V. 22:6 (18-22): Does Volume Matter? by Thomas N. Bulkowski
Product Description
V. 22:6 (18-22): Does Volume Matter? by Thomas N. Bulkowski
If a chart pattern breaks out on high volume, is it a blessing or a curse?
Recently, I was reading some reviews on Amazon.com for a book on technical analysis, and one reader comment that stuck in my mind was that the author didn’t discuss volume. Maybe it’s because volume isn’t important, I thought. In my daily routine, I rarely look at volume unless I’m considering a trade. Otherwise, it doesn’t even appear on my screen. But how important is volume? Does a high-volume breakout really suggest a better-performing pattern? Does a receding volume trend over the lifetime of the pattern suggest better post-breakout performance? I decided to find answers to these questions.
MEASURING BREAKOUT VOLUME
How do you measure volume? An exceptionally high daily volume in a sparsely traded stock might be less than an hour’s worth in an actively traded stock. So stock-to-stock comparisons would be worthless. To measure volume, I chose the volume average for each stock.
I computed the average volume for the three months before the breakout and assigned two categories to the breakout volume: above-average volume (more than twice the average) or low volume (average or below average). Then I looked at chart patterns and mapped the volume with performance.
If a chart pattern breaks out on high volume, is it a blessing or a curse?
Recently, I was reading some reviews on Amazon.com for a book on technical analysis, and one reader comment that stuck in my mind was that the author didn’t discuss volume. Maybe it’s because volume isn’t important, I thought. In my daily routine, I rarely look at volume unless I’m considering a trade. Otherwise, it doesn’t even appear on my screen. But how important is volume? Does a high-volume breakout really suggest a better-performing pattern? Does a receding volume trend over the lifetime of the pattern suggest better post-breakout performance? I decided to find answers to these questions.
MEASURING BREAKOUT VOLUME
How do you measure volume? An exceptionally high daily volume in a sparsely traded stock might be less than an hour’s worth in an actively traded stock. So stock-to-stock comparisons would be worthless. To measure volume, I chose the volume average for each stock.
I computed the average volume for the three months before the breakout and assigned two categories to the breakout volume: above-average volume (more than twice the average) or low volume (average or below average). Then I looked at chart patterns and mapped the volume with performance.
FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.
| Take Control of Your Trading. |
| Professional Traders' Starter Kit |
| All these items shown below only $299.99! |
| Click Here to Order |