Between 70% and 80% of traders are failing.
And the fact of the matter is they are using traditional trading strategies and indicators like:
- Bollinger bands
- Elliott Wave
I’m not saying any of these are “bad” or “wrong.”
I’m just saying that if 70- 80% of traders are failing AND they are using the above indicators, there must be a correlation there.
The good news is there’s another way, and it’s… you guessed it — volume.
In today’s newsletter I want to break down for you WHY volume trading is so effective.
But first, let me give you some quick context on volume trading, and then I’ll share with you multiple reasons why volume is so powerful.
In the 1930s, there were three great traders:
- W.D. Gann – An eccentric man who used methods based on ancient mathematics, geometry, and astrology.
- Ralph Nelson Elliott – His method was based on wave count. Although a great tool in hindsight, where do you start the wave count in the live market?
- Richard Wycoff – Developed a method based on analyzing volume with price movement.
And it’s Richard Wycoff’s teachings that we followed here at Hawkeye.
In fact, in developing Hawkeye, Nigel (our founding father) flew to meet the Wycoff family.
From there he was able to get his hands on Wycoff’s original notes, which he used when developing the Hawkeye algorithm way back in 1996.
Now, you may be wondering: what makes volume so special?
Well, check this out…
Here are 6 things volume helps you do that no other indicator does:
- Volume confirms the strength of a trend or suggests its weakness.
- Rising volume indicates rising interest.
- Falling volume suggests a decline in interest, or a statement of no interest.
- Extreme volume readings, i.e. climax volume, often highlights price reversals.
- Points where the market trades on high volume are the points of strong support and resistance.
- Breakouts and market spikes can be validated or ignored with the help of volume.
Volume really is the key to seeing all these things and helping you as a trader to assess the current value of price in order to know what to do with it.
If you know about trading, you know how powerful all the above points are.
Volume is the only leading indicator that signals price movement before it happens as well as market intent.
All other indicators by comparison are lagging, therefore they fall short of Hawkeye standards.
That’s why trading based on volume is so important.
… And why volume is the cornerstone of Hawkeye.
Funny thing is, that’s just the beginning of what volume can help you achieve when trading!