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Ep 66: How Volume Affects & Plays a Role in Stock Prices

January 7th, 2016

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Hey this is Sasha Evdakov and welcome to another episode of let’s talk stocks, episode number 66. I decided to number some of these episodes now so we can easily reference them in the future and now that we have a podcast, it’s just a good way to reference them rather than referencing the title so just makes things a little bit easier in the future.

Even though we’ve done probably a couple hundred of these episodes in the past, you can go back and look at them. But the more important ones, the longer ones, we decided to go ahead and number though, so people can easily reference them.

In this week’s episode, episode 66 we’re going to discuss how volume affects and plays a role in stock prices or how it moves that stock market or the specific stock that you are watching.

This kind of references episode 65 "the cause and effect ripples in the stock market", so if you haven’t watched that episode posted on December 17th, 2015, make sure you go back and actually watch that because they kind of will work together.

In this episode that’s what we’re going to hone in and focus on, because I’ve had a few questions over the holidays that asked me about volume. Even though we’ve done this subject before in detail, I’m going to go over it again in detail.

We won’t go in as much detail as we do in the courses of course, but we will go in detail about how it really plays a role and why it plays a role, so that’s what I’m going to cover. So at least you get an idea of why it’s important.

Hopefully over the last few weeks you had a great time over the holidays, maybe a little bit of a mental shift or break, maybe you got a chance to spend some time with the family. For me personally, I find that the holidays are always really busy.

It used to be, when I was a lot younger, I could just relax and enjoy the holidays much more but I guess as you age and get older, there’s a lot more things that you actually have to do for the holidays and I find it sometimes overwhelming but nevertheless once they are over that last week right before new year, I find it’s a lot more peaceful and more relaxing.

Hopefully you got some time to think, for us we got a chance to go to Canada, and typically we like to go up north, and see the families up there, and I spent some time in the winter areas doing some winter activities and festivities, when it’s colder and when it’s warmer we go back down to Florida and I spent some time over there. So in either case that was kind of what we did over the summer months, here coming up on vacation.

I guess around easter time we’ll be going to Florida, but nevertheless hopefully wherever you are, whether you’re in the United States, whether your overseas, you just had a nice holiday break from the markets, and hopefully when you came back the cause and effect, what’s going on right now, what’s happening didn’t shock you too much, hopefully that you were prepared for it.

With that being said and that in mind, let’s dig deeper into this lesson because it’s an important lesson to really understand how things move in the markets and how things behave.

Trading during holidays

To do some insight for you regarding the holidays, typically what I do when I’m on holiday, and it just depends on my focus and how much focus I can have on the stocks, typically I’m out all of my positions, meaning I don’t hold my positions if I cannot watch them.

And that is only to give me a personal mental break as well. So maybe for, let’s say the last two weeks or less we can have, I did not hold any positions whatsoever and that is just for my own personal self.

Can you hold positions over the New Year and over the holidays? Of course you can. But for me, because sometimes I don’t know exactly what’s going to happen, somebody invites you to this place or that place and things change and your schedule changes so what ends up happening is I get pulled in a few different directions during the holidays.

So because I’m not able to focus and concentrate as much, I like to sell a lot of my positions or get rid of my positions be neutral.

As I get back into the regular work mode, which was this week, I’ve been adding to my portfolio, adding meaning I’ve been adding positions, not to say that I’ve been adding to the long side, in fact most of the positions I’ve been adding is to the short side.

If you were watching the critical charts and if you were watching the charts that have been posted, and also the recaps before we went to the holidays, you know that the market was setting up to continue to push lower. We’ll get into that here shortly in just a little bit talking and discussing why that is and the signals that I was watching.

With that in mind, that’s kind of how I go about the holidays, but that’s just a personal taste. If you’re a person that needs to be a little more active or feel that you want to trade during the holidays, it’s perfectly okay. For me it’s more about break time and I try to pare down my positions, and now that we’re back, just this last week I went ahead and started adding more and I’ve added a few more today.

I’ll be adding probably another one or two positions tomorrow and some couple more next weekend and then again managing them depending on what’s happening in the markets and what’s going on.

