Why we are unique
We have developed a revolutionary new technology that allows us to analyze volume on a totally new level.
Over the past years, volume was studied over higher timeframes (for instance, one bar representing one day) but never on an intraday level. The reason for this is that it was difficult to separate volume fluctuations generated by market sentiment (i.e., panic selling / euphoric buying) from the typical diurnal volume patterns caused by the time of day or approaching expiration. We have taken our analysis a step further and now separate "unusual" from "typical" volume activity. Unusual volume activity refers to that activity driven by shifts in market sentiment. We can now chart this volume in real time. For futures trading, we analyze the "combined modulated futures volume":
Combined Volume: Our charts combine the futures volume from all available expiration series. This helps to smooth out volume surges that appear during trading periods close to expiration. Only combined e-mini futures volume enables an adequate analysis of futures volume over longer periods, as well as a comparison between different periods (certain typical volume fluctuations known to occur during trading sessions close to expiration are disregarded).
Modulated Volume: We modulate volume data in relation to historically-defined, normal volume fluctuations known to occur during typical trading sessions, as well as over longer time spans. Only modulated volume allows traders to distinguish between typical and unusual volume surges (with the latter generally leading to trend reversals). Currently, we are the only provider of combined modulated volume for e-mini index futures – that makes us unique.
Another revolutionary step we have taken is that we do an on-the-fly analysis of "selling volume" (which occurs as prices / index levels move higher) and of "buying volume" (which is generated as prices / index levels push lower). For this purpose, we have developed a new volume indicator – the SBV Indicator – which is available only through us:
The SBV Indicator (Selling Buying Volume Indicator) calculates the divergence between selling volume (volume generated during price/index moves to the upside) and buying volume (volume produced as price/index moves occur to the downside). By applying various moving averages, this indicator allows us to analyze the magnitude and duration of volume surges and monitor the developing relationships between volume surges and price / index reversals.
Chart 1: Combined Modulated Volume and the SBV
Indicator
In our ongoing endeavor to find the best and easiest ways to analyze the market, we are constantly developing new trading technologies. We believe strongly that volume is one of the most important indicators and that it should be analyzed in conjunction with price activity – that way, traders get to see the complete market sentiment picture.
©NOS Team
5/26/2006
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