Day trading using volume on futures gives day traders a heads up on where price will likely go in the near future. In other words, volume is a leading indicator. Incorporating volume requires looking at both buying power and selling power because trading is an exchange between buyers and sellers. However, most volume indicators fail to include all the information needed to decipher who is winning the battle.
The Directional Volume indicator for NinjaTrader, Multicharts, and TradeStation incorporates all the components so day trading using volume on futures can really give traders the “heads up” they need to make low risk entries, especially when combined with the power of the ATR indicator.
Day Trading Using Volume on Futures
For example, a 3 minute ES chart is shown using the Directional Volume indicator with the Trend ATR by TradersHelpDesk. Price starts out in a congestion area because the plus sign and a congestion dot appear at the beginning of the chart. As price retraces to the ATR, Point A, it is clearly evident that sellers are decreasing. In other words, sellers are not coming in to take price lower. This allows day traders to entry using a minimal stop for entry into the uptrend.
Then at Point B, price retests the ATR again and again sellers decrease and the hash mark (“-“) is plotted above the zero line. This is what is referred to as a momentum shift as the buyers overtook the sellers. Another great low risk entry point into the uptrend.
Then at Point C we have a reversal momentum shift because as price was trying to go higher, sellers stepped in. Richard Wyckoff referred to this as stopping volume in an uptrend. From there price goes down. Click on the image to expand.
The TradersHelpDesk Directional Volume indicator is also included in our Special Day Trading Indicator Packages.