morro
2008-Sep-21, 08:36 PM
Better Trading through Effective Volume
Rather than explaining what the book is about, here is Dr. Alexander Elders foreword:
You have opened a revolutionary book that explodes the envelope of standard technical analysis. It introduces several new tools that can help you recognize when a trend is likely to reverse. It reveals new ways to profit from trends and their reversals.
Pascal Willain used inexpensive off-the-shelf software to slice each trading day of a stock into one-minute segments, like cutting a long stick of salami into thin slices. He measures each slice to see whether prices rise or fall during that minute and discards the minutes with no changes. He finds the average one-minute volume for the day and separates the minutes with price changes into those with above-average or below-average volume. In each group, he adds up the volume of minutes with rising prices and subtracts the volume of minutes with falling prices. This gives him two cumulative volume lines: one for the minutes with above-average volume and the other minutes with for below-average volume. He named them Large and Small Effective Volume.
Pascal explains that the minutes with above-average volume reflect the impact of the big money. He discovered that Large Effective Volume often has redictive value. When you find a condition in which the big money starts pushing up a stock while the small money remains negative or neutral, an upside reversal is in the cards. When the big money starts pushing the stock down while the small money is flat or buying, a downside reversal is more likely.
Pascal compares his method to dropping down to the cell level and predicting the movement of the entire organism from the behavior of individual cells. He first described his concept of Effective Volume in the interview for my book Entries & Exits, but he goes much further in his new book.The author introduces another key concept, which he calls Active Boundaries. His research shows that the group of professional traders in any given stock is relatively stable and they shoot for relatively steady gains. When the returns from a stock over a period of time reach their Upper Active Boundary, the expectations for a further rise diminish and a downside reversal is more likely. When a stock declines and hits its Lower Active Boundary, bullish expectations become high and the stock has a greater probability of an upside reversal. Numerous charts show how to catch reversals using these concepts. In addition to Effective Volume and Active Boundaries, Pascal describes several other concepts. He even provides what he calls “more complex examples for a second reading.”
Pascal has a very rare ability to stand apart from the crowd, to question accepted concepts, and to come up with new ideas. For example, while acknowledging his debt to my Force Index, he stands the original concept on its head by asking why not have a Weakness Index, and even suggests its formula.
This book abounds with examples of Pascal’s unorthodox approach. For example, he addresses a commonly heard rule, “You must buy when everyone else is selling,” and writes:
For me, this is a sure recipe for financial disaster. There are only two clear times when you should buy:
You buy when everybody else is buying, but you do it early in the trend.
You buy when everybody else has stopped selling. In other words, you buy when the supply of shares has dried up, when only a few shares are available for sale.You have to invest time and energy in reading this book. Pascal, like many original thinkers, follows his own train of thought, sometimes leaving less prepared readers behind. During the past year I have been receiving the analytic e-mails in which Pascal shares his research into current markets. It took me a little while to catch on to these concepts, and I hope that e-mails from readers will prompt Pascal to offer both his software and his analyses to the wider public. Publishing a book is like giving birth to a baby. This baby will require a bit of nurturing to grow and become strong enough to stand on its own.
The reader must keep in mind that technical analysis alone is not enough to enable one to become a successful trader. Money management is essential for controlling risks, and you need good record keeping to learn from your profits and losses.
I expect the concepts of Effective Volume, Active Boundaries, and others in this book to become accepted by many serious traders. As always, the early adopters will reap the greatest rewards.
Table of Contents
Part One. The Set of Tools that Will Change Technical Analysis.
Chapter 1. Effective Volume: An Open Window into the Market.
Traders Get a Secret New Tool: A Brief Introduction to the Trading Mechanisms and the Market Players.
Volume That Moves the Markets.
Effective Volume.
Practical Examples of Effective Volume Calculations.
Technical Section: How to Calculate the Separation Volume.
Improve Your Trading: Decide on the Big Picture.
A Comparison with Traditional Tools.
What We Learned Regarding Effective Volume.
Chapter 2. Price and Value: The Active Boundaries Indicator .
Buy Low.
Traditional Measure of “Cheap”.
Why Do Trends Exist?
Grandmothers Are Always Right!
For Math Lovers: How to Calculate the Active Boundaries.
