Value in time- Better trading through effective Volume PDF

Value in time- Better trading through effective Volume PDF

Value in time- Better trading through effective Volume PDF provides breakthrough new technical analysis tools that show you how to see through market manipulations and become a better, smarter trader. This unique guide contains insights that will take your trading to the next level.

Category: Technical Analysis

Author: Pascal Willain 

Language: English

Free Download link: At the end of the post

Introduction- Value in time- Better trading through effective Volume PDF

On April 9, 2001, a revolution in the technical analysis of stock trading began when traders started to use decimalization—measuring stock prices to the penny instead of in sixteenths of a dollar. The objective was to make the stock price fluctuations easier to understand for the general public—but the reality was that it killed market visibility and, some believe, encouraged price manipulation.

The only way that investors and traders can now avoid becoming victims of insiders and manipulators is to use techniques that detect their moves. In Value in Time, Pascal Willain provides breakthrough new technical analysis tools that show you how to see through market manipulations and become better, smarter traders.

Willain’s three new tools—Effective Volume, Effective Ratio, and Active Boundaries—are based on how market players act; not on their behavior or on their potential reactions, but on their real, tactical moves. They show how to find out what insiders are doing, what large funds are doing, what traders’ expectations are, and how the equilibrium between supply and demand evolves. They will help you to value a stock based on profit expectations, formulate clear price targets based on stock history, detect when large investors and insiders are moving in and out of a stock, and analyze the supply/demand balance during stock runs and pullbacks to determine if a trend change is imminent.

Willain explains each tool in detail and then shows how they can be used in specific trading strategies, in the process revealing the foundations of good trading: the discovery of value, the selection of the right buying trigger, and the management of the trade evolution. He includes specific examples of successful trades, misleading signals, and short trades.

Information leaks and price manipulations are routine occurrences in the markets, and the objective of these leaks and manipulations is to take advantage of others. Don’t be the last one to know when something is happening in the market. Value in Time offers the breakthrough technical tools that will enable any investor to trade ahead of the news.

Foreword

” You have opened a revolutionary book that explodes the envelope of standard technical analysis. It introduces several new tools that can help you recognize when a trend is likely to reverse. It reveals new ways to profit from trends and their reversals.

Pascal Willain used inexpensive off-the-shelf software to slice each trading day of a stock into one-minute segments, like cutting a long stick of salami into thin slices. He measures each slice to see whether prices rise or fall during that minute and discards the minutes with no changes. He finds the average one-minute volume for the day and separates the minutes with price changes into those with above-average or below-average volume. In each group, he adds up the volume of minutes with rising prices and subtracts the volume of minutes with falling prices. This gives him two cumulative volume lines: one for the minutes with above-average volume and the other minutes with for below-average volume. He named them Large and Small Effective Volume.

Pascal explains that the minutes with above-average volume reflect the impact of the big money. He discovered that Large Effective Volume often has predictive value. When you find a condition in which the big money starts pushing up a stock while the small money remains negative or neutral, an upside reversal is in the cards. When the big money starts pushing the stock down while the small money is flat or buying, a downside reversal is more likely.

Pascal compares his method to dropping down to the cell level and predicting the movement of the entire organism from the behavior of individual cells. He first described his concept of Effective Volume in the interview for my book Entries & Exits, but he goes much further in his new book.

The author introduces another key concept, which he calls Active Boundaries. His research shows that the group of professional traders in any given stock is relatively stable and they shoot for relatively steady gains. When the returns from a stock over a period of time reach their Upper Active Boundary, the expectations for a further rise diminish and a downside reversal is more likely. When a stock declines and hits its Lower Active Boundary, bullish expectations become high and the stock has a greater probability of an upside reversal. Numerous charts show how to catch reversals using these concepts. In addition to Effective Volume and Active Boundaries, Pascal describes several other concepts. He even provides what he calls “more complex examples for a second reading.”

Pascal has a very rare ability to stand apart from the crowd, to question accepted concepts, and to come up with new ideas. For example, while acknowledging his debt to my Force Index, he stands the original concept on its head by asking why not have a Weakness Index, and even suggests
its formula.

This book abounds with examples of Pascal’s unorthodox approach. For example, he addresses a commonly heard rule, “You must buy when everyone else is selling,” and writes: For me, this is a sure recipe for financial disaster. There are only two clear times when you should buy:

1. You buy when everybody else is buying, but you do it early in the trend.
2. You buy when everybody else has stopped selling. In other words, you buy when the supply of shares has dried up, when only a few shares are available for sale.

You have to invest time and energy in reading this book. Pascal, like many original thinkers, follows his own train of thought, sometimes leaving less prepared readers behind. During the past year I have been receiving the analytic e-mails in which Pascal shares his research into current markets. It took me a little while to catch on to these concepts, and I hope that e-mails from readers will prompt Pascal to offer both his software and his analyses to the wider public. Publishing a book is like giving birth to a baby. This baby will require a bit of nurturing to grow and become strong enough to stand on its own.

The reader must keep in mind that technical analysis alone is not enough to enable one to become a successful trader. Money management is essential for controlling risks, and you need good record keeping to learn from your profits and losses.

