PowerZone Trading Blog

How to Trade with Volume Profile

Jean Folger - Wednesday, February 25, 2015

This article appears in the January 2015 issue of Futures magazine.

In a previous article, we introduced key concepts in volume profile and the various trends that emerge throughout a trading session. With today’s advanced charting platforms, virtually any trader can access this type of market analysis to identify where (price) trading activity took place and how much (volume) trading took place at each price level. Here, we take a closer look at the volume profile and explain how it can be used to identify trade entries and exits.

Volume profile review
Many traders are used to viewing volume as a histogram beneath a price chart. This approach shows the amount of volume traded during each price bar, whether it’s a time-based bar (such as one-minute) or an activity-based bar (such as 144-tick or 2000-tick volume). While this is a popular way to analyze volume, knowing where the volume occurs—in terms of price, rather than time—can be more meaningful.

Volume profile, plotted on the vertical axis of the price chart, does just that: It shows how much trading activity has taken place at each price level touched throughout the trading session. Why is this helpful to traders? Volume profile points out the prices that have been favored by the market as well as those that have been ignored, which can give traders clues about where price is likely to go in the near future. Read more

Trading the Volume Profile

Jean Folger - Wednesday, February 25, 2015

This article appears in the December 2014 issue of Futures magazine.

Many traders use technical indicators to analyze past and predict future price movement, and to identify potential trade entry and exit points. Technical indicators are mathematical calculations derived from price or volume activity. A moving average, for example, calculates the average price of a specific instrument over a defined number of time periods. Often traders will compare moving averages from various time frames to determine market momentum. 

In addition to (or instead of) technical indicators, traders can view price and volume action that are untouched by mathematical calculations. One method of analyzing this market information is through Volume Profile, an advanced charting study that displays trading activity for each price level over a specified time.

Here, we discuss Volume Profile, explain key concepts and look at the different profile types that emerge throughout a trading session. In a second part, we’ll expand on this introduction to explain how Volume Profile can be used to spot high-probability trading opportunities. Read more

Should You Have Gold in Your Portfolio?

Jean Folger - Friday, January 30, 2015

Should you have gold in your portfolio?

Gold is one of the most important commodities in the world of finance and for good reason. The precious yellow metal moves differently from other types of investments, making it the hedge of choice among investors in times of uncertainty.

Gold prices go up when there’s high government spending, bad central bank policies, or inflation. Before the 2008 financial crisis happened, gold was merely priced at around $670 per ounce. But after the most recent economic slump, gold’s prices shot up and peaked at around $1,800 per ounce in 2011.

Gold prices are highly volatile, which is the very reason why investors don’t put a lot of their money in it. Money managers allocate only 5% - 10% of their assets in gold, and some of them do this not to gain returns for the short term but to have something to look forward to in the long term.

Two ways to invest in gold
Physical gold
Buying gold bars or coins is the most direct way to own gold. Having physical gold stored in your personal vaults preserves wealth, and ensures that your future generation has something to spend even if currencies collapse.

Buying physical gold means shouldering a lot of things such as premiums, taxes, shipping, and storage fees. Investors who don’t want to worry about storing their gold back home open allocated gold accounts from banks and let bank personnel handle their gold storage. Tech-savvy investors can now also buy gold online and move their gold anywhere around the world with a click of a button. Purchasing gold from online brokers is very economical since investors can literally have gold investments in different parts of the world like Germany, U.S., and France without paying for middle man fees.

Gold ETFs
Gold ETFs are a very popular investment vehicle for private investors who can’t afford to pay gold’s spot price. Gold ETFs cost just 1/10 of the physical metal’s actual price and investors make money from them by tracking the prices of gold. The SPDR Gold Shares (GLD) is the most popular form of Gold ETFs since its shares are backed by the actual metal.

Keep in mind though that owning Gold ETFs doesn’t make you automatic owner of physical gold. The SPDR Gold Shares is like one, huge unallocated gold account where only Authorized Participants can withdraw physical gold in order to cater to their clients. Gold, no matter how much its prices depreciate, will always be legal tender in many countries. Since currencies can sometimes fail, having the precious yellow metal in your portfolio can give you peace in times of economic unrest.

This educational article was contributed by one of our partners.

Webinar - 5 Steps to Automate Your Trading

Jean Folger - Monday, December 08, 2014

Automated trading allows traders to validate ideas, minimize emotions, respond faster to changing market conditions, eliminate pilot-error mistakes, and achieve greater consistency in trading. The VSTOPS ProTrader strategy template is an innovative tool that lets you plan, test and trade your own day or swing trading system – with no programming required. You customize the strategy to match your trading style, risk tolerance and goals. The logic for the strategy is based on the popular VSTOPS indicator package, which uses an extremely fast filter to determine market volatility, so you can enter trends early and manage trades to take and protect profits as trends continue.

 

PowerZone Trading's award-winning Lead Developer, Lee Leibfarth, recently hosted a webinar where he explained the 5 steps to automate your short-term trading using VSTOPS ProTrader:

1.       Plan – outline your strategy: entries, exits and money management

2.       Test – backtest your strategy and evaluate performance reports

3.       Optimize – improve the strategy’s performance

4.       Walkforward – use out-of-sample and/or forward data to confirm results

5.       Trade – Automate the strategy!

 

View the webinar recording!

