Using Volume in Day Trading! 😮 (Pro Tips!)

[Music] talk about volume first off uh time of day is going to be uh the most important thing we have to focus on here when we talk about stocks that are in play first of all we like to look at stocks that are in play because the relative volume on the stock that is being traded that day is going to be higher than normal because we focus on such short term time periods we have to look at stocks that are doing more volume than normal so relative volume i think is going to be very important here guys and relative volume is simply just taking a snapshot of what a stock is doing as far as volume on a given day at a given time period versus what an average is over a certain time period we'll get into more of that coming up but let's uh let's talk first about uh volume at the open why we like to focus on volume at the open versus throughout the morning you know it starts to dwindle off and into the afternoon uh volume tends to die off so our most important time of day when it comes to short-term trading guys is going to be right at the open yeah uh thanks brendan yeah good good discussion there uh volume super super important we love to trade volume stocks you heard neil talk about why look it's about stocks being in play guys and if you're not gonna find and trade stocks that everyone else is trading you're gonna have less opportunities to get in and to get out i'll give you an example today twitter right now 21.5 million shares on twitter done today average volume 23 million shares for the day so right now a few hours left to trade here it's one o'clock in the afternoon and already at its average daily volume so uh you could see off here we talked about the open the market on open print super important you had a million shares go off here on this name today and then look at the move that happened basically the only move of the day was off of the open and off of a big volume print down here one million shares you see it die off it almost dies off into a third about one or two minutes in you're down here at 300 000 shares or so so volume very important off the open why are you looking at a name like twitter you can see the market here 8.85 today twitter down point two five percent so news on the name you get a big spike off open an awesome trading opportunity here to start the day on twitter with a million shares so that sort of gave you an indication that possibly something was brewing on this name neil yeah absolutely one of the things you always have to consider is look i i you can look at a level two you can see how much liquidity there is in the market but you care about transactions when you're trading if you want to make money you have to be able to buy you need to be able to sell and volume is the actual record of all of those transactions i'm looking at moderna which has been definitely in play all week long and you look at the open on twitter it has a nice move to it has a nice move off the upside but moderna does as well however it sustains a higher amount of volume you look at the bottom of the chart here most people like to put the indicator of how much volume is going by per minute at the bottom of this chart and you can see volume spikes at 9 30 at the open 10 minutes later and then a few more an hour into the day and that's one of the reasons why you see a secondary move to the upside of moderna it's still going crazy it's still giving you lots of trades whereas twitter the volume died down and the volatility went with it so you see that volume come in a little bit and maybe you move away from twitter which was fantastic in the morning and jump over to something in like moderna where it continued to have volume spikes and therefore better trading opportunities throughout the day so let's let's continue the conversation here a little bit guys when it comes to why we're looking at stocks with fresh news our fresh catalyst and why we like to trade things that are moving on a day and it comes back to the fact that they're doing more volume than usual if you want to put on a trade with you know any kind of size and put on you know any kind of risk into a trade you need liquidity and liquidity equals volume so we need stocks that are doing volume so that's why when you join us at nine o'clock every single day we talk about all the stocks on that day that are doing elevated volume and higher relative volume because typically of some sort of news catalyst i just wanted to jump into this uh phas here guys we can go to my screen real quick uh just to give you a very clear defined example of relative volume so this is yesterday over here and this is the day before that you can see at the bottom of the screen this thing barely trades on a regular day so this thing on a regular day is not even worth looking at but as soon as you introduced a news catalyst to this even in the aftermarket yesterday huge relative volume and then again today this stock today guys 131 times its normal relative volume and all kinds of trading opportunities yeah you can't state this enough i mean you this one came in it's one of those covid names fda approval and you get a new story like that great now it's an actionable piece of news you can go and want to trade the stock if i see news like that and don't see a corresponding volume spike either in the aftermarket the previous day when the news dropped or in the pre-market hands off this is it's a lightly traded name it barely does any volume as brendan mentioned i don't care that there's news if no one's gonna actually trade it uh that wasn't the day before or the weeks before on that given day on the news then where's your opportunity you need other eyeballs you need other traders excited about the stock buying and selling changing positions some big traders in there and if they're not doing it where's your opportunity guys and you see off the open there is a secondary volume spike and this is one of the things i love to see it picks up volume in the aftermarket it then does good volume in the pre-market and we had a short that was great one of the reasons why when it spiked up i took another short off the same type of trade here i'm shorting this one coming back in was because it was maintaining its volume it maintained the volume it had the first half an hour so to me the second trade was going to be just as good as the first one if there'd have been a drop down to the pre-market levels i wouldn't jump back in again because there's not going to be good opportunities you want to see sustained volume as well especially if you're a day trader because that's where your opportunities lie exactly i mean you hit the nail on the head there with uh brennan's chart was the best when you're showing yesterday's volume today's volume and so on and so forth i have i mean we have the same stock up here today 34.62 this is a one minute chart i just want to show you something so uh right now you know it's lunchtime we're doing this at 1pm eastern look at the volume since basically 11 o'clock we don't top out at more than 130 000 shares in any given minute here and especially now we're down to almost nothing when you open up here you get you know 400 600 000 on this move and i just want to talk about these volume spikes correlating with a move in the stock right this is the biggest move of the day right here this is from six dollars up to 685 and you're seeing with the biggest volume spike right there most of these prints when we'll be talking about this soon but you know they're coming from big institutions someone ramps this up all the way up more volume on