1989issue C121-3
Volume-scaled price boxes and volume cycles
A volume-scaled chart advances the horizontal axis by transacted volume, so each session box has a high-low height and a volume width. Box shape, a smoothed ease-of-travel reading, and peak-to-trough spacing are then taken in volume units rather than clock time.
- On a volume-scaled chart, left-to-right distance measures completed trading rather than elapsed time.
- Session-box height is the interval high-low range and width is that interval's volume, so an easy-travel box is tall and narrow and a resistance box is short and wide.
- Automated layouts typically show about 100 intervals on a page and will not shrink a box below a liquidity-floor width of about two-thirds of average daily volume.
- Analogous peaks and troughs are spaced along the volume axis, so a claimed rhythm is a volume cycle rather than a calendar cycle.
Width as transacted volume
On a volume-scaled chart the horizontal axis advances by transacted volume, so left-to-right distance measures completed trading rather than elapsed time. The volume increment is the width unit chosen so a hand-drawn chart stays legible given typical daily volume.
Session boxes and box shape
Each interval is drawn as a session box: a rectangle bounded by that interval's high and low, with width set by the interval's volume. A tall, narrow session box is treated as an easy-travel box, meaning a large price excursion on relatively little volume. A short, wide session box is treated as a resistance box, meaning a tight range under heavier two-sided volume.
Page scale and the liquidity floor
Automated volume-scaled layouts typically resize the horizontal scale to place about 100 intervals on a page, subject to a minimum box width. That liquidity-floor width is described as about two-thirds of average daily volume and is used as a liquidity cue. An automated layout will not shrink an entry below this floor.
Combined sessions and calendar space
When several sessions are combined into one box, calendar months occupy unequal horizontal space if volume changes. The longer-horizon example combines three sessions in a single box.
Ease-of-travel reading
An ease-of-travel reading is built from box shape, interval-to-interval price change, and direction, then smoothed and normalized across instruments. It is read above a midline as easier upside travel and below the midline as easier downside travel.
Trendlines and volume cycles
Heavier volume at turning areas widens those boxes, so a trendline drawn on the volume axis can be crossed after fewer calendar sessions than the same line on a time-based bar chart. Peaks and troughs are measured along the volume axis, so any claimed rhythm is a volume cycle rather than a cycle in calendar time.
All readings on this track · 40 readings
- 1988Constructing volume-confirmation overlays on OHLC spreadsheet charts
- 1989Commodity advance-decline from delivery months
- 1989The most-active list as a three-layer breadth lab
- 1989Constructing a yield-curve volume-breadth composite
- 1989A bond-futures case study in support, volume, and confirmation
- 1989Volume-scaled price boxes and volume cycles
- 1990Futures-signed on-balance volume construction
- 1990Self-relative volume boxes for news-free breakouts
- 1990Broadening swings, demand tests, and volume filters
- 1991A same-session pressure test of breadth and volume share
- 1991Tick extremes that confirm double tops and bottoms
- 1991Constructing auction fuel from volume and open interest
- 1994Constructing On-balance volume with smoothing and timeframe confirmation
- 1996A volume-gated moving-average trend combination
- 1996Constructing four-state range-volume bars
- 1997Failed trade review of a descending-triangle breakdown
- 1997Construct a head-and-shoulders before the neckline break
- 2004Volume confirmation is not optional for a head-and-shoulders reversal
- 2007Constructing a three-factor volume-price confirmation filter
- 2007Constructing a three-condition moving-average entry with a volume filter
- 2008Breakout rules that wait for volume and liquidity
- 2011Screen futures liquidity with open interest and volume
- 2011Filter executable futures with liquidity and open interest
- 2012Rank listed futures by liquidity before a forecast chooses the name
- 2012Filter futures liquidity using open interest and volume
- 2013Pre-trade futures liquidity as an execution filter
- 2014A futures liquidity screen from range, open interest and volume
- 2014Evaluating futures contract liquidity before execution
- 2014Constructing defended price lines from volume clusters
- 2014Filter futures by equal-dollar size, open interest, and volume
- 2015Filter futures ideas by ranked contract liquidity
- 2017Screen listed futures for execution liquidity first
- 2017Filter futures orders by liquidity, open interest, and volume
- 2018Using open interest and volume to rank futures liquidity
- 2018Score listed futures as an execution menu before the setup
- 2019Filtering futures orders with liquidity, open interest and volume
- 2019Futures liquidity as an execution filter
- 2020A futures liquidity board as a pre-trade execution filter
- 2020Sequenced volume and golden-cross breakout rules
- 2020Use a listed-futures liquidity filter before execution