Getting into this lesson and what’s going on in the markets, obviously we are selling off quite huge over this last week. I’ve talked about this in the critical charts, watching this simple critical support line.

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When you watch this line, you notice that we were pressing against it and then right here at this level, on Monday 14, we actually did a little bounce, then we had the next day on Tuesday 15, a little move sideways and then wednesday rolled over and now today thursdays it’s 343 right now as I’m recording this, which this video probably will be available by 5, by the time it gets uploaded.

Watch the day action

So we rolled over heavy and I’m watching the day action as well in this, typically what you want to do is watch the day action at the end of the day how things move at the end of the day, because that tells you what’s going to happen tomorrow.

If a stock is moving higher at the end of the day, you’ll typically get a bounce. If a stock is moving lower and it continues to press lower towards the end of the day, you’ll see it sell off further.

It depends also on other things of course, this is a bigger picture view that you’ll have to look at, but for simplicity sake, if you’re just getting started, that’s typically how it works.

I’ll give you an example of this right here, when you take a look at this bar and you see we’re coming into the support and I know it was support because right here we had a bounce here, we were looking to basically bounce right there at that level, what happened was we opened here, this is an opening price, comes back here and then we bounce to this level.

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What do you think is going to happen the next day? Well we have either sideways action or bounce, so that’s what happened, we bounced a little bit. But the bigger picture was still to the downside, so eventually we rolled over. Then we hang around right here, we hung out for a little bit and then we continued to roll over.

The consolidation pattern

To give you a projection and estimate of what’s going on and what’s happening, what do I expect or what do I project? Well typically, once critical support or resistance lines are broken, I talked about watching this consolidation pattern sideways, we talked about this multiple times over the last year, especially those of you that have been with me, you know I was watching this this area, moving sideways is healthy prior to a further move upward, however we weren’t able to hold it right now, and then if we can’t hold it, we will roll over.

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What do I expect will happen? I expect we will come back to about this level, and at this level anything can happen, we can either balance or we can continue selling further.

If we continue selling further, I’m watching this next level, 1870 on the S&P, if we break those levels, it could get very nasty, the market can sell off in a big way.

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We have a couple other different areas that we’ll be watching of course, I’ll be watching this 1815 price level, and after that all bets are off, depending on how it moves and behaves. Because that’s what I’m watching for, is the market could come down about 1575.

And a lot of people will say “well that’s a little bit extreme” or “That’s a little bit more than… You know, that’s pretty big, that’s big compared to where it is”.

The 50% rule

But you have to remember the rule of thumb, and what I like to say is that a market can pull back to 50%, 50% from its breakout point, and our breakout point was actually right here, this was our breakout point. So we can pull back 50% half way and nothing would be wrong with the market.

Where would that put us? Let’s take a look, this is the Fibonacci, we go from the lows over here, we take this line off, you can see that that actually comes in right here 38.2, ok? 50% is this line, so we can pull back right here without a problem.

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But here is a swing point, so we can pull back to here without a problem and nothing would be wrong with it, why do I say that? because when you look at the overall big picture, back to the monthly ,you can see that the market was heading up, pulled back at one-to-one, continued higher.

If you look at it on a shorter term, take a look at it right here on this weekly, popped higher, pulled back a little bit, continued to power higher. So let’s look at how this looks and affects on this little swing point area right here.

Let’s take a look from here, from these highs, so we go from here to here and how does that work out? Right here, market pulled back to 38.2% right here, so for these 6-8 months we were in a bear market and then it continued to power higher for a long period of time.

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So can we do that for 6-8 months? of course 6-8 months would be a year, basically it’s until November, so 10-11 months, depends, could be 6 months, could be 10 months. But 6 - 10 months pull back right here and nothing would be wrong with it.

How does volume play a role?

How do I look at this and why do I look at it this way? And how does volume play a role into this? Well, I think looking at it in a stock specific way rather than an index, might be a little bit better, because you can probably relate to it a little bit easier, and then we’ll take it back to the index.

