Playing it Safe, How to Effectively Use Volume Charts Over Time Charts

Day traders are always trying to tweak their system for charting to perfection. It usually encompasses one of three core strategies in charting. The first is the time-based chart, which uses time intervals of typically five to 15 minutes to explore day trading patterns.

The second main type is the volume-based chart. Investors will look at the volume as it changes over time, and they explore patterns based largely on quantity metrics. There is an undercurrent of investors who are deploying a volatility-based chart, which is fascinating in its own right. Day traders can go to the many Markus Heitkoetter videos to see more on volatility as a quickly growing option for day trading.

Volume-Based Results

It is the volume-based approach that exists in the nice medium. Well over half of day traders use a time-based chart. Another about 40% of day traders use a volume approach, whereas a small percent correctly use a volatility chart to wonderful affect. A volume-based approach is fascinating because it ignores changes over time by refining it strictly to how others are behaving.

Volume Charts offer a Little More to Chew On

The strategy is a little more complex than a strict time-based approach because it expects users to interpret the volume. A time-based approach just looks at price changes over time. A volume approach looks at the volume changes, and day traders make judgments based on the volume.

But, this is a kind of interpretation. There is a relative volume to consider. What does high volume mean in this sense? Day traders need to delicately look at how the volume changes the price and respond accordingly to those changes.

Volume is also great because it can allow investors to respond based on popularity. A time-based approach does not often encourage early responses. If it goes down 15 minutes later, it may go. Volume can encourage day traders to be sneakier, and many argue that volume charts offer more. Marcus explores a few methods for charting. Watch the YouTube videos he has available to get a fantastic overview of the day trading world. There is always more to learn.