Using Historical Price Volume Data for Entry/Exit Points

By Lisa Erdmier, Chart-Ex, LLC

Chicago, March 8, 2004 - The Chicago Board of Trade (CBOT) today announced that it shattered its single day volume record, ... Exchange electronic daily volume records reached on Friday included:...; the CBOT mini-sized $5 Dow futures reached 93,096 contracts, compared to the old record of 91,831 contracts set on January 15, 2004"

Chicago, March 11, 2004 - The Chicago Board of Trade (CBOT) announced today that volume in its CBOT mini-sized Dow Jones Index futures surpassed the100,000 benchmark yesterday and set a new daily trading record of 103,950 contracts.  The previous record of 93,096 contracts was set on March 5, 2004.

Chicago, March 12, 2004 - The Chicago Board of Trade (CBOT) announced today that CBOT mini-sized Dow futures traded 155,922 contracts on Thursday, March 12, 2004, while the Dow Complex traded 200,056, up 50% and 79% from previous records.

As you can see from the above press releases, the volume traded in the mini-sized Dow is setting new records almost daily. One of the biggest benefits of the increase in volume for traders is that it adds liquidity to the market. To be able to pinpoint the volume distribution at each price, a trader can get important signals for entry/exit points in the market. Volume is the driving force of the market's dynamics.

A number is a just a number; but by knowing the "value" of a number you are gaining an in-depth understanding of the market dynamics.  "Volume at price" puts a "value" on numbers; it will show you the strength or weakness of a market number. The "value" of the number can be determined by identifying which prices attract high volume and which prices attract low volume. If there has been high volume at a certain price for the day, week and month, when the market reenters that trading area there is a high probability that that price is going to attract high volume again and become a support or resistance area. Traders are going to protect their position at these areas. You can determine your entry/exit points by gauging historical price volume data.

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