But let’s just use apple, because everybody is talking about apple, you know what I’m talking about when I relate to an apple, iPhone. So here, looking at volume and how it plays a role or picture, we’re looking at the weekly.

Use long time frames

Typically when I’m watching volume, I will watch the daily, it’s where I make my trades, I make my trades off of the daily chart, I’ll watch the weekly to see a little bit of a longer term perspective, and the reason for that, why I don’t use the 30 minute, the 10 minute, is because it plays a fake out, it fakes out signals, and it’s a short trading time frame.

Can you trade off of that? Can you day trade off of that? Absolutely if you’re day trading, you’re watching 5 minute, 10 minute, 3 minute, 1 minute, 7 minute, you’re watching these different time frames.

But to get the real picture, the real story behind the stock, you’re watching the daily, the weekly, the monthly, quarterly, yearly, all those good things, the longer time frames, daily and above.

Ok, so looking at the daily, a lot of people over here were cheering for this stock at 130, and if you’ve been in the market over the last year, you know that over here in this region, they were saying “oh apple, apple, fantastic, great”.

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And if you were one of them, then keep in mind now you have this stock at $97, that you can purchase this stock for a lot cheaper than it was before, especially if you’re one sharing for it.

The ABCD pattern

For me, I look at it as very toppy. The reason I look at it very toppy, I’ve said this before. A to B, B to C, C to D.

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When we have an estimated ABCD pattern that’s completed, then something new happens, you either have to digest, you either have to pull back, something has to happen.This is C, and then here we have D. So we have A to B, B to C, C to D, so that’s our movement, and if we do the calculation right here, from here to here, we have a move about 85 points, and from the lows from here to here, we have a move of 77 points.

Why does it work?

So why does this work? Why does this all in all work the way it does? Or why is it so close? Let’s just take a look at the Fibonacci in this retracement.

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Look at where it comes down to, 50%, what did we talk about? 50%. It’s not magic, it’s not anything special, this is just the way the world works, it’s cause and effect, it’s the way behavior works, it’s about being self-aware, and it’s the way human behavior works in the world.

Here, when we move in the market, in the stock price 50%, we’ll put this where we are right here, and where does that put this? In this 95 range right here at that swing point in 2012. So that would put us right here. So we took it from the lows here to the highs here.

It puts us 50% right there, at around $95. If we get the 61, it puts us at this point right here, 61.8, would put us at this swing point, and that would be our support and resistance area right there.

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It’s very interesting the way that works, and as we look at things, we start looking at this daily, we start looking at how things behave, and when I start looking at this, I start looking at the bigger picture.

Where did the support line start? The support line started right around here, in 2014, and we hit it a few times and we popped off of that, and there’s nothing wrong with that, so now this is creating our base, we came back here, we broke it, but then we got back above it, so it confirms in the future of 2015, in august, that support line, but you have to now think about it as a jack hammer.

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Think about it as a hammer, think about it as a drill, going into a piece of wood, and the more it keeps going into it, the weaker the piece of wood, the weaker that it becomes. The weaker that material will become. So I look at, when I’m looking at the stock, how did it go into that?

Look at the map

I look at it right here, before, what was happening in the past? How did it get there? What is the map telling me? When you’re looking at a map? And if you haven’t used a map in a while, driving, if you use only your GPS in the car, which I know is convenient, but if you haven’t used a map, go ahead, take it out, just look at it, take five minutes to look at it.

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How are the roads connected? And look at the other roads to the side, and normally we’re always looking at that one road, we’re looking at that road of direction where we want to go, but we’re not looking at all the other traffic coming in from the other roads. Take a look to look at that.

This is what it’s doing, when you’re watching it, you’re looking at other roads that are coming into the direction for the place you want to get to, so you want to get to evaluating all these roads that are coming into the stock, and the roads are actually all the people trading it, and all the shares being exchanged.

Here, if we start looking at it and evaluating it, we start seeing…This support line was broken, so let’s forget about that, without getting too complicated or too confusing, we start looking at how many shares were traded. 69.8 million, next day, Tuesday august 4th 2015, 123.8 million, to the down side were traded. The next day stock pops with 99.2 million shares.