How to Choose a Trading Computer

Jean Folger - Wednesday, October 29, 2014

This article appears in the October 2014 issue of Futures magazine.

Technology that was once reserved for the exchanges and institutional traders is now readily available to retail traders: High-speed Internet, market research tools, sophisticated testing platforms, trade automation and direct access trading.

At the heart of this technology is your computer: Where you research and test your strategies, as well as where you initiate your trades themselves. Computers affect how you interface with the markets, and they must be fast, powerful, reliable and stable. Here, we take a look at various PC components and explain what to look for when you are buying, or building, your trading dream machine. Read more

Trading with Market Depth

Jean Folger - Wednesday, April 30, 2014

This article appears in the May 2014 issue of Futures magazine.

Market depth is an electronic list of buy and sell orders, organized by price level and updated to reflect real-time market activity. Most of today’s trading platforms offer some type of market depth display that allows traders to see the buy and sell orders waiting to be executed—not just the best bid and ask prices, but the bids and asks on either side of the market—as well as the size of all the bids and offers.

All of this information can be useful to traders because it shows not only where price is now, but where it is likely to be in the near future. Here, we look at market depth, from the basics to how you can add market depth to your trading toolbox.

Inside prices

Market depth displays information about the prices at which traders are willing to buy and sell a particular trading symbol at a single point in time. Market depth data are also known as Level II, depth of market (DOM) and the order book since it shows pending orders for a trading instrument.

Because market depth is in real time, it changes constantly throughout the trading session. On an instrument such as the E-mini S&P 500 futures contract (ES), which trades under extremely high volume, the market depth updates many times each second. On thinly traded instruments, the bids and offers may update every few seconds, minutes or even hours.

Regardless of how frequently new bids and offers come to the market, market depth shows the different prices and the number of orders lined up at each price to buy or sell. Read more

PZT Announces Partnership with TradeStation

Jean Folger - Wednesday, February 19, 2014

PowerZone Trading is pleased to partner with TradeStation to offer you a 20% rebate on commission costs each month, up to the full purchase price of your PowerZone Trading products! Here's an example of how it works:

  1. Purchase an annual license to BAR ANALYZER for TradeStation ($499)
  2. Contact our Sr. Account Executive at TradeStation, Frank Novelli, to set up the rebate program
  3. Trade and receive a 20% rebate off your commissions each month until the BAR ANALYZER is paid for

If you typically have $200 in commission costs each month, for example, you will receive a $40 rebate each month until the full price of the BAR ANALYZER license is paid for.

You can purchase our TradeStation software packages on a monthly subscription basis through the TradeStation TradingApp Store. Annual and lifetime licenses can be purchased through the PowerZone Trading website.

Please click here to find out more about using PZT software for free through the TradeStation Preferred Partner Program!

Improving Market Awareness with BAR ANALYZER

Jean Folger - Tuesday, February 18, 2014

For many traders, a price chart reveals only five pieces of market data: the open, high, low and close of the bar, and the volume during that period. While this information is important, traders can take a closer look inside the price bars to uncover valuable and actionable market information that can improve situational awareness and trading performance.

PowerZone Trading's Lee Leibfarth recently presented a Trade Like a Pro webinar hosted by NinjaTrader. During the presentation, Lee covered:

  • Why the pros trade with price and volume analysis, and why you should too
  • How to find key support and resistance levels using market depth
  • Volume profile, and how volume nodes can be used to locate high probability trading opportunities
  • How to trade directly from your price chart to make more precise trade orders
  • How our popular VSTOPS 2.0 indicator can work with the BAR ANALYZER to ride strong trends

Missed the webinar, or just want to see it again? Watch the recording to see how the BAR ANALYZER trading utility can improve your market awareness.

New Product - VSTOPS ProTrader

Jean Folger - Friday, November 15, 2013

The VSTOPS ProTrader strategy template in an innovative trading tool that makes it possible to build, test and trade your own profitable day or swing trading system - no programming required. The logic for the strategy is based on the popular VSTOPS indicator package, which uses an extremely fast filter to determine market volatility so you can enter trends early and manage trades to take and protect profits as trends continue. VSTOPS ProTrader can be easily customized to suit different trading styles (scalp, day or swing), risk tolerances and profit goals.

PowerZone Trading's Lee Leibfarth introduced VSTOPS ProTrader at a recent event hosted by NInjaTrader. During the presentation, Lee covered:

  • How to build, test and trade your own robust short-term trading system using the VSTOPS ProTrader strategy template
  • Customization features of VSTOPS ProTrader
  • How to backtest and optimize your strategy
  • The benefits of strategy automation, and how to automate your VSTOPS ProTrader strategy

 

 

Check out more videos on the PowerZone Trading YouTube channel!

Lee Leibfarth Interviewed on Trader Tech Talk

Jean Folger - Wednesday, November 06, 2013

PowerZone Trading's Lee Leibfarth was recently interviewed by Trader Tech Talk. In the podcast, Lee discusses the top four metrics you need to pay attention to when evaluating a strategy's performance, how to approach coding a new strategy, the three steps of testing a strategy, and guidelines for tuning a strategy after it's been running. Listen to the entire podcast here: