Investing with Volume Analysis: Identify, Follow, and Profit from Trends Hardcover – 18 Mar 2011
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From the Back Cover
“I found Investing with Volume Analysis of great interest. Any new study of volume and its great technical importance demands immediate attention. It is good to have Buff’s new ideas and discoveries added to the history and importance of volume in technical analysis. My sincere thanks to Buff for his great work and contribution.”
―Joseph E. Granville, The Granville Market Letter
“The author has gathered in one place all the major methods and theories that deal with volume in the stock market and has recognized volume as an equal partner with price in the workings of market and stock movements. He puts it all together into usable and readable guidance, using effective analogies and occasional humor.”
―Richard W. Arms, Jr., Arms Advisory
“Buff presents a thorough discussion of the utility of volume and volume-based market indicators, both traditional and of his own creation. Fellow market analysts can be glad for this resource and the fact that the VPCI on Buff himself is in a strongly rising trend.”
―Robert Prechter and Dave Allman, Elliott Wave International
“I really enjoyed and appreciated the author’s ability to combine volume with many of the basic indicators used by technicians today.”
―Ralph J. Acampora, CMT, Managing Director, Altaira Investment Solutions
“I trade for a living and don’t have time for fluff and puff. Buff tossed facts and figures in my face like a silver cross in front of a vampire. He is on to much here, as you will see. This book is not a morsel; it’s a nine-course meal. Dig in.”
―Larry Williams, Private Trader, World Cup Trading Champion
“For every stock trade that takes place, three key pieces of information are recorded: price, time, and size. It is from these three pieces of data that we derive all the key information that technical analysts use to examine a stock’s behavior. If you are only looking at prices, then you are throwing out a whole lot of key information.
Buff’s book teaches you how to take that information about the size of trades and turn it into the seven types of volume indicators. Better still, he teaches you how to use those tools to improve your own trading.”
―Tom McClellan, Editor, The McClellan Market Report
If price is the market’s testimony, then volume is the market’s polygraph. More than any other indicator, volume tells you the real force and extent of investors’ convictions about prices. By analyzing the market’s volume-oriented “lie detector tests,” you can uncover trends sooner with more reliability–and thus be better positioned to capture the profits those trends might deliver.
In Investing with Volume Analysis, award-winning technical analyst Buff Dormeier reveals how volume validates, interprets, and leads price. Using volume analysis, you’ll learn to uncover surprising shifts in investor enthusiasm, identify disparities in market opinion, and sniff out coming trend reversals.
Dormeier reviews many traditional volume indicators, introduces his own groundbreaking approaches, and shows you exactly how to apply them. You’ll learn how to assess strength and weakness in both supply and demand; identify common market narratives buried beneath volume data; integrate volume analysis with other portfolio allocation techniques; and much more.
Volume analysis speaks volumes. Read this book and discover what the market has been telling you if only you had turned on the volume!
Volume: what it says that you can’t learn any other way
Uncover the market’s true convictions about present prices
Apply the classical laws of motion in securities analysis
Achieve more profitable trading strategies
Is market movement accelerating– or is it about to halt and reverse?
Use volume analysis to evaluate the “state of the trend”
Go beyond standard volume analysis by discovering new breakthrough techniques
Buff up your market analysis with Capital Weighted Volume and overcome volume distortions while improving visibility
About the Author
Armed with proprietary indicators and investment programs, Buff Pelz Dormeier, CMT dynamically manages private investment portfolios for affluent individuals, institutions, trusts, and endowments. Buff builds customized strategies designed to meet or exceed a client’s specific investment objectives in what is often uncertain market conditions. This is accomplished by utilizing proprietary state-of-the-art portfolio management tools designed to grow and preserve wealth in a risk-conscience manner.
In Buff’s 15+ years in the securities industry, he has been employed as a financial advisor, an analyst, and a portfolio manager. An award-winning industry innovator, Buff is the developer of Volume Weighted Moving Averages (VWMA), the VW-MACD, the Volume Price Confirmation Indicator (VPCI), VPCI Stochastics, the Anti-Volume Stop Loss (AVSL), the Trend Thrust Indicator (TTI), Capital Weighted Volume Indexes, and a host of cap-weighted, volume-based breadth indicators.
As a celebrated source of investment knowledge, Buff’s work with market indicators and trading system design has been published and/or referenced in Barron’s, Stock’s & Commodities, SFO and Active Trader magazines, and the IFTA & MTA Journals. A Chartered Market Technician, Buff received the 2006 Charles Dow Award recognizing research papers breaking new ground or which make innovative use of established techniques in the field of technical analysis. The Charles H. Dow Award is considered one of the most important recognitions in the field of technical analysis. He has also been a featured speaker at national and international conferences including Expo Trader Brazil, the TradeStation World Conference, and the Moneyshow International Trader’s Expo.
Buff was a double major graduate of Indiana State University participating in varsity track and cross country as a student athlete. Still an avid runner, Buff is a former Indiana Marathon champion.
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Top Customer Reviews
Most Helpful Customer Reviews on Amazon.com (beta)
If we are perfectly honest, at least in my opinion, too many technical analysis books devote their first few chapters to the basics of technical analysis with a few comments on its historical perspective. I usually barely skim these sections because I've already read the story several dozen times and wonder why it needs to be repeated. Buff tells it differently, starting in the beginning with examples from Biblical times and moving forward through time to draw on Wyckoff and Schabacker rather than simply the standard facts about Edwards and Magee. He offers a story from Ralph Acampora about how John Magee faced an SEC inquiry where he was forced to defend the principles of technical analysis. While there are few true historians in the field, Buff joins their ranks with his very readable Part 1.
Behavioral finance theories factor into the explanations of why volume leads price. Technical analysts can appreciate that fact, but many only care about whether or not an idea makes money in the long run. A number of money-making tools are introduced in the book, including volume-weighted moving averages, volume-weighted MACD, and the Trend Thrust Indicator. Practical applications of these are developed, with the underlying logic and strategy explained. Traditional volume indicators are also included, making this a comprehensive review of volume analysis and is the only source needed to gain expertise on the topic. Not surprisingly, the book expands on the VPCI.
Test results are shown for many of the indicators, and the testing is very well designed. That is also different than what is commonly seen in technical analysis books where testing is often overlooked and many times the promised results can't be obtained. Buff shows what has happened, and does so in a way that inspires confidence that the indicators will work in the future.
The book gave some original thoughts concerning cap weighted volume and a trend thrust indicator made by Dormier but the usefulness of such things is torn apart by Buff himself in the final chapter when he tells us all that due to dark pools we are left with an erroneous picture of market depth and volume as retail traders anyway.
Man, I had high hopes!! But this one self destructed.
It is the single most complete, yet concise book I know on the subject of volume analysis - more than 300 pages packed with useful information.
Buff Dormeier writes clearly, even about deep material. The book goes through all the basics but also offers advanced and new concepts for the more experienced.
Unfortunately many investors overlook the benefit of understanding and learning volume analysis, focusing only on price and price momentum.
How to combine volume with many of the best known price momentum indicators is of profound value to an investor.
The book discusses no less than 7 types of volume indicators - from pure volume indicators to inter- and intraday indicators, VWMAs and
of course Buff Dormeier's own VPCI - The Volume Price Confirmation Indicator.
Especially informative I found:
-> How to use the VPCI in combination with other indicators.
-> The comprehensive study on how including the VPCI in your strategies can enhance both (risk adjusted) returns and reliability.
To me personally, other highlights of the book were the chapters including:
-> Capital weighted Volume. This chapter basically teaches you how to avoid the pitfalls of index volume, track the actions of institutions better
and how to rebuild breadth indicators using cap-weighted volume.
-> Anti-volume stop loss
-> Similarities and differences between breadth and volume indicators.
-> Volume dictated strategies: MPS (Market Positioning Systems).
The market breadth positioning system is a concept to evaluate the position and direction of different market sectors or individual stocks through mapping the VPCI
and the TTI into different sectors.
If you are a trader or a technical analyst this definitely is a "must have" in your library - overall an excellent book on how to incorporate volume in your analysis and trading!
I thoroughly recommend it. It sure opened my eyes to the importance of volume analysis.
The premise of this book is that trading volume contains useful information in estimating the future path of a stock or the stock market. Investing with Volume Analysis provides performance figures, draw down results and reliability figures for several strategies. This in itself makes this book unique in the technical analysis field. In addition, and this is big addition, calculation instructions and examples are included!
What else can you expect to find in this book?
- Numerous charts and graphs illustrating key points.
- Signature patterns of Market tops and bottoms.
- References to several academic studies with empirical evidence on the relationship between volume and return.
- How significant are volume spikes to a stocks future performance.
- How indexes distort volume analysis.
If you are a fundamental analyst this book will make you reconsider adding volume to your list of indicators.
P.S. This is the first finance book I have come across that acknowledges up front where true wisdom comes from. This is a very refreshing and welcome change! No wonder Mr. Dormeier was able to write such a useful book.
Perhaps the most interesting chapter is the one covering the Volume Price Confirmation Indicator, which is the invention of this author. Dormeier goes into detail explaining what this indicator is useful for, the details of it's construction, and it's effectiveness. It could be useful for predicting trend changes.
Overall, the book contains some original information and would be a valuable addition to most trading libraries. Some of the charts I found to be too small and hard to read, but this is a minor criticism.