I expect the concepts of Effective Volume, Active Boundaries, and others in this book to become accepted by many serious traders. As always, the early adopters will reap the greatest rewards.”

New York City
December 2007
 

—DR. ALEXANDER ELDER

Table of contents- Value in time- Better trading through effective Volume PDF

Foreword

Acknowledgments

Introduction: Revolution Is at Your Doorstep 1

PART ONE The Set of Tools That Will Change Technical Analysis 9

CHAPTER 1 Effective Volume: An Open Window into the Market 11

Traders Get a Secret New Tool: A Brief Introduction to the Trading Mechanisms and the Market Players 14

Volume That Moves the Markets 20

Effective Volume 30

Practical Examples of Effective Volume Calculations 40

Technical Section: How to Calculate the Separation Volume 51

Improve Your Trading: Decide on the Big Picture 57

A Comparison with Traditional Tools 59

What We Learned Regarding Effective Volume 66

CHAPTER 2 Price and Value: The Active Boundaries Indicator 67

Buy Low 67

Traditional Measure of “Cheap” 69

Why Do Trends Exist? 81

Grandmothers Are Always Right! 101

For Math Lovers: How to Calculate the Active Boundaries 109

What We Learned Regarding Active Boundaries 110

CHAPTER 3 When Volume Diverges from Price 113

Effective Volume: Two Arrows from One Bow 114

Price and Effective Volume Trends 118

Price-Volume Divergence Analysis 134

Examples of Divergence Analysis 144

How to Set the Optimal Analysis Window 176

Empty Trading Minutes 181

What We Learned Regarding Divergence Analysis 183

CHAPTER 4 Supply and Demand: The Key to Trading 185

Supply/Demand Equilibrium 186

Funds’ Strategies 205

Funds and Market Manipulation 211

What We Learned Regarding the Supply Analysis 218

PART TWO Trading Strategies 219

CHAPTER 5 Performance: The Risk/Return Balance 221

The Trading Strategy 223

Optimizing Profits 226

Minimizing Risks 245

Measures of Risk-Adjusted Performance: The Sharpe and Burke Ratios 260

What We Learned in This Chapter 262

CHAPTER 6 Automated Trading Systems 265

Production of Trading Signals 268

Trading Strategies 274

What We Learned in This Chapter 317

PART THREE The Bonus Section 319

CHAPTER 7 The Market Is a Two-Way Street: Shorting Strategies 321

The Short Sale “Tick Test” Rule 321

How to Use This Book’s Tools for Short Trading 322

What We Learned in This Chapter 340

CHAPTER 8 Market and Sector Analysis 341

When Is the Market Becoming Expensive? 342

Sector Analysis 350

What We Learned in This Chapter 361

Conclusion 363

Data Providers 371

Sources 373

About the Author 375

Index 377

Reviews

“You have opened a revolutionary book that explodes the envelope of standard technical analysis. It introduces several new tools that can help you recognize when a trend is likely to reverse. It reveals new ways to profit from trends and their reversals.”
—From the Foreword by Dr. Alexander Elder

“Mr. Pascal Willain has discovered a new and powerful approach in stock analysis using price and volume, which he named ‘Effective Volume.’ For students of volume analysis, this book is a must-read. I have studied volume analysis in length, and I can say with confidence that his approach is on the money. He does not stop at stock analysis, but goes further into sector analysis to complete the trading plan. If you’re interested in how the driving forces of the market work, then this book is for you.”
—Tim Ord, President and Editor, The Ord Oracle market letter, and developer of Ord Volume software

“I very much like the original ideas expressed in this book and believe that the Effective Volume Indicator along with the Divergence Analysis of the Effective Volume Indicator would be useful in managing a portfolio. In fact, my tech group is now working to incorporate the Effective Volume analysis into our proprietary algorithms.”
—Bill Cara, President of Cara Trading Advisors (Bahamas) Ltd., author of Lessons from the Trader Wizard, and editor of Cara’s Trader Wizard Investment Reports

About the author

Pascal Willain  is a private trader who trades only his personal funds, and he uses the very tools presented in this book. He graduated in 1983 with an engineering degree in telecommunications from the Universite Catholique in Louvain, Belgium. Pascal then went on to earn ´ a master’s degree in applied mathematics in 1987 from the University of Electro-Communications in Tokyo, Japan. Two years later, he earned an additional degree in business from the Universite Libre in Brussels, ´Belgium.

Dr. Alexander Elder featured some of the tools presented here in a chapter of his own book, Entries & Exits: Visits to Sixteen Trading Rooms. More about the Effective Volume tools can be found on the web sites at www.willain.com and www.effectivevolume.com. The author can be contacted by email at info@willain.com.

Before becoming a trader, Pascal created three companies in such varied fields as consulting, computer-voice interfaces, and parking-garage systems. These companies are now managed by partners. With his wife Michiko, Pascal also created the Nello and Patrasche Foundation, which is dedicated to helping handicapped orphans.

For more information, go to www.multilines.be/np.

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