Here's another way to calculate vol%, you adjust it for the
intra day time. For example if 1/2 the day has past, you
would multiply the current vol by 2 and then calculate the volume %
since you still have 1/2 the day left.
----------------
Some basic rules to follow while trading breakout/breakdown
patterns:
1.It's a good idea to avoid entering new positions
the first 15 minutes of the market open.
2.Only trade breakouts that have excellent volume
% relative to its 60 day volume average. I generally only trade
breakout stocks that exceed their 60 day moving average. Some
programs like Medved Quote Tracker already do this for you. The 60
day moving average can also be found on Yahoo Finance under
detailed quotes. Trading breakouts with big volume % greatly
enhances your chances for a successful trade. This is especially
true when Day Trading or Swing Trading. (Please note: Shorting a
stock doesn't rely on volume as much as longs do. When shorting, I
don't watch the volume near as much.)
Here is a simple formula that I use to decide how the volume %
is acting during the day:
[total volume
/hours into the trading day
]multiplied by 6.5
(trading hours in a day
)
You then compare your result to the 60 day average daily volume
for the stock.
Here's an Example:
Stock ABC has a breakpoint of $10.25 with a 60 day average
volume of 500,000 shares. At 11:30 eastern time, stock ABC broke
the $10.25 price resistance (breakpoint) and there has been 100,000
shares traded so far.
Should you go long this breakout stock since it has broken the
$10.25 resistance? The answer would be NO, because by using the
following formula, the adjusted volume is only 325,000 shares,
which does not meet or exceed the 500,000 share 60 daily average
volume.
100,000 / 2 = 50,000
50,000 x (6.5) = 325,000
3. Do not hold a position into earnings as this
can cause major losses. True if earnings are good it can provide
significant gains but is it worth it? My experiance is no.
4. Do not overweight your $$ into one position. It
is a good idea to keep minimal $$ in one particular position.
5. Do not enter a position early. Wait for a
pattern to setup, make sure it has excellent volume %, then only
enter after the price has traded through the breakout price.
6.It's a good habit to sell 1/2 your position on
the initial pop and reset stops at entry to ensure a profitable
trade. Always use stops as they help avoid disasters. Avoid
averaging down if a position goes against you. Maintain proper
stops and realize that if the stock comes back up one can always
reenter.
I agree that the better way to watch the volume is on a time
adjusted basis (which I think Medved QuoteTracker does not do).
It's easy to do this using TD Ameritrade's Strategy Desk. The image
below has some of today's stocks sorted by %V which is the daily
volume percentage relative to the 50 day moving average **IF** the
stock continues to trade at the same rate for the rest of the day.
The number tends to be too high in the early going because of the
rush of trading at the open. I think you can open an account at TDA
for $2000. and even if you never trade there IMO it would be worth
it just to have this tool. The average could be based on 60 days if
preferred. I'll PM the formula to anyone that wants it. BTW the
first 3 col show the position of the stock within the 65 day, 20
day and today's range -- so at stock at the high of the day will
show 100 in the %DR col. The alarm just came up on PPC -- I can
look and see that while PPC is at HOD it is only on track to trade
74% of average volume. Doesn't mean volume can't come in if the
stock starts showing up on screens and attracting buyers but at the
moment that's what's happening. Sometimes it's good to check a 1
minute chart to see more of where the volume is.
first off, the quote prices are real time from the alerts on the
watchlist and the pop ups are real time! As I said, we have to pay
about $800 a month for those quotes, very expensive.
as far as vol, I think it's delayed 15 min, however after the
first hr or so it can give a good guilde line, even if it's
delayed, it's still very useful. For example if a stock is
trading over 100% relative volume at 11 am real time, then I'm sure
the vol% from 10:45 am delayed is still high enough to show a high
vol%
intra day vol% calculation
Medved Quote Tracker - Education on using it to trade setups
Posted by matt on 11th of Jan 2011 at 09:33 pm
Here's another way to calculate vol%, you adjust it for the intra day time. For example if 1/2 the day has past, you would multiply the current vol by 2 and then calculate the volume % since you still have 1/2 the day left.
