How to day trade stocks using the volume price analysis methodology on NinjaTrader

How to day trade stocks using the volume price analysis methodology on NinjaTrader

00:00

Introduction and disclaimer on trading risks

00:00

The speaker apologizes for the delay and welcomes attendees to the second webinar of the day. This session will focus on futures, the stock market, and the broader market, following an earlier forex market webinar. A disclaimer about the risks of trading is also highlighted.

00:29

Volume Price Analysis (VPA) overview

00:29

The speaker advises against using money you cannot afford to lose and introduces the concept of volume price analysis (VPA), which examines the relationship between price action and volume to determine the authenticity of market moves. They mention focusing primarily on stocks and share that they have been exploring various stock filtering platforms, both paid and free, to refine their analysis.

02:03

The speaker highlights Stock Beep, a free platform offering real-time data such as volume spikes and new highs or lows, useful for identifying stocks and applying VPA lessons, especially on longer-term charts. They note the timing of the session on Monday, emphasizing how Friday’s market close provides valuable insights on daily charts.

02:36

3D approach to forex and stock trading

02:36

The speaker explains their 3D approach to forex trading, which combines volume price analysis with a broader view of related markets and fundamental news to identify the main drivers of currency pairs. This approach encourages traders to look beyond just the charts, as no market moves in isolation. The discussion also touches on trading psychology and suitability to different time frames, highlighting a specific module in their forex program that is applicable to various trading styles.

04:16

The focus shifts to Volume Price Analysis (VPA) and how recurring signals and patterns can be learned through extensive chart examples. The speaker mentions a supplementary book containing 200 examples across multiple time frames, primarily targeting stocks, indices, and some commodities. They emphasize that recognizing these patterns, regardless of the asset or time frame, can enhance trading confidence.

05:21

The speaker elaborates on the VPA methodology, which integrates volume, price action, candle patterns, and support and resistance levels—both price-based and volume-based. They note that standard trading indicators can complement this foundation, and that they have developed specific indicators to aid in analysis. The segment concludes with a transition to a colleague named David who will provide further explanation after a brief delay.

06:08

Market focus on Fed speeches and inflation

06:08

The market is heavily focused on the Federal Reserve’s statements, with multiple speeches scheduled from Fed officials, including Powell. This intense attention is due to concerns about inflation and its potential to take hold, as indicated by rising bond yields. Traders need to remain aware of the market’s focus, recognizing that some narratives may be distractions, similar to a magician’s trick, shifting attention away from other important developments.

07:52

Market participants must analyze charts carefully to distinguish genuine trends from misleading sentiment, using principles like volume spread analysis (VPA). Despite bullish headlines, anomalies such as narrowing spreads and high volume without price movement suggest underlying uncertainty. The bond market’s behavior and the Fed’s actions over the coming days are crucial, as rising yields signal inflation risks that could impact the entire economy. Recently, the Nasdaq experienced a significant sell-off but has since found a base and is recovering, with tech stocks being particularly sensitive to inflation due to their reliance on borrowing costs reflected in the bond market.

10:04

Divergence between Nasdaq and Dow Jones

10:04

The speaker discusses the divergence between the Nasdaq and Dow Jones indices. While the Dow Jones, which represents value and defense stocks, experienced a steady march higher despite a minor sell-off, the Nasdaq showed more volatility and a ‘whipsaw’ pattern. The current trading environment reflects this contrast. The speaker then introduces Stock Beep as a useful tool for selecting stocks, specifically highlighting unusual volume stocks based on specific criteria.

11:11

Using Stock Beep for unusual volume stocks

11:11

The speaker explains the concept of relative volume as used in VPA lessons, emphasizing its role in measuring stock trading activity relative to its average volume over time. A high relative volume ratio indicates a significant increase in trading activity, which often corresponds to strong price movements. However, such spikes in volume also bring increased volatility and momentum, leading to potential whipsawing in charts. This complexity requires understanding market psychology, particularly personality traits that influence trading behavior, which is further covered in their forex program’s psychology module.

12:58

Trader psychology and emotional traits

12:58

The speaker discusses the personality trait of neuroticism, which reflects how individuals emotionally respond to stressful situations, such as trading in volatile markets. They explain that most people fall in the middle of the neuroticism spectrum, with some being calmer and more resilient to stress, while others experience anxiety when out of their comfort zone. Both ends of the spectrum have pros and cons for trading, influencing the type of markets and time frames traders might prefer.

