Question:
Gents,

‘ve been looking a lot at volume lately and would appreciate your insight. Would it make sense or enhance our trading if a trader used a chart that showed at what past price most of the volume occurred at during a particular timeframe. For example if over a bar of 5 minutes a stock moves from 8.50 to 8.65 but the majority of trades occurred at 8.55 that would be the area we key in on. Simply looking at the 5 min chart would give you that level of specificity. Would this allow you to determine where the real pressure points in the market might be. Seems like those specific areas would seem like good fuel for moves one way or another. I realize that moving down a lower timeframe would also show this but if would also be helpful to be able to see it on your trading timeframe at a glance. Perhaps i’m over complicating things. Appreciate your thoughts.

Bella Responds

If you put together your idea with a Stock In Play this is a good start. The Tape is a bit more nuanced than just where most of the volume is being done. But where most of the volume is done is a very important component of Reading the Tape. For example, was their one particular buyer holding up the stock? Also you want to be careful about just using a 5m chart with the Tape all of the time. I would suggest you consider a 1m for the first 30m of trading and the premarket and afterhours. But I like where you headed with this idea for you. You may find a way to make this idea really work for you.

Nice job working on your trading game!

Mike Bellafiore
Author, One Good Trade