How to day trade stocks using volume price analysis

How to day trade stocks using volume price analysis

00:01

Introduction and trading disclaimer

00:01

The webinar begins with a welcome to attendees, noting that it is the third session of the day but some participants may be joining for the first time. The focus will be on analyzing the markets, specifically examining certain stocks and criteria useful for day trading. A disclaimer is emphasized, warning that trading is risky and advising not to use money that one cannot afford to lose.

00:32

Volume price analysis methodology overview

00:32

The speaker introduces volume price analysis, emphasizing the close relationship between price action and volume, as detailed in their published books. These books provide foundational concepts and over 200 worked examples across stocks, indices, commodities, and forex. The methodology incorporates candle patterns and both price-based and volume-based support and resistance levels, forming a solid foundation for trading analysis.

01:35

Building on the foundational volume price analysis, the speaker discusses the integration of proprietary indicators and secondary tools such as Fibonacci, Camarilla, and Elliott Wave techniques. These tools complement the primary methodology, offering traders additional resources to enhance their trading strategies. The speaker then shifts focus to practical application, highlighting the importance of selecting stocks to day trade.

02:08

The speaker demonstrates a trading platform, Tradestation, to help viewers better visualize concepts. They stress the necessity of filtering and selecting stocks for day trading, suggesting traders either pick individual opportunities or develop a basket of stocks to trade consistently. In contrast, forex trading is described as simpler due to having only 28 currency pairs to choose from, making selection easier. The segment ends by mentioning a metric used last week for shorting stocks, hinting at various metrics available for trading decisions.

03:05

Short selling and short squeeze strategy

03:05

The speaker discusses the strategy of identifying heavily shorted stocks as a way to potentially benefit from short squeezes, referencing the recent GameStop event as a high-profile example where retail traders collectively influenced the market. They explain that shorting stocks is a common tactic used by hedge funds despite its high costs and can be driven by technical or fundamental reasons, such as a company having an outdated business model like GameStop. The speaker also mentions a website, highshortinterest.com, which lists heavily shorted stocks and can be used to identify potential or ongoing short squeezes by analyzing these stocks on charts.

05:22

Using stockbeep.com for volume metrics

05:22

The speaker introduces a new website, stockbeep.com, which provides extensive volume metrics useful for stock analysis. They emphasize the importance of volume-related data such as relative volume and unusual volume in identifying potential stock movements. The discussion highlights using these metrics to find stocks making new highs, mentioning Snap as an example observed before the market opened.

06:47

Analyzing Snap at all-time high

06:47

The speaker discusses a stock that reached an all-time high, highlighting the use of different chart timeframes including 3-minute, 10-minute, and 60-minute charts along with daily charts for overall context. They emphasize that the analysis principles apply broadly to any stock at an all-time high. The focus is on the 60-minute chart to understand recent price movements leading up to the current session.

08:03

The 60-minute chart showed a series of candles indicating movement higher followed by a pullback, with much trading occurring within the widest range of the day. Though no volatility candle was triggered, the price stayed above key resistance levels defined by the Camarilla indicator, which calculates support and resistance levels that remain relevant for the week. These levels help traders identify potential reversal or congestion points in the price action.

09:18

The Camarilla indicator provides six key levels, with emphasis on R3, R4, S3, and S4, which signal possible price reversals or pauses. The speaker reminds viewers of Jesse Livermore’s advice that stocks can always move higher or lower regardless of perceived extremes. They note examples from the tech sector, including Tesla’s dramatic price changes, illustrating that market dynamics can defy expectations. The recent price action showed an initial move higher at the open, followed by an immediate pullback.

10:31

Intraday price action and volume analysis

10:31

The video explains trading on a faster time frame, focusing on price action and volatility at market open. It highlights the typical gap up followed by intense volatility and price fluctuations. Traders are advised to wait for this volatility to settle before analyzing price action relative to volume. The importance of considering overall market sentiment, such as whether it is a risk-on or risk-off day, is emphasized since individual stocks often follow the general market trend.

11:38

The discussion continues with an analysis of price action at an all-time high and the relevance of key technical levels like the camarilla pivot points (R3 and R4). The video notes that price paused near the third camarilla level and examines volume patterns under various candles. Despite a large up candle, subsequent candles show declining volume, indicating hesitation and lack of strong upward momentum. The presence of wicks and low volume suggests the upward move may not sustain.

13:30

The segment highlights that the highest trading volumes typically occur at market open and close, with lower activity during midday. Given the context of an all-time high and the observed price and volume behavior, the video suggests traders may prefer shorting the stock once it breaks certain technical levels like R3. The overall implication is cautiousness about further upward moves and a potential setup for a short trade.

14:04

Volume point of control and support resistance

14:04

The speaker explains the concept of the volume point of control (VPOC), which represents the price level with the highest traded volume over time, acting as a strong volume-based support and resistance level. They describe how price movement beyond the R3 level signals a likely drop, supported by volume analysis on up candles. The discussion includes how accumulation and distribution levels influence price stops and highlights a particular candle with a deep wick indicating buying interest and a potential reversal.