15:11

The discussion continues on how traders with low neuroticism may remain calm during drawdowns but might sometimes be too relaxed when they should be more concerned. Conversely, those with higher neuroticism may feel anxious in highly volatile markets. Understanding where one falls on this spectrum helps determine suitable trading styles. The speaker then introduces the concept of volatility in stocks, noting that some traders thrive on high volatility while others avoid it.

16:44

The speaker explains that while many traders might jump into popular stocks based on social media hype, it’s important to analyze volume and volatility data carefully. They emphasize the importance of considering relative volume and market capitalization when evaluating stocks. Smaller market cap stocks tend to be more volatile, which can affect trading strategies.

18:24

The speaker and a colleague have developed criteria for selecting stocks based on fundamental data such as market capitalization and outstanding shares. Larger companies are harder to manipulate due to their size and stock availability, whereas smaller companies can be more easily influenced, causing more volatile price movements. The speaker highlights the importance of these metrics in assessing stock stability and introduces a stock example, CPRX, which offers valuable lessons for traders.

19:32

Stock CPRX analysis with VPA principles

19:32

The speaker examines CPRX, a small-cap stock valued at approximately $453 million, noting its relatively manageable volatility. They highlight key technical aspects such as a breakout indicated by volume point of control and a hammer candle, despite limited volume. The stock’s price movements show a stable range with no extreme fluctuations, making it an interesting case for analysis.

20:48

Attention is drawn to the stock’s strong support and resistance levels, both price-based and volume-based, particularly near the 3.40 price point. The stock exhibited a consistent trading range with congestion phases identified through volume and price analysis. A breakout occurred with significant volume, followed by a gap up and some volatility, although this volatility was isolated and the stock mostly behaved as anticipated.

21:53

After the initial breakout and volatile candle, there was a retracement accompanied by selling volume likely due to profit-taking. However, the volume was insufficient to sustain the downward price spread, indicating an anomaly. The stock continued higher with subsequent pullbacks that respected resistance and support levels on lower timeframes, suggesting a balanced price action influenced by both fundamental and technical factors.

22:59

The analysis focuses on a hammer candle that pierced price-based support but found strong volume support at the volume point of control, acting as a reliable support zone. This caused the price to bounce back up, confirming the importance of volume-based support and resistance. A subsequent shooting star candle suggested a potential reversal, but the next day’s price movement defied expectations by moving higher despite the typical bearish signal.

24:04

The discussion centers on the unusual price and volume behavior following the shooting star candle, where price dipped but recovered, supported by volume patterns. The speaker highlights the anomaly of low volume during price declines and suggests this behavior is noteworthy for traders. The segment ends with anticipation of the following trading day’s activity, emphasizing the value of analyzing such patterns for better trading decisions.

24:38

Importance of Friday market close for Monday

24:38

The speaker discusses analyzing the market’s close on Friday, focusing on overall index performance and individual stocks that may have diverged from the general trend. This weekend review helps anticipate Monday’s market direction, highlighting how failed signals, candle patterns, and volume can indicate potential price movements. They note that a particular stock gapped up significantly on Monday but then pulled back, emphasizing the importance of examining short-term charts like the 10-minute timeframe for detailed insights.

25:44

The discussion centers on the volatility shown in the last candle of the day on Friday, characterized by a large lower wick and significant volume, suggesting strong support levels. The speaker describes the stock as spiky and whipsawing, typical of similar small-cap stocks, and explains how volatility triggers momentum outside the average true range indicator. They note a price retracement within the candle’s range, indicating either congestion or a reversal, and emphasize the importance of volatility candles in identifying key price levels where the market may pause or reverse.

27:28

The speaker shifts focus to reviewing another platform, Ninja, and a particular stock, ‘Seoul,’ to assess volatility and momentum based on Friday’s close. They explain that lower volatility numbers typically suggest reduced momentum, which affects trading decisions. This investigation is part of a broader approach to understanding market behavior through different tools and stocks.