That means people are looking to buy 99.2 million shares, this is just to simplify things. Sold off 123.8 million people.

Lincoln vs. Obama

Think about it this way, if 123 million people voted for Abraham Lincoln and 99 million people voted for Barack Obama, who would win?

123 million versus 99.2 million. Definitely Abraham Lincoln to the downside, in this case it’s bearish. So even though we popped, compare it to before, what was going on before?

Next day, a little pause in action, came down 52.9 million to the bear side. We go up, 38.6 million, ok? Do you see that? Green bar, red bar, red bar, 52.9 million, green bar 38.6 million, and this is august 7th 2015, and august 6th 2015, if you’re following along by audio.

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Then we get a little more pop, we get a pop to the upside, price continues to move, 54.9 million to the upside, compare it to the previous 52.9 million. So that bar beats it, but if we draw the price across and just look at what’s been going on in that range of prices, that last bar, 69.8 million, 123.8 million, add those together, ok? you get about 193 million – 194 million, and then this bar over here, you got 54 million, you got another upside of 38 and 99.

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Looking at this range, comparing it, 54 million versus 69 million versus 123 million, which one do you think is going to win out? which one is already ahead? Which one is it setting up for? Still more people are to the bare side.

Look at the swing points

Next day, 96 million, so we went from 54 million, Boom, takes it out. And that’s what happens, you continue to evaluate this, I’m not going not to break this down for every tick for you, the more important ones to really watch are the swing points, where the stock changes direction to create the support and resistance.

Why do I say that? That is where the most money is made or lost at any given time, that is what creates a support or resistance, there’s a lot of trades that happen there, that’s why they create support resistance.

Because a lot of trading takes place there, so here to the downside we had 162 million. To the upside we had 102 million.

Be patient

With all these trades being traded, this digestion took a few months and I know that we live in a world, in a society where we want it instant, we want our packages to arrive next day, we want everything delivered wirelessly, digitally, we want it fast.

That’s the way that a lot of the world and mentality works, unfortunately this programming and training that’s happening in the world, in this consumer world that’s going on, it’s training you to fail in the stock market because it doesn’t teach you patients.

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If you’re not patient, this is what’s going to happen, you’re going to buy into this, you’ll probably have a mentality that this will go back up to this 130-140 level.

But the smarter investors, the operators, they know what’s going on and what’s happening. So take any day or any few days and regions and start comparing them.

Here looking at this bar right here, draw it down and then we compare it to this region right here, look at this region right there and compare that volume, it’s weaker than those previous, look at this red bars, right here in September, the middle of September, comparing it to these green bars, just start looking at these colors.

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If we start watching these things, okay we’re going down on 84 million, we’re going up on 62, we’re going up on 49, we’re going up on 58, 60, 84 versus 62, 84 versus 49, 80. 80 versus 58.

It doesn’t take a rocket scientist, but it does take understanding and awareness, being aware of this, it’s very difficult to become self-aware of these things.

But if I was just to point things out for you, the price, you hit yourself in the head and say, “I got it, I got it from looking at this chart” but now you have to apply it to other charts.

So what happened? As we continue, this takes time to digest, move sideways. So we continue looking at it.

Here you can see we’re moving or we have a green bar with 29.2 million, then we have a red one with 46 million, another red one with 65.

Here’s a green bar, 56 million but a red one 65 million right before it, so we compare these bars right there in that region.

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Here’s one 44 million and another one that takes it out at 96. So we bounce at this level and then again, what happens? The volume dips.

If you have the blue course, we talk about volume patterns in that one. So then right here, this continues to increase to the bare side and as this increases, it breaks it. So it breaks it right here, there is the break on okay volume, average volume, we re-test it, and the reason they re-test it is because they want to see if there are buyers out there that’ll take their shares, it’s the operators, they’ll spike it higher to make sure that everybody got rid of their shares if they don’t want to go long.

