towards the middle of the profile and price closes inside the value
area are characteristics of neutral volume profiles. A neutral profile resembles
a normal distribution the most closely of all the other types of distributions.

The market's equilibrium leads to neutral profiles. Use neutral profiles as a

signal to avoid the market until a new trend starts or to trade ranges.

4. Key Support & Resistance Levels

Key support and resistance levels may be quickly and easily determined from
long-term charts using volume profiles. I update my Daily and Weekly charts
every morning before the market opens in search of fresh high volume nodes.
(comparable to the LVNs mentioned above)

I check for stacking points of control on my daily chart, and I project any POCs
that haven't intersected forward on my weekly charts.
On the daily chart above, take note of how the price responded as it crossed
over some of the stacked POCs.

These frequently represent extremely powerful levels of support and

resistance that might bring about sudden reversals.

This does not imply that once the price retraces to one of these levels, I just go
long or short. It's helpful to conceive of them as areas with opportunities,
where you'll search for a setup.

Your R multiple will increase if you duplicate these levels onto the charts you
use for your entries.

5. Stop Loss Control

You can trail your stop behind Points of Control, as seen in the example below,
in a manner akin to the conventional approach of tracking candlesticks that
close at new highs or lows.
By doing this, you are methodically trailing your stop behind a level that makes
sense and has statistics to support it rather than an arbitrary price point.

By securing more profit more quickly than most conventional trailing

approaches, as demonstrated in the example, you are also lowering your risk.

6. Improve R Multiple
R stands for the initial risk you accept on a particular transaction, which is
determined by your stop loss. We define our trading earnings as multiples of R.

For instance, your R Multiple would be $300 (Profit) $100 (Initial Risk) = 3R if
your initial risk on a transaction was $100 and you made $300 in profit.

What ways, therefore, might volume profiles aid your R Multiple? Everything
begins before the deal ever occurs. To calculate R for a specific deal, we can
utilize HVNs and value areas.
The current bars value region is shown in green in the example above because
we are trading inside of it, and the prior bars value area is marked in red
(resistance) because we are trading below it.

The HVN that developed above on the previous bar is a sensible spot to look to
exit the trade because price will frequently pass through low volume nodes
with ease.

Calculating the R Multiple can help you decide whether to trade this setup if it
fits inside your strategy's parameters. If not, pass.

When assessing this deal, the following would have been the R Multiple:

8 Risk x 25 Profit = 3.1 Risk

As you can see from the example above, depending on your exit strategy, this
transaction might have generated 3R or more.

You can see that our original R Calculation was substantially lower in the case
below.

4 (Profit) ÷ 3 (Risk) = 1.3R

Price suffered after rallying to the value area, as seen. Despite the fact that this
setup ultimately rallied, you probably would have been stopped out.

The key to better trade selection is to use context. You may now create some
context around your transactions to create a more accurate estimation of your
possible R multiple.

Determining Volume Profile Time Frames

Your trading style will dictate what time frames you concentrate on most, so
you'll need to do some testing. Here are some general ideas to get you started.

Weekly, daily, and eight-hour volume profiles

No matter what type of trader you are, you can designate important support
and resistance levels using daily and weekly volume profiles.

Before the market starts, it's a good idea to glance at the 8 Hour profile to see
overnight activity, which can suggest how the market will move.

Minute Profiles 5, 15, 30, 60, and 120

The bulk of day traders will construct intraday support and resistance levels
using these time periods.
I would concentrate on 5, 15, and 30 minute profiles if your average hold time
for a position is less than 5 minutes.

I would concentrate on 30, 60, and 120 minute profiles if your average hold
time is greater than 5 minutes.

Once more, these are only some ideas to get you going. Try different time
periods as an experiment. For long-term success in this industry, you must
constantly evaluate your trading edge and search for ways to refine it.

Volume Profile Charting Software

I would suggest a few charting software providers if you're interested in
employing volume profiles or any other order flow trading techniques.

The chart screenshots that see throughout this site were created using
MotiveWave, the charting program that I use. Since I've been using
MotiveWave for about two years, I'm quite satisfied with the program.

MW provides a variety of order flow metrics, including, but not limited to,
footprint charts, cumulative delta, volume profiles, and TPOs.

To utilize all of the order flow capabilities, you must have their $49 per month
Order Flow subscription or above. Because I utilize many PCs, I personally use
their Pro package.

Site: SierraCharts I traded for over ten years using Sierra Charts. It is a very
quick and light piece of software.

I could only criticize Sierra for having an outdated graphical user interface. It's
still one of the nicest platforms I've ever used, even with the price and speed,
though.

For all order flow tools, including Number Bars, Sierra's term for footprint
charts, you require their $36 per month Level 5 package or above.

I switched to MW because I needed a Mac-native program. If you use a Mac,

you must either utilize Parallels or run Windows in Bootcamp if you wish to use
Sierra.
Even though many of our members utilize Sierra, I sometimes occasionally
yearn for it. You won't be let down by any choice, in my opinion.

Using the indications in the program, I shall continue on my own

personal trading path, which has literally brought me from the lowest point of
despair to the highest point of trading success. Regardless of what has
transpired thus far in your trading career, I would like to offer you just one
piece of advice: do not fall for any alluring trading tactics, software, or training
courses that do not place Volume at the core of their calculations.

 The ONLY leading signal is volume.

 It is the ONLY indicator that predicts a price change in advance.

 It is the ONLY metric that reveals market intent.

All other signs lag and are only impressive in retrospect.

You WILL succeed and succeed financially if you use VOLUME as your primary
signal. Even better, you might be able to stop working for someone else and
focus only on trading.
Introduction to the importance of Price

The Price is Right was one of the most well-known game programs that was
sold globally a few years ago. The show's competitors were asked to predict
the prices of various things, and while the forms varied significantly, the basic
idea remained the same. The contestant who came the closest to the price
without going over it won.
The financial markets are still viewed by many investors and traders as a
never-ending game of "The Price is Right," yet in trading there are always two
sides to each price. More significantly, the price or opinion in the market is the
result of an agreement to disagree between two different parties. Since just
one individual is selling at price X, it follows that they anticipate a decline in
the price. If someone else is purchasing at price X, that person is betting that
price will increase.
Price in the financial markets can be seen simply as an opinion that is more
significant than a mere price. All market opinion is weighed on price, which
sways backwards and forwards as fresh information, facts, and events in the
globe are first taken in before being represented in the price on the chart.