28:07

Analysis of stock Seoul and volume patterns

28:07

The speaker analyzes a 10-minute chart, noting volatility accompanied by significant volume that caused the price to move up despite some weakness. They identify a consolidation phase approaching the market close with strong resistance indicated by the accumulation distribution indicator and volume point of control, suggesting price and volume-based support levels. The expectation is a retracement into the candle’s spread after an initial upward push.

29:21

Attention is drawn to a compressed candle with notable volume near the day’s end, indicating buying interest despite it being a red candle. This buying could be attributed to bargain hunters entering the market on Friday. The speaker emphasizes that 10- and 15-minute candles often reveal market movements more clearly than daily charts. The day’s price action showed a sharp rebound with renewed volatility, which is characteristic of these stocks.

30:27

The speaker discusses the use of the Camarilla indicator, highlighting the importance of the third and fourth levels as potential congestion and reversal points. They briefly mention technical issues with a system and the intention to review daily charts later. They encourage improving understanding of volume price analysis (VPA) by examining anomalies, particularly at the end of the trading day, to better anticipate market moves.

31:40

Advice is given to focus on key levels and probabilities of price increases at the start of the week while remaining mindful of broader market conditions, including Federal Reserve actions. The speaker acknowledges widespread market concerns about a potential crash or correction but suggests being aware of bond market dynamics and other factors that influence market behavior.

32:08

Overview of indices and intraday volume

32:08

The discussion begins with concerns about rising yields and potential financial instability if central banks lose control. The speaker sets up a trading analysis using multiple platforms, focusing on the US market which is already well into its session due to recent time changes. They highlight the use of various indices and charts to assess market conditions.

33:18

The analysis focuses on three major indices (YM, NQ, ES) using both five-minute and daily charts for June contracts. The Nasdaq (NQ) is leading gains strongly on the day with noticeable volume support. Daily charts are emphasized for providing perspective on potential market direction, regardless of trading timeframe. Resistance near 13,300 on the ES is noted, with the YM showing sluggish momentum compared to the Nasdaq.

34:12

Market momentum is analyzed further, noting typical volatility and indecision at the open with many doji candlesticks. Price action is moving away from key volume points, indicating a transition from congestion to smoother trends. Volume and trend indicators suggest increasing strength in upward price movement, especially as price enters areas of lighter volume requiring less effort to push higher.

35:05

The speaker switches focus to multiple intraday timeframes for the Nasdaq, ranging from 15 seconds to 15 minutes, providing a detailed view of scalping and short-term price action. This framework helps connect equity market movements to currency market trends. On a slower two-hour timeframe, currency moves are discussed, highlighting yen and dollar selling off, which is positive for market sentiment, while the Swiss franc has been strengthening.

36:15

Currency market sentiment and commodity currencies

36:15

The discussion focuses on the behavior of commodity currencies throughout the day. The Australian and New Zealand dollars are rising, while the Canadian dollar is falling, showing a divergence that doesn’t always follow typical patterns. The Canadian dollar’s decline is linked to a sharp drop in oil prices, which recently fell to $66. The Swiss franc and yen usually move together, but currently the Swiss franc is acting differently. The FTSE 100 is also declining, and the pound is selling off against the yen.

37:06

Currency pairs are moving in expected directions given overall market sentiment, with the Australian and New Zealand dollars rising against the yen, while the Canadian dollar remains weak. The VIX volatility index is falling to 20, indicating reduced market fear. These movements align with typical index trends, except for some discrepancies with the Swiss franc. The analysis then shifts to the E-mini Nasdaq futures chart on a five-minute timeframe, noting a rally with volume initially rising but then a decline in volume on the latest candle.

38:02

The market shows signs of a rally losing momentum as volume decreases on the latest candle despite a similar price range to previous ones. This drop in volume suggests some selling pressure or simply a lack of participation rather than panic selling. Volume Price Analysis (VPA) helps interpret this scenario, indicating caution but not alarm, signaling traders to be aware of potential shifts in market dynamics.

38:58

VPA is valuable for confirming whether market pullbacks are minor pauses or actual reversals of primary trends, essential for making confident trading decisions. Understanding if a trend change is genuine helps traders hold positions through fluctuations instead of prematurely exiting due to emotional responses. The biggest challenge for traders is managing these decisions to avoid small losses from exiting too early during pullbacks.

40:03

Managing emotions and holding positions

40:03

The speaker explains that trading success relies on having many small losses balanced by fewer but much larger wins. The main challenge for traders is managing their emotional responses rather than just understanding market mechanics. Psychology plays a crucial role, and tools like Volume Price Analysis (VPA) and indicators such as the trend monitor help traders stay in trades during market pauses or minor pullbacks, distinguishing between temporary consolidations and genuine trend changes.

41:04

Using multiple time frames and VPA principles, the speaker illustrates how volume and price behavior indicate support and resistance levels. Volume Point of Control (VPOC) and accumulation/distribution clusters often mark congestion zones, which, when broken, turn into significant support or resistance. The volume profile histogram shows volume distribution, aiding in identifying whether a breakout is gaining strength or losing momentum.

41:54

The analysis continues by examining specific volume and price relationships, such as narrow spreads with low volume and wide spreads with low volume, which can signal anomalies. These clues help anticipate market moves. The speaker highlights the need for volume to increase to push through resistance levels, noting how the accumulation/distribution indicator visually represents support and resistance zones, simplifying the interpretation of market strength across time frames.

42:45

The speaker describes how the indicator automatically adjusts line thickness to reflect the strength of support and resistance levels as they are tested. The Volume Point of Control shifts according to where the most volume is concentrated during congestion phases. This live analysis on a 15-second chart caters well to scalpers and emphasizes the importance of anticipation and understanding market context at the ‘live edge’ to make informed trading decisions.

43:39

The segment concludes by stressing the importance of individualizing trading strategies according to personal preferences, time availability, and risk tolerance. Different traders operate on various time frames, from scalpers trading multiple times daily to others trading less frequently. The speaker encourages learning and practicing trading while maintaining other employment, advocating for a flexible approach that fits each trader’s unique situation.

44:07

Apple stock intraday volume and price action

44:07

The segment discusses Apple stock’s pre-market trading activity, emphasizing the significance of pre-market volume spikes as benchmarks for intraday price movements. The speaker highlights how these pre-market levels act as floors and ceilings, guiding traders on potential breakouts. The stock exhibits a fluid and heavily traded nature with a steady rally, making it easy to enter and exit positions.

45:38

This section analyzes a minor pullback in Apple’s stock price, noting that the falling volume and narrowing spreads suggest it is not a significant reversal but just a brief pause in an uptrend. The speaker explains that a true reversal would involve widening spreads and rising volume, which are absent here, indicating no heavy selling pressure or major market disruption.

46:32

The discussion continues on market behavior during selling phases, describing heavy selling as a cascading waterfall with widening spreads and eventual stopping volume signaled by narrowing spreads and price wicks. Currently, Apple’s stock is rising with no signs of heavy selling and is supported by positive performance in the Nasdaq index. The speaker also refers to volatility triggers expected at market open.

47:24

Attention shifts to volume analysis on various time frames, noting a significant drop in volume at the 15-minute chart level, suggesting limited resistance for the stock’s upward movement. The speaker introduces the camarilla levels on the 60-minute chart to identify potential barriers and support. This helps traders align their strategies depending on their trading horizon, whether scalping short-term or holding for several hours.

48:19

The focus is on volume point of control (VPOC) levels across different time frames, illustrating how these volume concentrations can act as support or resistance. The speaker explains that once Apple’s stock passes certain VPOC levels, it should face less resistance and move more easily upward. They also discuss positioning strategies varying by trader type, from scalpers to longer-term traders, highlighting the use of limit and take profit orders.

49:13

The final segment reviews Apple’s weekly volume profile, showing current selling pressure and a congestion phase awaiting a breakout above the volume point of control. The speaker then shifts focus to broader market indices, noting a pause in the Dow, continued strength in the Nasdaq, and weakness in the UK index. The VIX volatility index is beginning to rise slightly. The segment closes by mentioning oil and the potential impact of inflation, suggesting gold could benefit as a safe haven.

50:35

Oil price analysis and inflation impact

50:35

The segment discusses gold as a hedge against inflation and highlights its potential to benefit while other assets struggle. It then shifts focus to the daily WTI oil contract chart, noting resistance around $66-67 per barrel based on weekly chart analysis.