----------------
Some basic rules to follow while trading breakout/breakdown patterns:
1.It's a good idea to avoid entering new positions the first 15 minutes of the market open.
2.Only trade breakouts that have excellent volume % relative to its 60 day volume average. I generally only trade breakout stocks that exceed their 60 day moving average. Some programs like Medved Quote Tracker already do this for you. The 60 day moving average can also be found on Yahoo Finance under detailed quotes. Trading breakouts with big volume % greatly enhances your chances for a successful trade. This is especially true when Day Trading or Swing Trading. (Please note: Shorting a stock doesn't rely on volume as much as longs do. When shorting, I don't watch the volume near as much.)
Here is a simple formula that I use to decide how the volume % is acting during the day:
[total volume /hours into the trading day ]multiplied by 6.5 (trading hours in a day )
You then compare your result to the 60 day average daily volume for the stock.
Here's an Example:
Stock ABC has a breakpoint of $10.25 with a 60 day average volume of 500,000 shares. At 11:30 eastern time, stock ABC broke the $10.25 price resistance (breakpoint) and there has been 100,000 shares traded so far.
Should you go long this breakout stock since it has broken the $10.25 resistance? The answer would be NO, because by using the following formula, the adjusted volume is only 325,000 shares, which does not meet or exceed the 500,000 share 60 daily average volume.
100,000 / 2 = 50,000
50,000 x (6.5) = 325,000
3. Do not hold a position into earnings as this can cause major losses. True if earnings are good it can provide significant gains but is it worth it? My experiance is no.
4. Do not overweight your $$ into one position. It is a good idea to keep minimal $$ in one particular position.
5. Do not enter a position early. Wait for a pattern to setup, make sure it has excellent volume %, then only enter after the price has traded through the breakout price.
6.It's a good habit to sell 1/2 your position on the initial pop and reset stops at entry to ensure a profitable trade. Always use stops as they help avoid disasters. Avoid averaging down if a position goes against you. Maintain proper stops and realize that if the stock comes back up one can always reenter.
Title: Volume percent -- the
Posted by bkout3 on 12th of Jan 2011 at 10:10 am
I agree that the better way to watch the volume is on a time adjusted basis (which I think Medved QuoteTracker does not do). It's easy to do this using TD Ameritrade's Strategy Desk. The image below has some of today's stocks sorted by %V which is the daily volume percentage relative to the 50 day moving average **IF** the stock continues to trade at the same rate for the rest of the day. The number tends to be too high in the early going because of the rush of trading at the open. I think you can open an account at TDA for $2000. and even if you never trade there IMO it would be worth it just to have this tool. The average could be based on 60 days if preferred. I'll PM the formula to anyone that wants it. BTW the first 3 col show the position of the stock within the 65 day, 20 day and today's range -- so at stock at the high of the day will show 100 in the %DR col. The alarm just came up on PPC -- I can look and see that while PPC is at HOD it is only on track to trade 74% of average volume. Doesn't mean volume can't come in if the stock starts showing up on screens and attracting buyers but at the moment that's what's happening. Sometimes it's good to check a 1 minute chart to see more of where the volume is.
BTW guys, you do know
Posted by matt on 12th of Jan 2011 at 10:13 am
BTW guys, you do know that the watchlist does this right? It shows vol% adjusted for time. It's been there for many months.
I had my programmer add that calculation months ago
Matt, Is it still time
Posted by bkout3 on 12th of Jan 2011 at 10:14 am
Matt, Is it still time delayed?
first off, the quote prices
Posted by matt on 12th of Jan 2011 at 10:18 am
first off, the quote prices are real time from the alerts on the watchlist and the pop ups are real time! As I said, we have to pay about $800 a month for those quotes, very expensive.
as far as vol, I think it's delayed 15 min, however after the first hr or so it can give a good guilde line, even if it's delayed, it's still very useful. For example if a stock is trading over 100% relative volume at 11 am real time, then I'm sure the vol% from 10:45 am delayed is still high enough to show a high vol%
relative volume for TOS users
Posted by jimbodad on 12th of Jan 2011 at 12:00 am
came across this - perhaps it will help track volume %