15:53

Attention is drawn to the need for volume to support upward price moves back toward the R3 level, emphasizing the importance of combining price action with volume-based support and resistance for more measured trading. The speaker advises caution with highly volatile penny stocks and invites questions. The segment concludes with a transition to another speaker, David, who begins sharing his screen and preparing to discuss his analysis using Ninja Trader.

17:06

Apple stock and market indicators review

17:06

The speaker focuses on Apple stock for the session, emphasizing the importance of monitoring the US dollar’s movement, as a rising dollar generally negatively impacts stocks. They reference TradingView charts to track the dollar’s rise and consider its influence on market conditions.

17:36

The dollar has been rising after a brief dip pre-market, which is typically unfavorable for stocks. The speaker reviews the VIX volatility index, noting a quick rally followed by a decline. They then examine broad stock indices, observing an initial plunge followed by a modest recovery.

18:41

The recovery in major indices like the Nasdaq and S&P 500 is weak, with some volume but insufficient strength to break through significant resistance levels. The volume point of control and other resistance areas create strong barriers, limiting upward momentum in both indices and individual stocks.

19:41

On a 30-minute timeframe, the recovery appears fragile following a period of high volatility and volume. Price action is confined within specific support and resistance zones, indicating potential congestion or reversal, but overall the market strength remains limited at this stage.

20:43

Pre-market trading shows very low volume and a volatile environment with a trap move before the open. After the open, there is a decent rally followed by a reversal, with volume declining. The trend monitor shifts back to bearish, signaling weakening support amid falling volume.

21:16

Across multiple intraday timeframes (five and ten minutes), the stock attempts to rally but lacks strength as volume diminishes. The VIX volatility index has flattened and shows slight downward movement, which could aid a recovery. However, current price action and volume patterns suggest limited upside momentum.

22:20

Some buying interest emerges on the one-minute chart with clearer volume signals when adjusting the view. The stock may move through a low volume node between 22 and 30, but faces major volume congestion from 40 to 50, indicating significant resistance ahead. Intraday traders must continuously monitor these volume and price levels to gauge potential price movement.

23:16

Intraday trading volume and price congestion

23:16

The speaker explains that regardless of the market or asset being traded, the focus should always be on the potential return and whether it justifies the risk. They discuss a specific stock price moving from 24 to 50 cents as an example. The concept of price congestion is introduced, highlighting that areas where the stock has historically paused or consolidated tend to remain significant due to accumulated volume, causing the price to hesitate again in those zones.

24:21

Using a one-minute chart, the speaker analyzes recent price action and volume, noting some weakness as indicated by a wick on the upper body of a candle without strong follow-through. They compare volume levels across candles during the same session and observe that although volume is slightly lower on one candle, it is similar to a previous benchmark. However, the price movement is minimal despite comparable volume, suggesting a lack of momentum.

25:33

The analysis continues by examining how one candle shows signs of effort without much price movement, indicating disagreement between volume and price. Conversely, another candle with a lower wick and decent volume suggests buying pressure that reverses a slight downtrend. The speaker emphasizes the importance of volume-price analysis, stating that understanding whether price and volume agree or disagree forms the foundation of market interpretation.

26:42

Market makers and volume price relationship

26:42

The methodology emphasizes that market makers control markets across stocks, currency futures, and spot markets. Traders should focus on identifying anomalies and confirmations in price and volume relationships. When price and volume disagree, analysis of specific candle and volume interactions helps determine whether market makers are buying or selling. This approach involves following market makers’ actions by interpreting volume-price dynamics, forming the core principle of the strategy.

27:50

From an intraday trading perspective, current opportunities are limited. The volume point of control (VPOC) is dynamic and shifts as volume accumulates at different price levels. Recently, the VPOC has dropped to a lower level as volume there has surpassed the previous high-volume area. This new VPOC acts as the market’s fulcrum on the one-minute Apple chart. Traders should note the high volume resistance above and recognize that a break away from this price region will be significant for market direction.

28:46

Trading congestion phases and stop placement

28:46

The speaker explains the importance of identifying a rising market breaking away from a congestion phase, ideally with increasing volume for confirmation. Trading during congestion phases can be effective if one is patient, as these phases establish clear levels for entry points and stop placement. Using an example of a short opportunity, the speaker discusses how stops can be strategically placed beyond congestion barriers or volume points of control, which act as natural protective levels.

30:15

Stops should be placed based on technical market signals, ideally behind support and resistance levels to provide natural protection against reversals. The current market is weak, struggling to surpass a low volume node, with trend indicators still negative on short time frames. The VIX is dropping, which is aiding a slight recovery in some indices like the YMS, while others like the NQ remain weaker, and the ES trades in between.

31:22

Indices, VIX, and dollar impact on stocks

31:22

The discussion focuses on price levels and volume patterns in the market. There is a significant resistance level to overcome, with volume analysis showing relatively low selling pressure despite some down candles. The speaker points out anomalies in volume distribution and identifies candlestick patterns like long doji and hammer, indicating potential market reversals or pauses.