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What they’re trying to do is find your hand, they’re trying to see if there are people that are screaming “I love Apple, I love Apple, it’s going to go higher, look at that, it’s bouncing back, it’s going higher” and that’s when they take the rug, they rip it from under your legs and they run with it, they sell it out further, they say “go ahead, take my shares, I’m selling” That’s what the operators, that’s what the professionals do.

Review the charts

And then you get three more days of selling and continuation, so that’s what was going on, that’s what’s happening and that’s what we were discussing with Apple.

Review the charts and if you don’t have the critical charts membership, review them, if you don’t have it, I think the freebie for 30 days is bit.ly/chartfreebies I believe.

Go ahead look for that, it’s a free 30 day promo, if you want it. But we talked about that, you can review it and those of you that have been with the charts, you know where I was at and you know what we were talking about here in this last week.

You could break that down into any stock chart, any stock chart. If you go to CMG, this one is a lot easier to spot and I showed you the more difficult example first, just so you understand what’s going on and what’s happening.

Let me show you this second example right here. Moving higher, let’s look at this, moving higher right here, look at how this stock moves, it broke out on volume, more people decided to go in, they put their money on the table, when it pulls back, 1.4 million red, 1.1 million red, a pop of 4.8 million, what do you think is going to happen?

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We pulled back on 1.4 on 12-13-2013 for CMG, the next day we pop on 12-20-2013 with 2.2 million, 2.2 million pop versus 1.4 million, think about it, what’s going happen? The stock continues to move and accelerate, and you dissect the charts all like this, one by one.From here our breakout point was right there, based on the volume.

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The money is in C-D

When we get toppy, again, we’re looking for an ABCD pattern. Where’s our A? our A is right here in 2009. Where’s our B? Right here in 2012. Where’s our C? Where’s our D?

When we hit the ABCD and the money line, where you make the most money is this C-D line, by the way, because you know that the estimated, you know the projected, even though you might’ve missed that A-B right here, your money line is that C-D.

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All you need to do is be prepared for when that stock rolls over, and you start seeing signs. This could be a little key that it’s getting there. Do you see that big red spike right there in 2014? That shows you something could be coming soon or we’re doing a halfway pullback. So that’s one little thing.

Second thing right here, now we start getting more and more red, this is where distribution happens, if you have the green course you understand, we go through the four stages of a stock, and this is where distribution happens.

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And then later the selloff happens. So now when we look at the volume, let’s just look at the weekly to make things easier. Here we were moving, let’s say we’re moving to the upside, here’s a green bar, we have 3.3 million, we have 3.2 million, we have 7.3 million, which is quite huge, so we got basically 3.3, 3.2, 7.3.

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As we start selling off, we got 2.8, 6.4, 2.6. So it didn’t have the full 7.3, but you can see we’re hitting the ABCD pattern, we’re breaking another little support and now you start seeing more spikes coming in at 6.7, 4.2 and 8.1.

That 8.1 beats out that 7.3. 7.3 million people versus this 8.1, definitely 8.1 is going to beat it.

Is it really that linear? No, because you have to take other things into account. Typically I’m watching how it affects on this swing point and I’m watching how it affects at that range. So I’m watching at this range.

If I’m comparing this range, meaning this support line, I’m watching for how this support line area is reacting, comparing it to this line.

If it’s coming in with weak volume, then I would expect it to bounce, because it’s coming in lightly. if it’s coming in with heavy volume, then I would expect it to break and go through the wood.

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Here are some examples

Let me give you some regular examples, think of it like a gas pedal in a car. If you’re pressing on the gas pedal and you’re pressing hard, that car moves faster to the upside.

If you’re just pushing it lightly, like let’s say this is lightly, we’re pushing lightly, it’ll continue to move, but it’s going to go slow. We have light gas here, it’ll move slow.

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When we have a lot of gas, let’s say here to the short side, huge fuel, it’s going to go down fast. Because you have a lot of fuel. Think about it, pushing your gas pedal, how fast that’s going to go.

Think about it like a barbecue. If you open up the propane on your grill, you’re going to see an upside. If you open it up even faster, it’s going to go even further and further. If you open it to the downside, same thing, more gas to the downside, it’s going to go faster and faster, more gas is added either to the upside or more gas is added to the downside, where is the gas, where is the fuel.

