Statement Explanation

[cpatte7372]

Hello all,

The following is an excerpt from Bill Williams book "Trading Chaos."

A practical rule in intraday trading is: A difference of one tick is enough. We are interested in whether there is more or less volume than in the previous time periond. If we are trading on a daily chart, we use +/-10 percent as a significant difference in volume. Trading dailies, we must have 110 percent of the previous day's volume to be counted a plus(+). Volume that is 90 percent or less would count as a minus (-), and between 91 and 109 percent would count as the same volume.

Can someone please explain what is meant when he says in one sentence;

'If we are trading on a daily chart, we use +/-10 percent as a significant difference in volume.'

And then goes on to say in the following sentence;

'Trading dailies, we must have 110 percent of the previous day's volume to be counted a plus(+). '

I kinda understand the first sentence, but I don't see the correlation in the following sentence.

Thanks in advance.

Carlton

[DuaneG]

Hi Carlton,

The first statement reads...

If we are trading on a daily chart, we use +/-10 percent as a significant difference in volume.

The second statement reads...

Trading dailies, we must have 110 percent of the previous day's volume to be counted a plus(+).

By taking 100% of the previous days volume and adding an additional 10%, we are left with 110%. Just keep in mind that the rule is based on + or - 10% of the previous days volume.....the previous days volume is always considered 100%. Anything + or - 10% will be considered significant.

[cpatte7372]

Hi Duane,


Great explanation. You make it sound so simple.

Cheers mate.

Carlton