c04 JWBT016-Busby September 30, 2008 13:48 Printer: Yet to come
58 A FOUNDATION FOR SUCCESS
Generally, if a trend is strong, it will intensify as volume increases. Like-
wise, as volume wanes, it may be time to exit the market because without
momentum, money cannot be made as easily.
The V-Factor records the volume and identifies the number of buyers
and sellers. Then, the ratio is expressed in an easy to read format. The
V-Factor can be reset during critical times during the day to check the cur-
rent volume and the bias of the majority of traders during any trade zone
or significant time frame.
Here is how the V-Factor works: If the V-Factor is 1.0, there are an
equal number of buyers and sellers. If the V-Factor is 0.05, there are twice
as many sellers as buyers. If the V-Factor is 2.0, there are twice as many
buyers as sellers. I watch the V-factor while I am trading. If I am long in the
market and the V-Factor indicates that a great deal of selling has stepped
in, I may seriously consider exiting my position or lightening it. Use the
strategy or program that you like, but if you expect to be a winner, watch
volume.
Figure 4.2 is a V-Factor reading. The V-Factor graphically depicts vol-
ume in three formats. Comically, the dominant side is pictured as either a
bull or a bear. In Figure 4.2, the bears are roaming, and it might not be a
good time to go long. Also, the concept is conveyed with a bar graph. The
higher bar on the right shows that the bears are slightly greater in number.
Finally, a chart plots the strength of the bulls and the bears. The line on the
top shows the bears with greater volume than the bulls.
Another one of my personal indicators is the TTICK. I created this
indicator several years ago, and I use it every day. The TTICK combinesFIGURE 4.2 A V-Factor volume indicator that I designed and use for my trading.