this move up and then more volume on this move down right here you're sort of into a section where we call choppy trading where you kind of get back and forth back and forth nothing really happening considering this stock is moving 34 today you don't really expect this to be in a 20 cent range for a six dollar name well guess what the volume is your indicator here telling you not much happening what you can do is basically close your eyes don't even look at the chart when you start seeing volume pick up then you can go back to this name and actively day trade it we're talking about day trading guys not swing trading we're looking for little one minute blip ups here in in spikes for the candles then you'll know that maybe there's something happening on this name absolutely and one other thing about it too is uh you know brennan you're always coming through with breaking news i could have 10 stocks on my watch list all of a sudden you know brandon will jump in and our earpiece and say hey come to me uh there's a breaking news story could be on on reuters twitter whatever it might be that you know a new drug has come in for this particular stock one thing i always have to consider is when i see that happen intraday and it doesn't matter what it might be i just happen to have peloton up here uh so we're gonna show this one here if you get a big spike in the middle of the day i wanna see one of these corresponding uh a volume bars brennan when you're screening breaking news for us is that something you consider if you don't see a volume spike do you even bother saying it to us one of the most important screeners that i spend most of my time staring at throughout the show is in fact a volume spike screener so i'm constantly looking for things that are popping up doing higher volume uh for whatever reason you find the ones that are doing the volume then you find out why they're doing the volume i have a great example here on my screen right now this is going back a few days but hertz car rental we've been talking about this uh for the past week or so look at uh what day was this may 22nd over here in the top left corner barely trading i mean it's doing volume but not nothing significant they come out and they say they're going to declare bankruptcy over the weekend the stock was actually halted until i believe it was about yeah 2 30 in the afternoon back on tuesday and you get this huge spike to the downside and massive massive volume coming in so a great example guys of how breaking news in this case a halt from the morning right through to the afternoon gives you an opportunity as long as you're watching for it into the close on hertz yeah absolutely you know i use a quote board myself and one of the callings columns i have is going to be volume but if you're not uh looking at the chart there to be able to see where relative volume comes in and out it's going to be very deceiving i'm going to give you one quick example guys i'm just going to pick a stock it just happens to be a sleepy one in toronto and you can see here 2.5 million shares of volume in in toronto star that seems like a decent amount yeah sure it looks good but look at the chart almost all of that happens in one block print at 9 47. is there an actionable trade here no that volume's pretty much useless for you because it's not continuous it happens in one block chunk and i think the type of volume certainly matters shawn how much does that play into uh to your view on the stock and the opportunities in a day sort of the type of volume you see whether it's a continuous prints or big block prints maybe coming in dark pools or something like that neil it's almost like we trade together every day here um yeah i have an example up right now microsoft uh this is normally one of my favorite stocks but today absolutely no executions on it whatsoever and i'm gonna show you why i mean here's this block print uh that we're talking about right off the open here a smooth 720 30 000 shares that's just gonna be a market on open order so that doesn't mean that much to me today because see it doesn't really move the stock but then look this is consistent volume all the way through here all day and and what you're going to notice is not really too many great opportunities sure you bounce off view up a little bit here um but yeah consistent volume throughout the day so what this tells me is sort of the opposite of what we just talked about no breaking news no real momentum here with microsoft sure it's trending upwards but you don't get those crazy spikes you don't get those crazy moves so yeah right now i don't really see any block prints telling me any sort of an indication here whatsoever about anything even on this move down you know microsoft makes a top here then moves down but look at the volume just nice and easy easy as it goes basically a hundred thousand shares a minute nothing too crazy here so yeah it's telling me right now that this name although can be a high flyer very consistent volume today and just chugging along just heading along with the market not making any big-time moves and if you look back today microsoft's had earnings last couple weeks uh right now it's just settling down and volume is telling you that so brendan hit the nail right on the head there a lot of the time the best scanner to use is not a breaking news scanner it's nothing like that it's just a simple volume scanner when volume starts to spike believe me guys the algos like we just talked about with some of those block prints they'll come off and they'll be indicated in volume scanners we have a great one with our platform and i'm sure you guys do too if you're not using that tool use it especially after watching this video it's one that we use on the show all the time a very uh in-depth and a very vast topic obviously uh when it comes to volume specifically block prints especially if you're getting block prints uh in the dark marketplace so you have to make sure you understand where the volume is being executed not only how much of the volume is being executed but very important to understand we here always look at stocks that are doing higher volume than normal because those are the ones with the most attention and the most opportunity on the day so we covered a couple of things here guys time of day how important it is to make sure you're trading at the most important time of day which in this case is going to be at the open and as you move throughout the morning the volume is going to die down breaking news spikes in stocks on breaking news because of uh volume the next thing was relative volume we touched a little bit on relative volume and how important it is to make sure you're looking at stocks that are doing higher relative volume on the day and finally block prints so hope you learned something about volume uh for our first educational video of the day today take it away malaria hey brandon and thank you for this great explanation guys subscribe to this channel and join our live show every day at 9 a.m eastern time

Channel: Market Wisdom by TraderTV Live

Views: 30,386

Rating: 4.9224491 out of 5

Keywords: trading volume, volume, volume stocks, trading volume indicator, volume analysis in trading, stock market volume explained, volume explained, volume trading, thinkorswim, how to trade using volume, what is volume in stocks, technical analysis, technical analysis tutorial, daytrading, day trading, trading stocks, active trading, volume trading strategy, volume strategy, volume based trading

Id: 2Wu3fSWlfRE

Length: 13min 44sec (824 seconds)

Published: Mon Jun 01 2020