What We Learned Regarding Active Boundaries.
Chapter 3. When Volume Diverges from Price.
Effective Volume: Two Arrows from One Bow.
Price and Effective Volume Trends.
Price-Volume Divergence Analysis.
Examples of Divergence Analysis.
How to Set the Optimal Analysis Window.
Empty Trading Minutes.
What We Learned Regarding Divergence Analysis.
Chapter 4. Supply and Demand: The Key to Trading.
Supply/Demand Equilibrium.
Funds' Strategies.
Funds and Market Manipulation.
What We Learned Regarding the Supply Analysis.
Part Two: Trading Strategies.
Chapter 5: Performance: The Risk/Return Balance.
The Trading Strategy.
Optimizing Profits.
Minimizing Risks.
Measures of Risk-Adjusted Performance: The Sharpe and Burke Ratios.
What We Learned in This Chapter.
Chapter 6. Automated Trading Systems.
Production of Trading Signals.
Trading Strategies.
What We Learned in This Chapter.
Part Three: The Bonus Section.
Chapter 7. The Market Is a Two-Way Street: Shorting Strategies.
The Short Sale “Tick Test” Rule.
How to Use This Book's Tools for Short-Trading.
What We Learned in This Chapter.
Chapter 8. Market and Sector Analysis.
When Is the Market Becoming Expensive?
Sector Analysis.
What We Learned in This Chapter.
Conclusion.
Data Providers.
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Download/Mirror Linkshttp://www.friendlytraders.com/forum/images/custom/hand.gif
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are provided by third party file sharing/hosting services like badongo,
divshare, fileden, filefactory, filefront, mediafire, megaupload,
megashares, mihd.net, multiply.com, rapidshare, rapidsharing,
rapidupload, turboupload, sendspace, sexuploader, uploading.com, zshare, zupload etc. <span style="font-size: 100%;">(Disclaimer: The owner of this site is
not responsible for any content made by anyone else in the forum. The owner does not sell or own anything here. The contents are provided "as-is". Please support the developers if you like their products/services. They need your money to support their fine research and work.)</span><br />
[Hidden Content]
Rather than explaining what the book is about, here is Dr. Alexander Elders foreword:
You have opened a revolutionary book that explodes the envelope of standard technical analysis. It introduces several new tools that can help you recognize when a trend is likely to reverse. It reveals new ways to profit from trends and their reversals.
Pascal Willain used inexpensive off-the-shelf software to slice each trading day of a stock into one-minute segments, like cutting a long stick of salami into thin slices. He measures each slice to see whether prices rise or fall during that minute and discards the minutes with no changes. He finds the average one-minute volume for the day and separates the minutes with price changes into those with above-average or below-average volume. In each group, he adds up the volume of minutes with rising prices and subtracts the volume of minutes with falling prices. This gives him two cumulative volume lines: one for the minutes with above-average volume and the other minutes with for below-average volume. He named them Large and Small Effective Volume.
Pascal explains that the minutes with above-average volume reflect the impact of the big money. He discovered that Large Effective Volume often has redictive value. When you find a condition in which the big money starts pushing up a stock while the small money remains negative or neutral, an upside reversal is in the cards. When the big money starts pushing the stock down while the small money is flat or buying, a downside reversal is more likely.
Pascal compares his method to dropping down to the cell level and predicting the movement of the entire organism from the behavior of individual cells. He first described his concept of Effective Volume in the interview for my book Entries & Exits, but he goes much further in his new book.The author introduces another key concept, which he calls Active Boundaries. His research shows that the group of professional traders in any given stock is relatively stable and they shoot for relatively steady gains. When the returns from a stock over a period of time reach their Upper Active Boundary, the expectations for a further rise diminish and a downside reversal is more likely. When a stock declines and hits its Lower Active Boundary, bullish expectations become high and the stock has a greater probability of an upside reversal. Numerous charts show how to catch reversals using these concepts. In addition to Effective Volume and Active Boundaries, Pascal describes several other concepts. He even provides what he calls “more complex examples for a second reading.”
Pascal has a very rare ability to stand apart from the crowd, to question accepted concepts, and to come up with new ideas. For example, while acknowledging his debt to my Force Index, he stands the original concept on its head by asking why not have a Weakness Index, and even suggests its formula.