Every chart's fundamental building piece is price, and when I once asked a very
well-known trader which indicator he would choose if he could only use one,
he said price. Without the price, it is impossible to gauge market mood or
determine where the market is at any given moment's pivot. Price
encompasses all the data in a single, uncomplicated bar, including the
opinions, facts, expectations, and goals of traders and speculators throughout
the world, who are all motivated by the two fundamental emotions of fear and
greed. These two feelings would only wither and cease to exist without the
fulcrum of price.
Price fuels emotional reactions, which are subsequently represented by a
single simple bar on a single simple chart. Everything is reduced to one fulcrum
by Price, where it balances for a brief moment before going on.

Price is hence the fundamental component of any chart. It is the genetic code
of the market and encapsulates all available knowledge in a single number. In
1931 Wyckoff said that "stock prices are made by the minds of men" and that
"when demand for a stock exceeds supply, prices rise." Wyckoff himself used
to teach his pupils this. Prices decrease as supply outpaces demand.

There are four parts to every pricing bar: the open, the high, the low, and the
close. One of these is crucial when conducting any price analysis, as we shall
discover later in this book.
Any price's opening price, whether overnight or intraday, establishes the pivot
point for that specific trading session and serves as the beginning point.
Whether on a one-minute chart or a yearlong chart, the open serves as the
standard against which all subsequent price activity is evaluated.

The high is the price at which the market traded at any given time. It is the
price at which purchasers were unwilling to pay any more, at which point the
price fulcrum started to swing downward.
The low is the price at which selling was finished and purchasers saw an
opportunity to benefit from a deal. It is the lowest point at which the market
traded during each trading session.
The closing price reached by buyers and sellers to terminate the trading
session is known as the close. It determines the ultimate assessment of the
market, making it a crucial piece of knowledge. Before continuing to perform
the procedure once again, it concludes the session's price movement.

Let's now think about pricing in more depth, especially how most traders use it
in their analysis. To achieve this, let's examine the most straightforward bar
chart conceivable. Clearly defined are the open, high, low, and close.

What is this bar really trying to tell us?

It is actually only providing us with a historical record of market sentiment at a
certain point in the trading session. If it is an up bar, it indicates that the
session's overall market mood was positive and that the closing price was
higher than the session's beginning price.
Does it independently indicate where the price is headed?
NO, is the response. The next price bar might be up or down. Price by itself
only provides us with historical information on the state of a market at any
given time. It's similar to operating a vehicle by checking the rearview mirror.
You won't be able to see what's coming; all you'll be able to see is what has
already happened.

The issue with many traders is that they exacerbate this issue by applying so-
called "lagging indicators," which are once more based on a historical
perspective of the past. Imagine, for instance, that we have witnessed ten
increasing price bars in a row. Does this imply that the subsequent bar will
raise as well?
Naturally, no one can be certain of the answer. The following price bar will
climb, according to any indicator that considers historical data, so that much is
guaranteed.
Simply put, this is because it lacks more knowledge on which to build its

other than what has already occurred recently, decision. Additionally, it is

anticipated that the price would increase. It will draw this conclusion only from
past data, without conducting any analysis.

Consider for a second that you are the casino and I inform you that I have a
method for predicting the location of the tiny white ball on the roulette wheel.
I tell you that my method is based on where it has arrived in the past,
according to history. Would you say that this is a useful method for predicting
the outcome of the next roulette spin?

Naturally, the response is no. No one can predict where the ball will fall using a
system or approach that is based on the past. However, this is what traders do
every day, year after year, all around the world. putting their trust in systems
that are based on facts from the past. Each and every one of these systems has
shortcomings. In fact, if you have read my introduction to this book, you will
know that I was also brought to this situation while employing these sorts of
indicators. These traders might as well toss a coin.
A lagging indication is what, then?

If you remember, this is like to driving a car and just utilizing your rear view
mirror. These are attempting to anticipate market direction by looking at prior
price history. You'll eventually crash.
It just remains to be seen when.

Such indicators number in the hundreds, and the majority are available on
your trading platform. They may be divided into two groups: trend following
and oscillation. The most well-liked indicators are those that measure moving
averages, MACD, stochastic, Bollinger bands, RSI, and Elliott waves, to mention
a few.

Because they all trail the market, these indicators have one thing in common.
They are excellent in retrospect. The reason why most traders struggle to
make a living is because they are employing signals and indicators that are
based on historical data, which are essentially useless for predicting future
price movement..

Despite their lack of success, traders keep testing every indication they can
before switching to another, only to find that this one is as worthless.

Finally, it occurs to you that there must be a better method to trade and to
regularly earn money. Unfortunately, this generally has a significant emotional
and financial cost because it not only costs money but also damages one's self-
esteem, confidence, and self-belief.

Another issue with all of these indicators is that although they may perform
admirably in some market situations, they fall woefully short in others. Of
course, at the moment, you are never sure which will be the case, leading to
more ambiguity, impulsive trading choices, and additional losses.

Take the MACD, one of the most often utilized indicators by traders, as an
example. What a mouthful: MACD stands for moving average convergence
divergence. A so-called "veteran trader" sometimes charges a lot of money to
teach traders how to utilize this indication to place trades.

According to the hypothesis, when price is going against the MACD indicator's
trend, a shift in the market is imminent. Here's an instance when bullish
divergence between the price and the MACD indicator does, in fact, imply that
the price will turn up.

Here's an illustration of how MACD didn't work, though.

 There are just as many instances of a failing MACD signal as there are of a
successful one, but many traders are drawn in by the'mystical' quality of
MACD and continue to use it, choosing to have faith in the system rather
than switching to another indicator, even though doing so will result in
greater losses.

The stochastic is another highly well-liked indicator, and here is an

illustration:

On a chart, overbought and oversold zones are indicated by stochastics.

Finding overbought and oversold areas is a crucial and very effective
component of a trading method. They are helpful when the market action is
turbulent, or when the marker is going sideways. Or to put it another way, the
market is sideways moving in a small area of the price chart.

Although trending markets are where most traders benefit, they are infamous
for being unreliable in such markets. The issue is that it may be quite
challenging to predict whether the market is now trending and whether that
trend will continue. Thus, stochastics and the numerous other trading
indicators based on them typically don't work.

Many traders who use Stochastics consistently eventually give up, feeling it is
their fault when in reality there is nothing they could have done differently.
They merely base their trading choices on trailing indicators, which in turn try
to forecast market direction by analyzing previous price movement.

The fact is that lagging indications have never worked and will never work.
When I originally began, I also employed them. All of us do. It's a case of herd
behavior. Every trader I've instructed over the years has came to me after
losing money utilizing them. Therefore, I ask that you refrain from utilizing
them since they all have two characteristics in common.
In addition to assisting you in losing money, they are completely useless for
predicting the market's future course.

This is a key factor in why the majority of trading accounts housed with brokers
are currently in deficit (perhaps as high as between 70% and 80%).

Being diligent in following your system is important, of course, but even then,
if you are basing your judgments on the incorrect tools—for example, trailing
rather than leading indicators—fear, confusion, and doubt will result. You will
probably concur that this is not the finest frame of mind to foster consistency,
confidence in your trade, and positive outcomes.
Instead, this feeling of dread makes it harder to trade with discipline since
you're constantly worried about making or losing money.
Trading has evolved over the years. In the current environment, where
everyone can see the price in real time at the same time, old indicators that
performed well at the end of the day fail at the live edge of the intraday
market. Lagging indications are unable to provide the complete live narrative
as it is occurring right now.

The fact that many traders adopt a "the more the better" mentality is another
result of employing these indicators. To put it another way, they cluttered their
trading displays with as many indicators as they could in an effort to discover
the ideal trade setup.

However, each of these metrics follows trends. Why have many people give
you the same information? VOLUME, on the other hand, rises head and
shoulders above the competition since it is current and not trailing. You MUST
make judgments based on that!

The Tale of Four traders

I'll give you a few illustrations of what occurs when traders make irrational
choices.
These illustrations, which are based on a Forex trader, are equally applicable to
other markets.
Example - Trader 1
Our first trader consistently finds lucrative transactions. He executes 100 deals,
of which 60 are lucrative and 40 are losing trades, which is a respectable
average for most traders.
His winning trades provide an average profit of 25 pip. There are 1500 pip total
as a result. The losing trades had a 45 pip loss as a mean. 1800 pip total,
resulting in a 300 pip loss overall.
This illustration shows a trap brought on by fear and emotion that even
experienced traders might fall into.
In this instance, the trader kept onto the unsuccessful deals and prematurely
closed down the profitable trades. Why?
due to the trader's concern for losing a profit. One of the main worries
experienced by all traders.
Of course, it is wise to strive for nest setups upon entering, but this is merely
the beginning of the process that will lead to your outcome. Keep in mind that
your REAL DEAL profit or loss in any trade is realized upon the exit..

Example - Trader 2
This trader executes 100 transactions, of which 40 result in a profit and 60 in a
loss.
He has made a total of 1800 pips, with an average profit per successful
transaction of 45 pips. He only loses 25 pips on his losing transactions, for a
total loss of 1500 pips. In contrast to Trader 1, this results in a profit of 300
pip.
This trader's method or program may not be giving him a strong winning-to-
losing trade ratio, but at least he is able to regulate his emotions by keeping
winning transactions open for longer and, of course, closing down lost deals
quickly. As a result, he ends the trading session with a tiny profit since his wins
outperform his losers. Although this trader is lucrative, he may not be able to
make a living off of his trading. This example does, however, demonstrate that
traders do not need to be correct the majority of the time in order to succeed.
This example shows how it is possible to still be profitable even when there
are more lost transactions than winning ones. Although this is an
improvement over Trader 1, it could not provide the trader with a clear route
to achieving total financial freedom..
Example - Trader 3
This trader, who is likely a beginner, uses one of the many free trading
platforms offered by his broker or the internet and places as many profitable
trades as unsuccessful ones.
He typically makes 25 pip on each winning transaction and loses 25 pip on
average on each losing deal, which results in a break-even situation over time.
However, the cost of "the spread" is not included in these trades, so over a
longer time frame, he might incur a sizable loss. Sadly, 70–80% of traders are
losing money, and two of those traders are Trader 1 and Trader 3. Even worse,
many of these traders do discover potentially profitable transactions, thus they
are not always choosing the bad trades. They are just unable to stay in trades
for a long enough period of time to profit from any trend due to their
indicators or system. They will often be using the charts and lagging indicators
that their brokers have given.
Accordingly, the total consequence of their trading method is tiny wins but
larger losses. This deadly mix causes dissatisfaction and losses, and eventually,
many of these traders give up on the market altogether, falling short of the
potential for a lifetime of enduring results.

Example - Trader 4
Trader 4 follows a strict trading methodology and has a trading plan. He
probably doesn't employ any of the well-known lagging indicators that you can
get on online brokerage trading platforms, which is another very plausible
scenario.
A possibly profitable trend will be accurately predicted by his software and
system, which is more significant. It could also indicate when a trend is about
to terminate. Overall, Trader 4 enters into 30 lost transactions at 15 pips and
70 successful trades at 55 pips. As a result, he makes a mind-blowing profit of
2905 pip.
The emotions DO NOT control this trader. He follows a trading plan and is
emotionless when it comes to his successes and losses. In other words, he has
a whole trading system that is designed to protect him from both himself and
the whims of the market, as well as from his emotions and anxiety.
This trader is one of the exclusive group of exceptional traders who can make a
life from trading. He or she could have been in a position to leave their work
and pursue trading as a company. The trader will be able to acquire both
financial and personal independence as a result.
With the help of these examples, you can learn how and why most traders fall
short of their potential and why it is almost never their fault.
So how can traders achieve their goals of being successful traders? How can
discouraged traders rebuild their confidence so that they may start trading
clearly and fearlessly? How can new and aspiring traders begin their trading
careers certain that they are utilizing tools and programs that will shield them
from the market and themselves while allowing them the time and room to
master the art of trading?
It's actually extremely easy, and you'll discover how to do it in the following
chapter of this book. This is what I learned for myself, and I now want to tell
you about it.
Introduction to the importance of Volume
I was one of the traders from the aforementioned instances in my own trading
career, as well as any of the first three. I was trading with a number of lagging
indicators, and when they stopped working or, worse yet, when they gave me
inconsistent indications, I was continuously controlled by emotion and anxiety.
I was also motivated to adopt viewpoints that were in opposition to my
analysis.
This was the beginning of the end for me.
At this time, I decided to go to the London Stock Exchange by myself, where I
spent the next two weeks standing there for eight hours a day to observe the
pit traders at work. In those days, merchants of all sizes and shapes shouted
and screamed at one another, indicating deals with their hands. The pit, or the
ring as it was known, was a seething mass of people.
Sadly, the CME (Chicago Mercantile Exchange) is still one of the only venues
where you may observe this in action today.
I learned three important insights from regularly watching these traders at
work. The discipline of a trading atmosphere was firstly present among these
dealers. Thirdly (and most significantly), they could feel and smell the market.
Second, they possessed "free money," or the bid and the ask..

They could observe the buying and selling activity, and when any sizable
institutional orders were received, these traders would simply follow them,
profiting from the market's momentum. They could nearly "see" the buying
and selling like pit traders. They could detect the greed and terror in the eyes
of the merchants. It's impressive to see a market in full swing, and you can tell
right away how much is being bought and sold there. I sought to imitate this in
my own trade.
In order to support the price action above, I wanted a system that would
reflect what was truly happening at the live edge of the market. What I had
found was, of course, VOLUME, which is the market's fuel, and the more fuel
there is, the more momentum there is. It is the sole leading indication, in other
words.
Of fact, this discovery is nothing new; it was also realized by all the great, well-
known traders of the past, like WD Gann, Elliott, Wyckoff, Jesse Livermore, and
Richard Ney.
Although it took traders more than a century to realize the significance of this
fact, Charles Dow, the man behind the Dow Jones Index, grasped the value of
volume.
One of the key findings of a 2001 research on market volume by Gervails,
Kaniel, and Minglegrin from The Wharton School, University of Pennsylvania,
which looked at market pricing over a 30 year period, was that:
‘"Stocks with unusually high trading volume over time tend to have large
subsequent returns."
University of Texas academics Li and Starks have also reported similar findings.
In other words, the price tends to move in the same way going forward when
there is abnormally high volume in any particular time period (which might be
5 minutes, an hour, a day, or a week).

All financial instruments and markets have been proved to be subject to this
concept, therefore it holds true for currencies, commodities, indices, shares
(and, of course, options based on these), and ETFs.
It is also a known truth that while prices are increasing, the market won't
collapse only due to low volume, but rather, it will merely move sideways as it
takes a break.
On the other hand, any turn around from a sinking market requires a rise in
volume, which is why it is frequently referred to as a volume climax.
Pro traders as well as famous traders from the previous century like WD Gann,
Elliott, Richard Wyckoff, and Richard Ney have acknowledged this reality for
decades. They recognized that volume is the most potent leading indication,
and the following straightforward images will explain key claims..

Li and Starks, both professors at the University of Texas, have

published comparable findings as well.
In other words, when there is unusually high volume in any
given time frame (which might be 5 minutes, an hour, a day, or
a week), the price tends to rise in the same manner moving
ahead.

This idea has been demonstrated to apply to all financial

instruments and markets, therefore it is true for currencies,
commodities, indices, shares (and, of course, options based on
these), and ETFs.
 It is also a well-known fact that even when prices are rising, the
market won't collapse owing to a lack of activity; instead, it will
quietly drift sideways while it rests.
The term "volume climax" is commonly used to describe a
market turnaround from a declining market since it
necessitates a spike in volume.
This truth has been recognised for decades by professional
traders as well as notable traders from the previous century
such WD Gann, Elliott, Richard Wyckoff, and Richard Ney. The
following clear visuals will clearly illustrate the main points
since they demonstrate their understanding that volume is the
most effective leading indicator.

The following figure shows a bar with an extremely high volume when the
price is on an uptrend. As volume climaxes emphasize price reversals, this is
OFTEN an indication that the trend is likely to change. This is especially true if
the high volume is not accompanied by an equivalent change in pricing..
After all, it is obvious that the market is resistive to growth if it needs effort to
rise and fall (as shown in VOLUME) and has so far failed to do so with a
considerable increase in volume. This volume must be regarded as a selling
volume as a result. The market would have gained sharply if it had been
BUYING volume. In the example below, we can plainly see how a failure to
climb on increasing volume may manifest itself on a price chart.:

Here, we can see that the price has significantly increased along with the
volume, which is a good indicator. However, the market fell with a narrow
spread price bar on the most recent bar despite the extremely strong volume.
What is occurring is that purchasers are losing interest at this price, and those
who remain are progressively being pushed out of the market by sellers who
are beginning to take control. A trend reversal is about to occur.
The market would have continued to increase as in the previous bar if the
volume bar had been BUYING volume. Since it has instead failed to increase
and the bar's price spread is small, this MUST be new selling volume entering
the market.

Strong support and resistance levels are seen at large volume trading points,
which are also the first indications of a trend shift or breakout.
Volume supports the probable breakthrough from a price congested region. In
the example below, we can see that there is a lot of volume near the bottom
of each market reversal, suggesting that these are good times to buy or
accumulate.

When we DO finally witness the breakout (as seen below), we get a GREAT
SIGNAL from our volume bars that this is a GENUINE breakout and hence a
LOW RISK transaction for a "Long" transaction because the price support zone
supports this perspective..

The high volume in the next example is at the TOP of each trend, thus in this
instance we can conclude that the market is SELLING volume and establishing
a zone of price resistance..

In light of the fact that this volume is selling, when we witness a breakout to
the downside, VOLUME AGAIN VALIDATES THIS BREAKTHROUGH, as we have
seen the HIGH volume bars on each FAILED effort to go higher.
Should there be a break below support and volume confirms it, we might once
more have the opportunity for a low risk entry.
With the use of volume, breakouts and market surges may be confirmed or
disproved. Without volume, we can only speculate on the market's future
course. With volume, we can see the market and if buyers or sellers are
interested.

However, much like price, volume by itself doesn't reveal anything about the
path the market may go in the future. It can only independently communicate
interest in a market or event.

Price and volume must be combined for this to provide us the most potent
analytical tool possible, as this is the only approach that will indicate the
market's future course..

Combining Volume and Price

After identifying the two main market factors—price and volume—I was
confronted with the apparently intractable challenge of utilizing these forces
for personal gain.
For this, I once more looked to the famous merchants of the past, particularly
Richard Wyckoff, and began my research using ink and paper. Forget every
element you've ever used to make decisions, as Wyckoff himself said. The
tables of stock prices and volumes in your daily newspaper include all the
information you want.
In his capacity as a broker, Wyckoff had observed the "behind the scenes"
maneuvers of the major players and had come to the conclusion that "it was
possible to judge the future course of the market by its own action," that "the
action of stocks reflected the plans and purposes of those who dominated
them," that "the basic law of supply and demand governed all price changes,"
and that "the best indicator of the future course of the market was the
relation of supply to demand."
When I went to Phoenix, I ran upon Wyckoff's family members and even
managed to buy some of his original notes. I learned a lot of the principles that
I eventually used in Hawkeye by studying Wyckoff. The correlation between
price and volume is the most crucial of them.
Wyckoff also taught me that price alone can only reveal a market's true
technical position at the moment and where the trend is most likely to go.
That volume more accurately forecasts the trend, recognizes turning
moments, and signals when to enter or exit transactions. But when put
together, they create a whole image.

At this point in my trading career, I also started learning about volume spread
analysis, which likewise considers price and volume but just across the spread
of the price bar. Only the high, low, and close of the price bar are taken into
account in volume spread analysis. By taking into account the imbalance
between buying and selling, this method aims to determine the reason why
price changes occur and, in turn, forecast the market's future course.

