My thesaurus offers gauge, calculate, compute, determine, assess, quantify, evaluate, appraise, and rate as alternate words for measure.
All those words work in some way for what we are trying to accomplish by charting, or technically analysing the market we trade.
This begs the question, what exactly can we measure in a bar of data on our chart?
We can measure price, volume, range, and the number of trades.
Am I missing anything?
The price bar will give us bids and asks and the last transaction price as the bar fills. We can see the volume of contracts traded, and we can break down that volume into up tick and down tick volume. We can see how high and how low the price traded during the bar formation (range) and we can see how many trades took place during that bar.
Note that the number of trades and volume are not the same thing. A tick chart (why they call this a tick chart is beyond me) measures how may trades happen and forms the bar when the prescribed number is achieved. So with a tick chart a "trade" can be for 1 contract or 1000 contracts and still only count as one tick. So if I place a trade for 1 contract and LW places a trade for 1000 both only count as 1 tick. With a volume chart they count the total number of contracts traded.
With all these things to measure we can use this data to cut off when the bar is formed rather than just cutting off the bar based on time served. We have range bars, tick bars, and volume bars to quantify when and how our "price" bar is formed.
So if range, price, number of trades, and volume are the only data points we have to measure would it not make sense to try and use all of this data in our trade plan?
I measure the bar's range with ATR, I measure the number of trades by using a tick chart, I use the price data within the bar to measure the angle of ascent or descent of the EMAs and the level of the ADX.
I'd be interested in anyone's ideas on how they use volume in their trading.
Well maybe not just anyone, someone who knows what they're talking about preferably.