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Think about it as a water spigot or a water faucet on your sink if you open it lightly, it’s going to continue to dribble, it’s going to drip, and then it’ll continue moving sideways and it’ll move around in your sink, but is it going to flow? Is it going to go flow heavy?

Trade heavy

And for me I trade heavy in the flow, and the reason for that is why would I trade when things are dripping? I would rather write a book, I would rather go and enjoy time with the family, I’d rather make a video. And do things that maybe are more enjoyable in that sense and then wait for the right trades that are higher probability trades.

Why would I make trades that are less probable? And risk my hard earned money and have the mental stress, have the mental focus, need to watch the trades more. Why would I do that? I might as well go to other things in my life.

Instead I wait for these big breaks, I wait for when I see the heavy flow, and it’s not that you missed it, even when you say right here “Oh I missed it”, you wait for the next trip, the next break right here.

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And look, even if you got in it right here from the 600 level, you still would be up 163 points in just a matter of 27 days, 163 points, 30% if you were short. How many of you would like that in a month?

It works with any stock

That’s how it works, and you could do the same thing with Facebook, I don’t care what stock it is. It doesn’t matter what they do, what they are, it’s all about behavior and where people are positioned.

This one, I was waiting for it to break either to the upside or the downside, I wasn’t sure where it was going to go because it’s loved and when it’s loved, sometimes it reverses.

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But some things that slowly started to catch my eyes are these little bigger red spikes here in December, right here we had 26.4 million shares to the downside, but then we popped on 24.8, we held that support right there, or you could even say that support, because then it lines up a little better. So, we went down on 26.4 but we held it on 24.8 million shares.

Then we went down again with 37.9 million, it keeps building. It takes time to build this. Just like a faucet dripping, it takes time to build and accumulate a huge milk jug. So 26.4 million didn’t do it, we bounced with 24.Then we had 37.9 million shares, that didn’t do it, we had to hold it 23 million, we held it with 25 million.

44.8 million shares did it, it broke Facebook stock. 37 didn’t do it, 26 didn’t do it. It took 44.8 million shares to break that stock out of its pattern and now we’re pulling back slightly and we’re breaking that 20 week moving average.

As far as daily, you can see that the 20 day moving average were under that already. So where can this go? Well, the initial breakout point is right there. We’re watching, let’s just make it a monthly, make things simple.

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Draw it up, Fibonacci, 50%, can put us back at 65, and then the stock would go higher and nothing would be wrong with it. So that’s kind of the long and short of how volume affects and plays a role in stock prices.

That’s how really it plays a role, and you start looking at things, dissecting things, and you put things on slowly and if you’re not used to the volatility, if you’re not used to these markets moving quickly, then you want to step aside, you want to be mindful and be careful, but right now, where can this market go based on what I’m looking at and what I’m seeing?

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Right now it can easily come back to that 187 on the SPY or the S&P right here, that 1900 or 1870. Typically the composite leads the market, and the same thing here. You have 4500 where it can get to, nothing would be wrong with it.

Watch the action before making a decision

Be mindful of where the stocks are, how they’re moving, how they’re acting, how they’re behaving, and just because it’s a nice name brand, just because it has a brand, because it sounds good, don’t believe in it, watch the action, watch what people are actually doing and then make your decision on the trade.

And it doesn’t matter if you’re long, if you’re short. It’s all about managing your money, managing your risk, watching how fast that stock is moving in what direction, it’s like cranking up the fuel on the gas in your car, cranking up the fuel on your grill, opening up the water tap, or just kind of comparing it to a milk jug versus a can of soda. Volume, the volume in a milk jug is going to be much bigger than a can of soda.

Stop looking for the shiny object

Hopefully this gave you some insight in terms of just how volume affects and moves things, and for me, I was really never a believer in volume. The first five years, seven years of training, I didn’t even pay attention to it, I didn’t even care about it, I was trying to find a fancy indicator, and that’s how most people start out with, because they want to find that shiny object and they want to find something that makes their life easier, one green arrow that tells them when to buy, when to sell.