I kept doing volume spread research for a long time, and while it had certain
advantages and validity, it was—and still is—a very personal assessment of the
market. It needs a lot of research, and although giving a sense of market
emotion and potential future direction, it gave much too many contradictory
indications. In other words, it didn't appear to be able to tell if a price bar's
activity represented buying or selling, or just a halt in the price motion.
In addition to being a subjective approach, there was no consistency because it
was up to interpretation by every trader. I have always believed that Volume
Spread Analysis as a methodology and trading system should be improved.

At this time, I started reading some of Richard Wyckoff's works once more, and
as I was doing so, an epiphany struck me.
Even his research neglected one important fact, namely the opening price, and
probably the easiest way to express my "aha!" moment is to think about a
straightforward parallel.

Take a moment to picture yourself at an auction. There are just a few other
individuals in the room, and it is a chilly, rainy, terrible day in the dead of
winter.
The next item, maybe a piece of antique furniture, is brought into the sale
room by the auctioneer, who raises his hand to place an opening bid but
receives no responses. At this cost, there is no interest.
After a little period of waiting, he lowers the price. There are still no floor bids
being accepted. When he lowers the price one last time, one individual in the
room makes an initial offer. However, there are no further offers, and the
object is sold for a pitiful sum.

Consider the same sales area at the height of the summer. Standing room only
is present in the crowded space where the identical piece of furniture is now
being resold.
The auctioneer raises his hand with an opening bid, which is quickly accepted
and the bidding begins. As each succeeding offer is subsequently replaced by a
new and enthusiastic bidder, the price rises steadily. The sculpture is
eventually sold for three times the initial amount once the bidding war ends.

The fundamental tenets upon which the financial markets are based are
encapsulated in this ordinary, daily occurrence. Few traders, nevertheless,
ever have the good fortune to learn these straightforward tricks.
You are among the fortunate ones because you are going to discover the
volume secret, which when paired with price results in the most potent trading
indication in the whole globe..

You'll be able to understand the financial markets clearly by

comprehending how this volume and price relationship operates, and
perhaps even achieve the financial and personal independence you long
for as a result..

Returning to our auction room, let's examine this relationship and its influence
over us as financial traders.
The markets are fundamentally extremely basic, and this is the first idea we
need to understand. The markets are still relatively straightforward, despite
the millions of pages and hundreds of volumes that have been written in an
effort to explain how and why they function.

Some even employ higher mathematics, while others make use of the stars,
and still others depend on an ever-growing number of technical indicators, all
of which are promised by the writers to increase your wealth.
The truth is rather different. All of these books and theories were written with
the intention of making money for the writers, not for you. They are intended
to mislead and obscure the markets in order to take advantage of the naive
and uninformed and make even more money.
As I mentioned previously, volume and price are the only two elements that
influence the financial markets. Knowing how volume and price interact will
probably be your key to trading success.

When you start to comprehend the strength of these two forces in the market,
the importance of studying and mastering the link between volume and price
makes any trailing indications you may have previously used meaningless.

So let's get back to the first of them, volume, which is the most potent leading
indicator we have and forecasts the direction the market will go next.
Additionally, after finishing this book, you will be able to read the market like a
seasoned trader.

Take a moment to recall our auction. The price was being bid up in our sales
area. Why? In plain English, numerous people placed bids on the same items
of furniture. In other words, this is volume if we translate these "several
bidders" into monetary terms. As was the case in the first scenario, supposing
those bidders had not been present. Would the cost have increased that
quickly? NO - and there are various ways to interpret this parallel - because
there was no volume action to raise the price.

The famed financial author Joseph Granville famously said, "Volume is the
steam in the boiler that makes the choo-choo go down the track," and this
straightforward remark perfectly sums up what volume is all about. It serves as
the market's fuel. Without volume, nothing happens, and it pushes the market
both up and down.
After all, wouldn't you anticipate a car to travel upward without any more gas?
Why therefore should we anticipate anything different in the financial
markets? Of course not.

It requires work to climb upward, and this effort is volume in the financial
markets. If the market is rising and there is an increase in volume, this is
comparable to our analogy of the auction house, where more bids drive up the
price. Now, the only distinction between the financial and mechanical worlds is
that it requires work for a market to collapse in both, emphasizing once more
the importance of volume.
In a market that is rising, we need to see increased volume as buyers enter the
market and drive up prices, and in a market that is dropping, we need to see
sellers entering the market and driving down prices.
In other words, if we can observe volume, we can also tell whether or not the
sale room is full or empty. If it is, we may anticipate greater costs in a
developing market. If it's empty, we can anticipate a decline in prices or a
stable trend. Our volume indicator reveals all of this on our charts.

In a word, volume communicates attention and excitement in a single

straightforward bar. One volume bar's pure activity represents the buying and
selling choices of investors and speculators across the world. This one bar
contains the results of all the millions of buy- or sell-related trading choices.

There are only two reasons to buy or sell in the market, after all. The first is
increasing risk in order to get financial gain, while the second is lowering the
chance of financial loss. If everyone is willing to take on greater risk, the
markets will rise and the volume will climb as more buyers enter the market.
The markets will collapse, once again with rising volume, if everyone is, on the
other hand, lowering their risk by selling. This straightforward example shows
us that, if this is what is happening on our charts, we should purchase in the
first instance knowing that the market will rise and sell in the second case
knowing that the market will fall.

If you can grasp this idea, you may use the volume indicator as your own
market forecaster and crystal ball.

Volume conveys excitement and attention. Without volume, the market will
only float since volume IS the market's fuel and what propels it. Volume
reveals the market's reality. Volume reflects market conviction, and our charts
make all of this information clear.

If the volume is declining or is low when the market is rising, this merely
indicates that the move is not real. In the same way, if the market is down
while the volume is decreasing, this is not a real move. Now that I've shown
how important volume is and why we refer to it as a leading indicator, I hope
you can begin to realize how much it reveals.

It is the sole leading sign, in fact. In other words, it is the only indicator that
provides future market direction information. Trading without it is similar to
trading while wearing a blindfold. Better still, throw a coin.

Let's now revisit pricing, the second important factor in our volume-price
connection.
Consider for a moment that you are trying to buy anything on eBay. After
searching the website, you are able to identify just one vendor who is offering
the item for sale. How do you feel about this? Is this a reasonable price, or is it
too high? There are no other vendors of the same goods, so you have no
means of knowing and no standard by which to evaluate the pricing.
Imagine that you are shopping for a different product on eBay and find
hundreds of postings, all with the same product and a very limited price range.
How do you feel about this? Now that you can compare prices and come to a
logical conclusion, you have a baseline by which to evaluate market prices.

