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Strategies & Market Trends : Technical Analysis - Beginners
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To: TA2K who wrote (9540)2/24/1999 7:01:00 PM
From: Craig DeHaan  Read Replies (1) of 12039
 
Nick*
I like Allan's concise analogy. Here's another (slighly less so):

Stocks travel routes measured in both direction and topography; volume is one (major) source of fuel to arrive at the next destination. Repetitive price patterns, indicators and systems, etc. provide good directional road maps of probabilities of space, but can't fully assess ETAs - the time predictive.

Volume influences usually become contagious, accelerating movements otherwise changed only by natural market entropy (balance: buyers = sellers). At these contraction point junctures you especially need to monitor vol for subtle changes that hint of the next direction taken. What starts as a gentle roll from a price pivot recently stalled can quickly gain speed careening either back into a valley recently passed or flying over the horizon effortlessly to a new summit.

For me volume is one of the clearest examples of greed/fear psychology at work that can be measured by a chart.
C
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