This book abounds with examples of Pascal’s unorthodox approach. For example, he addresses a commonly heard rule, “You must buy when everyone else is selling,” and writes:
For me, this is a sure recipe for financial disaster. There are only two clear times when you should buy:
You buy when everybody else is buying, but you do it early in the trend.
You buy when everybody else has stopped selling. In other words, you buy when the supply of shares has dried up, when only a few shares are available for sale.You have to invest time and energy in reading this book. Pascal, like many original thinkers, follows his own train of thought, sometimes leaving less prepared readers behind. During the past year I have been receiving the analytic e-mails in which Pascal shares his research into current markets. It took me a little while to catch on to these concepts, and I hope that e-mails from readers will prompt Pascal to offer both his software and his analyses to the wider public. Publishing a book is like giving birth to a baby. This baby will require a bit of nurturing to grow and become strong enough to stand on its own.
The reader must keep in mind that technical analysis alone is not enough to enable one to become a successful trader. Money management is essential for controlling risks, and you need good record keeping to learn from your profits and losses.
I expect the concepts of Effective Volume, Active Boundaries, and others in this book to become accepted by many serious traders. As always, the early adopters will reap the greatest rewards.
Table of Contents
Part One. The Set of Tools that Will Change Technical Analysis.
Chapter 1. Effective Volume: An Open Window into the Market.
Traders Get a Secret New Tool: A Brief Introduction to the Trading Mechanisms and the Market Players.
Volume That Moves the Markets.
Effective Volume.
Practical Examples of Effective Volume Calculations.
Technical Section: How to Calculate the Separation Volume.
Improve Your Trading: Decide on the Big Picture.
A Comparison with Traditional Tools.
What We Learned Regarding Effective Volume.
Chapter 2. Price and Value: The Active Boundaries Indicator .
Buy Low.
Traditional Measure of “Cheap”.
Why Do Trends Exist?
Grandmothers Are Always Right!
For Math Lovers: How to Calculate the Active Boundaries.
What We Learned Regarding Active Boundaries.
Chapter 3. When Volume Diverges from Price.
Effective Volume: Two Arrows from One Bow.
Price and Effective Volume Trends.
Price-Volume Divergence Analysis.
Examples of Divergence Analysis.
How to Set the Optimal Analysis Window.
Empty Trading Minutes.
What We Learned Regarding Divergence Analysis.
Chapter 4. Supply and Demand: The Key to Trading.
Supply/Demand Equilibrium.
Funds' Strategies.
Funds and Market Manipulation.
What We Learned Regarding the Supply Analysis.
Part Two: Trading Strategies.
Chapter 5: Performance: The Risk/Return Balance.
The Trading Strategy.
Optimizing Profits.
Minimizing Risks.
Measures of Risk-Adjusted Performance: The Sharpe and Burke Ratios.
What We Learned in This Chapter.
Chapter 6. Automated Trading Systems.
Production of Trading Signals.
Trading Strategies.
What We Learned in This Chapter.
Part Three: The Bonus Section.
Chapter 7. The Market Is a Two-Way Street: Shorting Strategies.
The Short Sale “Tick Test” Rule.
How to Use This Book's Tools for Short-Trading.
What We Learned in This Chapter.
Chapter 8. Market and Sector Analysis.
When Is the Market Becoming Expensive?
Sector Analysis.
What We Learned in This Chapter.
Conclusion.
Data Providers.
http://i33.tinypic.com/14wvcx3.jpg
Download/Mirror Linkshttp://www.friendlytraders.com/forum/images/custom/hand.gif
No file, if any, is stored on our servers. Only external download links
are provided by third party file sharing/hosting services like badongo,
divshare, fileden, filefactory, filefront, mediafire, megaupload,
megashares, mihd.net, multiply.com, rapidshare, rapidsharing,
rapidupload, turboupload, sendspace, sexuploader, uploading.com, zshare, zupload etc. <span style="font-size: 100%;">(Disclaimer: The owner of this site is
not responsible for any content made by anyone else in the forum. The owner does not sell or own anything here. The contents are provided "as-is". Please support the developers if you like their products/services. They need your money to support their fine research and work.)</span><br />
[Hidden Content]