When we are buying and selling, we frequently engage in this practice.

Whether we are purchasing groceries in the shopping center or a new
automobile in the auto showroom, we always seek confirmation of the price
while making a purchase.
We follow the same procedure while selling. Prior to listing our goods for sale,
we verify the pricing, and chances are we'll market it somewhere in the middle
of the price range.

In the realm of trading, the relationship between volume and price is defined
by these same rules.
Simply said, a price move is more verified the more participants there are in it,
or in our instance, the more volume there is linked with a price rise. In other
words, quantity determines the quality of the price, therefore, as in the
previous eBay example, when there is little volume or just one seller, our
pricing is just not justified. Our pricing is validated when there are plenty of
buyers or when the volume is large. That's how easy it is, in fact.
I'm hoping you can now see that the only two elements of a chart you really
need to comprehend are volume and price. By understanding how they
interact, you may join the exclusive club of traders who can accurately "read
the market" and predict market trends with greater accuracy before they
occur.
Understanding the link between volume and price is essential to your trading
performance since volume not only supports the price but also influences it.

As we all know, news of every kind constantly floods the markets, from the
daily publication of basic and economic data to political remarks from
governments and politicians to the most recent central bank decision.

The markets take in all of this news, and it is reflected in the most recent price
movement. Volume now reflects the impact of this new information on pricing
when it is made available to the general public. When this information is
provided, we can immediately observe how the markets are responding to it
and how quickly the most recent news is being assimilated by the various
market players by observing the volume shift.

This indicates that the volume supports the release's relevance or lack thereof.
The market is giving this piece of news a lot of weight if both the volume and
price increase in response to the news. In this instance, it is obvious that the
volume spike validates the pricing.
The market and its players, however, will obviously have dismissed this item
and will now wait for the next release to arrive, considering it to be trivial or
irrelevant, if the volume does not increase in response to the news.
Now that you have a basic grasp of the link between price and volume, you
must take into account some of the other crucial parts of this crucial
relationship, and at this point I must emphasize certain crucial ideas to us as
traders.
Studying price and volume separately is useless because the actual potential of
what I term VOLUME PRICE ANALYSIS, which combines the two, is only
apparent when it is applied.

Price and volume by themselves only provide hazy market information. What
does a price tell you, after all, other the fact that it is a price, to which the
response may be, "So what?"
Similarly, loudness by itself reveals little more than the presence of volume.
The full market purpose, which would not have been made evident by either
action alone, is exposed when both purchasing and selling intent are clearly
signaled.
According to Ying, who published a groundbreaking study on the price volume
relationship in 1966, "Price and volume of sales in the market are joint
products of a single market mechanism; any model that attempts to isolate
prices from volumes or vice versa will inevitably yield incomplete, if not
incorrect results."

When this strong idea is initially introduced to traders, one of the common
concerns they have is whether volume leads price or does price lead volume.
The answer is, of course, that volume leads price.
This is why this method is so effective since it will foretell what the market is
going to do next. The power of volume price analysis may be summed up as
the signaling of a price shift BEFORE it occurs.
Assume, for instance, that we have a market that is expanding and seeing an
increase in volume. This is a clear indication that the market is optimistic and
will probably continue to be so for some time. Later on though, the volume
starts to decline as the market is still rising, albeit more slowly. The market
movement in this case is comparable to an oil truck that takes some time to
stop after the brakes are applied. The same is true in the market, where a
trend's momentum will last for a while after buying activity has either stopped
or decreased.
The ship will continue for a distance, much like when the engines of a big oil
tanker are abruptly shut off. Similar circumstances apply to the market, which,
like the tanker, will move forward owing to its velocity and does not abruptly
come to a halt.

The loudness, though, is unmistakably warning us that a shift is coming.

Market players are no longer interested in higher pricing while the volume is
declining. The volume price connection is clearly signaling a shift in the
market's direction, which is being driven by volume. Now that you have a
better understanding of how effective this approach is for us as traders, you
can see why the best traders in the world only employ it in their own trading.

Let's look at a few more instances of how volume influences both the present
and future course of a market now that you have a fundamental knowledge of
the volume and price connection..
High or Low volume
As we've seen, volume is the second-most valuable piece of information
behind the actual price. Large volume demonstrates market activity and the
involvement of market players, notably financial institutions, who drive the
most turnover. Financial institutions drive the price up or down when they
trade because they are interested in the price at particular levels.

Low volume indicates a small number of market players and that neither
buyers nor sellers are very interested in the price. Since there would be no
involvement of financial institutions, any actions taken by private traders will
be ineffective..

Volume and trend

We can assess a trend's health using volume. If volume rises as price follows
the trend and falls as price moves against the trend (during corrective periods
or "pull backs"), the uptrend is robust and healthy.
Traders can determine when prices are rising and volume is declining that a
trend is probably not going to last. When sellers seize control (which is
typically indicated by an increase in volume on a down bar or candle), prices
will fall even if price still tries to climb slowly. If volume rises as prices fall and
falls as they start to retrace (draw back) upwards, the downtrend is robust and
healthy.
The downtrend is unlikely to continue while the price is falling and the volume
is dwindling. Either the price will begin to climb or decline, albeit more slowly..
Volume and Reversals
Traders can tell that this was a market with significant interest when volume
increases at particular price levels. Significant interest indicates that the level is
important. Trading professionals may discover critical support and resistance
levels that may be crucial in the future by simply observing volume.
Volume climaxes are often characterized by high volume spikes that are bigger
than any surrounding previous spikes. When this happens, traders should seek
for hints from the price itself as to the direction of the move to come. This is
frequently followed by a certain candle or price bar pattern..
Single volume spikes, which frequently occur during fundamental and
economic announcements on a daily basis, might momentarily freeze price
movement. Geopolitical news might also create a volume increase that quickly
subsides.
However, reversals take place over a number of days rather than just one. A
significant volume spike, or volume climax, will signify a point of market
reversal if higher-than-average volume persists in the market for many days..

Volume and breakouts

All sorts of breakouts may be validated with the aid of volume. A rise in
volume may indicate that a breakout is about to occur while the market is
consolidating on little volume. A breakthrough that occurs on increasing
volume is legitimate, but one that does not draw any trader attention and
occurs on declining volume is probably phony..
Volume and Price
It is obvious that volume is a key indication for all traders, but volume presents
a problem in that it might take some time to fully understand how to analyze it
on a chart.