32:15

Volume is starting to increase on the upside while the VIX index is falling, which typically supports a stronger dollar. The dollar index has risen back to a key level around 91.27 before pulling back slightly. The appearance of a long-legged doji suggests a possible reversal in the dollar’s strength, which could benefit stocks intraday if the dollar weakens significantly.

33:08

The analysis shifts to multiple time frames of the YM index, noting that the current rally is driven by a weakening dollar and declining VIX, which are pushing stock indices higher. The speaker reviews short-term charts, including 15-second and three-minute time frames, to understand the market’s move out of a congestion phase and the potential for continued upward momentum.

33:38

Market congestion and resistance levels

33:38

The market is experiencing congestion around a key volume point of control, with a strong resistance level tested seven times previously. If this level breaks, further resistance is expected, requiring significant volume to push through. Trend monitors show a transition phase, with indicators moving through blue zones but no major change yet on the five-minute chart. There is potential for the trend to shift into a bullish phase if momentum increases, while the dollar is hovering with some attempts to sell off.

34:25

The VIX index continues to decline to around 24.34, indicating reduced market volatility. Apple’s stock is attempting a rally on a fast timeframe but faces resistance around the 135 level on slower timeframes. The price movement may be sufficient for intraday traders aiming for gains between 60 to 70 cents. This potential bullish transition is influenced by a weakening dollar and the falling VIX, although the changes are gradual.

35:32

An example is given with Snap’s stock stopping at a resistance level (R3), illustrating intraday trading principles. The approach to selecting and analyzing stocks is consistent across platforms like TradeStation and NinjaTrader. Focus is placed on heavily traded, liquid stocks to identify profitable intraday opportunities.

36:03

Selecting liquid stocks for day trading

36:03

The speaker discusses trading in relatively liquid pre-market stocks, such as pink sheets, highlighting the trade-off between liquidity and high volatility. They emphasize the importance of choosing stocks that offer smooth price action, good volume, and trading opportunities across multiple time frames. They observe a rising price with some profit currently but question how far the price might travel, noting potential resistance around 135. The segment concludes with a reference to Anna’s site, annakuling.com, which offers books in both Kindle and paperback formats.

37:01

Resources, indicators, and funded forex program

37:01

The speaker discusses various trading tools and platforms, including indicators available on multiple sites and ongoing work on TradingView. They mention the currency matrix introduced earlier and the development of the array feature. The TradeStation platform has been launched, compatible with TradeStation 9.5 and integrated with Interactive Brokers and TradeStation Securities, utilizing the TradeStation feed.

38:03

The funded forex program, now called the complete forex trading program, is available exclusively to students. It allows participants to trade using the program’s capital starting from accounts of 5, 10, or 15 thousand dollars, which can grow up to 2 million. Profits earned are shared, with students receiving 50% at higher levels and up to 60% at the 2 million level. The program has expanded from forex-only trading to include indices and gold at the portfolio manager level.

39:15

The speaker thanks attendees for joining the session, hopes they found it useful, and announces the next session will be at the same time next week. They apologize for an incorrect webinar message date and mention they will check the chat box for questions or comments.

39:14

Explanation of pivot indicators and volume levels

39:14

The yellow and orange indicators on the chart represent pivot points derived from pure price action over three candles, indicating short-term intraday strength or weakness. These dynamic pivot indicators appear at price highs and lows, helping traders anticipate potential rallies or reversals. Additionally, horizontal volume indicators, such as the volume point of control (VPOC), represent the cumulative volume where traders have executed orders, showing significant areas of market interest.

40:19

The horizontal volume areas consist of a mix of executed orders, pending orders, and open positions, reflecting traders who may be trapped in weak trades and looking to exit. When the price returns to these levels, many traders attempt to close their positions, either at breakeven or small losses. This results in a dense concentration of various order types—including stops, limit orders, and executed trades—creating key price congestion zones where significant market activity takes place.

41:20

Volume clusters and trader order behavior

41:20

The speaker explains that the platform presents data visually, particularly regarding volume. They clarify that the funded program uses only MT4 because the backend operations are highly automated and complex, focusing on risk management. MT4 is chosen as the simplest and most comprehensive platform to handle these needs.

41:52

Funded program platform and account management

41:52

The funded accounts are delivered automatically via MT4 once you send your details, with funding amounts of five, ten, or fifteen thousand. MT4 is chosen because it is widely used and accessible globally. The system operates with complex, software-driven backend metrics to manage risk and account monitoring. Currently, only MT4 is supported, but funded program participants also receive a free second set of indicators to use on their own accounts across various platforms. The session concludes with thanks and a note about the next training session scheduled for the same time next week.

43:25

Session wrap-up and next webinar info

43:25

The speaker mentions sending out GoToWebinar invites for the following week and thanks the audience for attending. They express appreciation and wish everyone a safe and enjoyable rest of the trading day and week.

 

By Anna Coulling – creator of volume price analysis