51:05

Oil prices have hit the expected resistance and are now retreating to the volume point of control near $60.50 per barrel. A large volume spike beneath this level indicates significant market activity, often linked to volatility and involvement of major market makers or operators.

51:31

The market shows signs of possible congestion or reversal with heavy volume under narrow-spread candles near the volume point of control. The selling pressure appears strong, suggesting that oil prices may trade sideways in this region for some time.

51:53

Analysis of intraday 15-second candles reveals ongoing selling pressure concentrated at the volume point of control. The focus is on candle patterns such as unusually low highs to assess market strength, indicating a cautious outlook with potential for sideways movement.

52:24

A price waterfall pattern emerges, showing attempts to rally with high volume efforts that ultimately fail. Buyers begin stepping in beneath these sell-offs, suggesting some absorption and support forming despite overall weakness.

52:52

Real-time bar-by-bar analysis notes that while trend monitors remain red, there is a possibility of transitioning to bullish sentiment. However, this may only represent a minor rally within a longer-term downtrend, with congestion expected around the volume point of control.

53:26

Selling pressure appears to be diminishing as recent candles show reduced volume despite similar price spreads. This suggests sellers are either being absorbed or withdrawing, potentially indicating a slowdown in downward momentum.

53:56

Soft commodities congestion and breaks

53:56

The speaker discusses the current state of soft commodity markets amid inflation concerns, focusing on soybeans which have experienced a significant rally followed by a large congestion phase, awaiting a decisive move either upward or downward. Similar conditions are noted in other soft commodities, with wheat showing signs of potentially breaking away from its range, possibly indicating shifts in related markets like corn. The analysis utilizes various technical indicators such as accumulation distribution, volume point of control, and trend monitoring, which are applicable across different charts. The segment concludes with a brief update on the FTSE 100 beginning to bottom out and volatility triggers affecting yen currency pairs.

55:23

Market pause and Fed speech anticipation

55:23

The VIX is sliding lower, indicating market uncertainty as participants await the next round of Federal Reserve speeches to see what might drive the markets. A quick review of the indices shows slow, steady upward movement rather than strong rallies, with the Nasdaq (NQ) showing relatively more strength. Volume Point of Control (VPOC) is evident across the charts, with price action displaying narrow value areas and balanced spreads. Overall, the indices are moving in the right direction but lack strong momentum. Additional indicators and tools are available on quantumtrading.com for platforms like MT4/5, NinjaTrader 7/8, and TradingView.

56:30

TradeStation platform and market monitoring tools

56:30

The speaker demonstrates using TradeStation to monitor market activity, focusing on large trade volumes above 50 or three figures and their impact on price. They highlight using time and sales data alongside multiple time frames, such as minutes and 10-minute charts, to track market sentiment and volatility triggers efficiently.

57:24

By cycling through various chart time frames on TradeStation, the speaker quickly assesses market sentiment and volatility. They explain that TradeStation has two versions: one driven by Interactive Brokers and another, TradeStation Securities version 10 and above, which supports running up to a thousand charts via RadarScreen. Interactive Brokers integration allows direct trading through the platform.

58:13

The speaker discusses brokerage integration with platforms like TradeStation and TradingView, which support linking various brokerages including FXCM, Saxo Bank, and others, enabling seamless trading from the platform. They also mention resources such as books available on Amazon and the Quantum Trading Education site, which provides educational materials for forex and other markets.

59:06

Quantum Trading education and funded forex program

59:06

The program described is a comprehensive forex trading course that includes a funded forex option where traders start with accounts of $5,000, $10,000, or $15,000. Successful traders who meet targets can have their accounts multiplied by four, potentially reaching up to $60,000 from a $15,000 start. Beyond that, the account size can double repeatedly, scaling up to $2 million. Traders receive profit payouts: 35% on the evaluation account profits in a lump sum, 50% monthly on higher levels, and 60% monthly once their funded account exceeds one million dollars. This program offers a clear progression path for students to apply their trading knowledge with increasing capital and profit sharing.

01:00:04

The program was established to provide students with an opportunity to advance their trading skills and apply what they have learned in a practical, funded environment. The presenter thanks the audience for attending the webinar, announces that more webinars will be held next week, and concludes the session with a farewell.

 

by Anna Coulling – creator of volume price analysis