I had to spend thousands of hours programming and back-testing my theory

after studying volume, volume spread analysis, and realizing the value of
volume price analysis before I could finally deliver what I consider to be the
ultimate trading system based on volume and price, which serves as the basis
of Hawkeye.
While it is firmly rooted in the work of the iconic traders of the past,
particularly the work of Richard Wyckoff, and builds on volume spread
analysis, Volume Price Analysis is my own original interpretation of the volume
price relationship that also considers the importance of the opening price.

All other experts and programs prefer to disregard this aspect of pricing. The
results of the well-known Turtles experiment and the significance of average
true range are also taken into consideration in volume pricing analysis.

The unique Hawkeye volume indicator, which employs VOLUME PRICE

ANALYSIS, is the end product. Before performing more than 360 calculations
on each bar to determine whether it is buying volume, selling volume, or
neutral volume, the Hawkeye volume indicator examines the open of the
previous 20 bars, the close of the previous 20 bars, the high of the previous 20
bars, and the low of the previous 20 bars..
Using Hawkeye with different trading markets
The Hawkeye volume indicator may be applied to tick and time charts in any
market and at any time period. Down to quick scalping on an intraday basis,
from longer-term swing and trend trading on daily and weekly charts.
A group of sophisticated but potent trading indicators and tools, like Hawkeye
volume, are all focused on assisting traders (and investors) in making huge
gains from the market.

Hawkeye and Forex

Some of you reading this might be thinking, "Well, this is all very interesting,
but there is no volume in the spot Forex market," before we continue.
We have well-known exchanges for stocks like the NYSE and LSE. While the
CME, CBOE, ICE, and many more are available for futures trading. The volume
transacted during the trading session will be reported by each of these
exchanges.
There is no central exchange and no mechanism to gauge market activity on
the spot Forex market. This is not a disadvantage, either, as there is a wealth
of tick data accessible that is really superior in a number of ways. I'll explain.
Because there is no linked information on contract size, many traders believe
that tick volume in forex trading is completely meaningless. Tick volume only
provides information about market activity. After all, a tick is nothing more
than a price change.
Naturally, the significance of volume in stock trading is widely recognized and
well documented, and as we have previously learned, having access to this
information will enable traders to detect anomalous market behavior.
Stocks are also bought and sold for a number of purposes, including long-term
investments, buy and hold strategies, and serving as the foundation for
pensions and other investment vehicles..

Contrarily, currencies are largely bought and sold for two reasons, but they
are bought and sold for many other reasons as well, most of which have
nothing to do with investing.
First, for practical considerations in cases when a business must manage
currency risk or acquire resources and assets abroad in the local currency.
Second, volume size is no longer significant since it is being used simply
speculatively, which is increasingly the norm.
What significance does it have to you as a currency trader if Honda, a
Japanese automaker, decides to hedge 500 million Yen before shipping cars
abroad, for instance? You would observe these transactions in multi-million
parts, such as 15 million, 50 million, etc., if you were monitoring this
transaction using level 2 data, which illustrates the magnitude of
transactions moving through the market. What is this saying to you?
Nothing, you have no idea who or why is moving this money. However, what
tick volume DOES convey to you is the degree of market activity.

The forex market, for starters, has a regular daily pattern of activity that
fluctuates as the major financial centers open and close and as the market
shifts throughout the world.
Relatively low volumes in Asia, high quantities in London, lulls before news
releases, and medium volumes in the US often reflect this. This is a typical
trading day on the currency market, thus any variation from this pattern
should be taken seriously.
Second, abrupt spikes in tick activity at significant price levels may also
indicate places of strong support and resistance where traders have left
"take profit orders" or stops, which may temporarily affect the market until
all of these orders have been filled. As interest wanes and the market enters
a period of aimless drift, a dramatic drop in tick activity might also indicate
the conclusion of a price rise.

Tick activity makes all of this plain for you to see, providing you a profound
understanding of market mood, market interest, and therefore market
direction.
For forex traders, meaningful volume analysis in the spot forex market was
only a pipe dream up until this point. But with Hawkeye volume, forex
traders may now use its incredible potential to take advantage of the
currency markets.
Hawkeye can determine with 90% accuracy if the tick volume moving across
the market is buying volume or selling volume by applying sophisticated
mathematical algorithms.

The world's most potent trading technique for forecasting the future is
currently available to forex traders.
You will see instances of how Hawkeye uses this data to provide traders with
the ultimate chart later on in this eBook. On this chart, you will see a
currency pair with corresponding volume that indicates the direction and
trend of the market going forward..
Volume AND Price = Trend
After stating previously that only volume can indicate if a trend is healthy or
not, let's now explore how the adage "let the trend be your friend" is useless.
This is so because the majority of traders lack the ability to identify trends and
then stay in them in order to benefit the most. Broker data currently shows
that over 70% of traders continuously lose money, so we know this. To create
regular, exploding gains and develop actual capital riches, one must follow a
trend, but here is where things become tricky. And this is it.
How can you tell when a trend has begun? In the end, the trend is only
apparent in the rearview mirror, and at this point, it is simple to claim that a
commodity, stock, index, or currency has been in a "long trend."
Nobody is aware that a trend has begun when it first manifests itself. A market
may see a bar of upward movement followed by a bar of downward
movement before going sideways due to price congestion. The truth is that no
one can predict a trend, and no one can ever know until the market has
changed and the pattern has been fully disclosed. But can they? Continue
reading to learn how..

Revealed Hawkeye
There are only two sorts of risk in trading. each trade's financial risk as well as
the trade's overall risk. The first is straightforward to define and administer
and will be understood by the majority of traders.
How much of your trading money you are willing to invest on the deal
represents the financial risk. Applying the 1% rule is a common trading
strategy that is easy to implement. In other words, you may be mistaken 100
times in a row before losing all of your money. You might limit your risk to a
maximum of $10 per transaction, for instance, if you had $1,000 in your
trading account. This would limit the amount of contract you may trade as well
as the maximum placement of any related stop loss.
Simple calculations and adherence to your trading plan are all that are
required to manage this simple trading risk. Identifying the risk that traders are
incurring when they join a position is far more difficult for most traders.
Alternatively put, the likelihood of success or failure.
Like flipping a coin, we constantly try to tilt the odds in our favor. To make a
coin fall with a bias toward one side, we would put a little bit of lead to one
side of the coin.
In our trade, we want to achieve a similar result. We strive to calculate the
probabilities for every transaction so that we may choose the one with the
lowest risk and the best chance of success.
This capacity to assess a trade's chances of success or failure is essential to
trading. Due to the fact that trading is far more of an art than a science, many
traders find this to be challenging and problematic. It is an art because markets
are made up of people, their money, their dreams, their fears, and their greed,
and it is this emotional whirlwind—often characterized by illogical behavior—
that is shown second by second on trading screens.
Furthermore, it quickly becomes apparent why the vast majority, if not all, of
the most widely used indicators simply do not function with the introduction
of high frequency trading and the speed with which money can flow in and out
of assets at the touch of a button.
Volume is the only indicator that may accurately reflect the market's genuine
intention, which is another reason for that. To put it another way, if it is
motivated by fear or greed..
Because Hawkeye
eliminates the need for
hours of investigation to
attempt to determine the
market's purpose and trend
direction, it is unmatched
in this regard. Hawkeye
allows you to visualize the
trend in a similar manner
that the volume bars are
colored red for selling
volume and green for
purchasing volume. The
portrayal of the trend is
quite similar. This time, a
green dot indicates a
market that is increasing,
while a red dot indicates a market that is dropping. This information is
computed and painted for you after a difficult sequence of computations that
take both price and volume into account. This is offered in all marketplaces
and at all times..