There are multiple causes and effects

But that’s not how it works, it’s the market’s dynamic, there are multiple causes and effects that come into it. Watch the episode 65, with the cause and effect episode, it really talks about that and discusses it.

When you’re looking at this, volume is not the only thing that I watch, and you might be wondering “Ok, what else do you watch?”, there’s a lot of other things before even getting into the volume, that I’ll look at.

Start with volume

I’ll look at a lot of the health of the markets, the global economy, how things are moving, where they were, so there’s a lot of other things, but when you’re just starting out volume makes sense, volume is the thing to start with.

And I did it backwards, I did it backwards for years, and maybe that’s why it took me such a long time to really understand things. I did it backwards for many, many years, probably a good seven years, 5-7.

And until you really hone in and understand that, you really don’t need to use any other indicators, because you can trade just fine just using volume, looking at how we just did these trades on Apple.

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What more do you need to know in the sense of the trade? You got the volume, you got the action, you need to understand money and risk management, and it would be great if you understood more of the technical, on why you would get there, because if the ABCD pattern is complete, and understand and watch that “okay, something new is probably going to happen”.

Of course there’s other things, the Fibonacci, money management, risk management, some of the other things that we talk about in the course, but this just gives you a little taste of why volume is so important.

Because normally there is not a one to one linear cause and effect, like we talked about in episode 65, there’s not one cause and effect typically, it’s multiple causes that create a certain effect.

It’s not just about doing the right things when it comes to driving such as, steering wheels, you have to also use the right foot pedals, you have to shift gears in the right way, you have to concentrate, focus, estimate distance.

There’s a lot of things to get you to move the vehicle correctly, so all these things, these causes create an effect of how you drive, from shifting lanes, from how fast you’re going to your destination, to all these things, that creates that effect.

Volume makes things simple

In the stock market, the beauty about volume is it allows you to hone in, how much gas are you putting, and then the amount of gas equals the price, it makes things simple, you don’t have to worry about the steering wheel, what the other drivers are doing, the distance, how much fuel do you have? is the car overheating? is the radio too loud? is there a crazy driver in the left lane? You don’t have to worry about all that stuff.

With volume you’re focusing on simply gas, break, gas, break, gas, more gas, more gas, that’s all you’re focused on, and that’s why volume makes it easier to understand stock prices and of course, there’s other factors that will come up as you grow and as you evolve your education, as you understand the markets better, but if you’re just starting out, and even if you’re more advanced, going back to the fundamentals of volume and price action and behavior, how it’s moving, are all key concepts that you really need to constantly review and keep your focus on.

Hopefully got a lot out of this lesson, I hope you really soaked in about volume, why it’s important, I did get a few questions about it, that’s why I wanted to cover it, even though we covered it in the past once or twice before.

If you didn’t have a chance to find it, there it is, episode 66: How volume affects and plays a role in stock prices.

As far as for me, we’ll be focusing on finishing up the options course here over the next month or two, just concluding doing some more filming for that, it will take me about another week or two to catch up to everybody’s comments on YouTube from the holidays.

I truly appreciate all the fellowship, all the great energy that everybody sends me, it’s just really remarkable, and it’s one of the reasons why I do what I do. That’s why I enjoy doing the types of videos, the trainings and connecting with everybody, it’s because of that connection level.

It will take me a little while to get back to everybody, just because I get a bunch of different emails and things like that, so playing catch-up over the last two weeks will take me some time, but if you wrote me, I will get back to, and I just take me a little bit of time, be patient, I will get there.

And then we’ll have some great things that I worked on over the holidays as well, with the freebie courses that will be coming out over this next year, a little podcast, freebie courses, just introduction courses to the markets, just a lot of good things and one of the final, bigger courses that puts everything together, of how to find a trade, enter that trade, manage that trade and exit that trade course. Maybe we’ll get that towards the end of the year, but really my focus here is the options course.

And that course might be more towards the end of the year of how to find a trade, manage a trade, enter a trade, exit a trade. Putting everything together, all the other courses together, and it’ll be another monster, big, large course in detail, putting everything together.

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Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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