Hopefully, you can now start to see how predictive Hawkeye is. It not only
reveals the market's future direction, but it also enables traders to follow a
trend and benefit as much as possible from it. Any trader may become the
consistently profitable trader we showed in our earlier example with Trader 4
by combining Volume Price Analysis with trend..
Forex & Hawkeye
Here is an illustration of how having a trend and volume chart helps us see
where the market is id and frequently traded currency pairings on the forex
market is the GBP/USD. This isheaded next:
One of the most liqu a typical instance of a green trend moving upward, but
with diminishing green volume, so we can tell that this trend won't last for
very long until it stalls and starts to move sideways..

Indeed, the red volume bars in the latter bars of the move higher, when
purchasers are quickly leaving the market to be replaced by sellers, properly
highlight this.
However, in this instance, the selling volume never really took off, and the
market instead just continued to float around without any support from rising
volume. As a scalping trader, we would now be searching for a potential
position on the long side whenever we start to see increasing purchasing
volume with green volume bars. It is clear that the downward trend won't last
for very long at this point.
Additionally, this would be shown by our green trend dots, which would pick
up the price movement and cooperate with our volume.
Hawkeye & Futures
However, Hawkeye performs just as well in other markets. The highly
popular YM e-mini contract, a derivative of the Dow Jones index, is used as
an example here. Here's a terrific illustration of how Hawkeye volume offers
us unmistakable indications about the potential scope of the trend. The
displayed chart is a time chart. In this example, negative volume is there as
demonstrated by the red volume bars, but more significantly, this volume is
declining. As experienced Hawkeye traders are aware, when a market is
dropping with declining volume, the trend will eventually lose momentum.
Indeed, in this instance, the purchasing volume significantly outpaced the
selling volume, which is seen in green. This indicates that buyers have
entered the market, and it is followed by a period of growing green volume,
which indicates a strong bullish attitude that then supports the upward
trend.
A perfect illustration of Hawkeye volume in action with a deep liquidity
instrument and a very short intraday chart.

Hawkeye & Commodities

This time, a daily chart of the corn commodities market shows how the
Hawkeye volume is performing.
As can be seen from the growing magnitude of the green volume bars, over a
sustained time we experienced progressively rising bullish volume..

This supported the trend and finally culminated in a selling climax of

extremely high volume, which was swiftly followed by high volume, but this
time selling volume in the negative. As anticipated, the market immediately
dropped from this level, providing excellent short-side trading
opportunities..

Hawkeye & Equities

The stock Honeywell, which is listed on the Dow Jones index and is quite
actively traded, is seen in the following chart from the US equities markets..
In this instance, we can observe a time where the stock was trying to recover
after a decline, but as we can see, the green Hawkeye purchasing volume
was rather modest and declining, indicating weakness and a lack of
momentum in the rebound.

Shortly thereafter, the stock started to go lower once more, and this time,
the Hawkeye volume in red started to slowly expand in size, suggesting
increased market bearish sentiment and increasing selling activity that gave
the trend lower more strength.

Another perfect illustration of the value of using Hawkeye to analyze the

price and volume in order to determine our trend. Hawkeye provides you
with two potent and foretelling indicators in one bundle in addition to
calculating the amount of market activity and determining whether it is
bullish or bearish.

The Hawkeye volume indicator understands VOLUME PRICE ANALYSIS and

then informs you if the volume is buying, selling, or neutral since it does over
360 calculations on each price bar. This is how Hawkeye stands out from
other volume indicators. Following that, the volume bars are painted in the
appropriate colors: red for selling, green for purchasing, and white for
neutral. The Hawkeye volume indicator then weights these bars and
generates strong and precise entry and exit signals, something that no other
trading program can do or offer. But it doesn't end there. Traditional volume
spread analysis and trailing indicators are consigned to the past thanks to
this innovative technique, which brings trading analysis into the twenty-first
century and adds a completely new dimension.
However, this is not all. When Hawkeye provides volume, price, and trend
across various time frames, it reveals its real strength and enables trades
with high probability and minimal risk. Any trader, from a novice to an
experienced trader, may utilize Hawkeye. If you are a beginner trader, you
will find the method to be of the utmost value and simplicity, and it will help
you quickly reach your full potential without the difficult learning curve that
many of us have encountered in our own trading careers..

And finally….

The main reason I created Hawkeye was to assist YOU in avoiding the
suffering that many others have experienced and in achieving your own
trading success, which in turn fosters confidence and leads to more success.
As you begin your own trading experience, Hawkeye aims to remove
emotion and anxiety by providing you the courage to take a trade and hold
onto it for as long as possible.
Traders with more expertise may now confidently abandon their trailing
indicators and welcome a new world free from the biases of historical data.

I really hope you have liked reading this brief book and have learned
something from it. Because it is built on mixing volume and price to provide
us with market direction over many timeframes, Hawkeye is the only
program that consistently performs in every market and in any timeframe.

Join one of our FREE live training sessions or online workshops to see
Hawkeye in action as we trade the markets and make real money in real
time if you want to be a part of the elite group of traders who have found
financial independence and personal freedom.

You are more than welcome to sign up at ANY of the Hawkeye trading sites
listed below, depending on your favorite trading vehicle(s), and join one of
our FREE live training rooms.

Finally, I'd want to express my gratitude for taking the time to read this free
eBook and hope you found it to be both interesting and educational. Please
look into VOLUME for yourself if you don't do anything else. It is THE ONLY
approach to trade and to always be a successful trader.

Learn about Hawkeye volume for yourself to gain the trading advantage
you've been looking for.

Good fortune and good trading!