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Volume Patterns – How to Spot the Professionals at Work
01.04.2010
Volume
V
e Patte
erns – How to
t Spott the Profess
P
sionals
s at
W
Work
By
y analyzing
g average trade size you can se
ee when th
he Professiionals are at work – buying
lo
ow and sellling high.
Summary
y of wha
at you’ll learn
l
in the featture artic
cle below
w:
 The Better
B
Pro Am indicattors use a proprietary
y algorithm
m to analys
se average
e trade size
e
and identify Pro
ofessional and
a
Amate
eur activity
y.
 Profe
essionals ac
ct before the trend changes, bu
uying on down bars a
and selling
g on up barrs.
Amatteurs chase
e the trend
d, buying on
o up bars and selling
g on down bars.
 The Stopping
S
V
Volume
and
d Profit Tak
king volum
me patterns
s show Proffessional
accum
mulation and distribu
ution and are
a seen be
efore a trend change
e.
 The No
N Demand
d/No Supp
ply volume patterns show
s
a tren
nd has run
n out of ste
eam.
 The RAMBO
R
(Re
eversal of Amateur
A
B
Break
Out) volume pa
attern is offten seen at
a market
turnin
ng points as
a Amateurs get "wro
ong footed
d".
 The Better
B
Pro Am volume patterns work in an
ny time fra
ame (tick tto monthly
y charts) an
nd
for an
ny market (futures, stocks,
s
forex, etc.), however,
h
t
the
Profess
sional and Amateur
A
PainttBars are best
b
used on
o tick charrts.
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Volume Patterns – How to Spot the Professionals at Work
01.04.2010
Professional and Amateur Activity Can Be Seen On Individual Bars…
Volume Patterns: Professionals and Amateurs (Emini 1,500 tick)
The Better Pro Am indicators use a proprietary algorithm to analyse average trade size and
identify Professional and Amateur activity. Professional bars are painted blue and Amateur
bars are painted yellow (default colors, can be changed).
Since Professionals trade in size they need to buy on down bars and sell on up bars –
before the trend changes. By contrast, Amateurs are always chasing the trend and buying
or selling breakouts – so doing the opposite of Professionals, buying on up bars and selling
on down bars.
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Volume Patterns – How to Spot the Professionals at Work
01.04.2010
And Helps Understand Market Structure and Trend Direction
Volume Patterns: Professionals and Amateurs (Emini 1,500 tick)
By looking for these Professional and Amateur volume patterns you can get a good sense
of where the Professionals are entering trades and taking profits. In my trading I look for
Professional and Amateur activity at price extremes and then watch to see how price reacts
to determine trend changes.
This approach takes quite a lot of interpretation and practice – but it's well worth it once
you get the hang of it. A useful tip, to make things easier, is to ignore Professional and
Amateur activity that occurs during price congestion. Concentrate on Professional and
Amateur bars on price extremes.
Here's another example: Volume Patterns – A New Take on the Double Top.
Note: The Professional and Amateur PaintBars are designed to be used on tick charts.
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Volume Patterns – How to Spot the Professionals at Work
01.04.2010
Professional Accumulation and Distribution Is Seen Early…
Volume Patterns: Professional Accumulation & Distribution (Emini 1,500 tick)
Included in the Better Pro Am indicators are 4 of my favorite volume patterns. Three of
these volume patterns indicate Accumulation and Distribution:
 Stopping Volume (St and St* on chart)
 Profit Taking (PT on chart), and
 No Demand and No Supply (NoD and NoS on chart)
Stopping Volume and Profit Taking show Professionals are reversing their positions.
However, the Professionals trade in size and need to scale in and out of positions. So these
volume patterns are often seen before the market eventually reverses.
The No Demand and No Supply volume pattern is often seen at market tops and bottoms.
It indicates there is a lack of buying volume at market tops to push price to new highs, or
lack of selling volume at market bottoms. This volume pattern often confirms a change in
trend.
In my own trading, I use clusters of these 3 volume patterns as confirmation of trend
changes, not necessarily as entry signals.
Note: The Stopping Volume and No Demand/No Supply volume patterns included in Better
Pro Am are improved versions of the free ones available on this website.
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Volume Patterns – How to Spot the Professionals at Work
01.04.2010
And Amateurs Usually Get Wrong Footed
Volume Patterns: RAMBO = Reversal of an Amateur Breakout (Emini 1,500 tick)
The fourth Better Pro Am volume pattern is called "RAMBO" – which is short for Reversal of
Amateur Break Out. Marked on the chart with the text 'R'.
The logic behind this volume pattern is that break outs led by Amateurs often fail.
Amateurs are always chasing price, entering late and expecting a breakout from
congestion to turn into a trend move. Professionals will fade this behavior, drive price back
into congestion and gun the Amateur stops.
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Volume Patterns – How to Spot the Professionals at Work
01.04.2010
Volume Patterns Are Best Traded with Confirming Indicators
Volume Patterns: Better Pro Am, Sine Wave and Momentum (Emini 1,500 tick)
Nothing is perfect and I don't believe you can trade with these Professional and Amateur
volume patterns alone. However, in my own trading they are an essential part of
confirming a change of trend and signaling entry points.
I use Better Sine Wave and Better Momentum to confirm high probability trades:
 Better Pro Am shows me what the Professionals and Amateurs are doing
 Better Sine Wave shows me price cycles and trends, and
 Better Momentum shows me buying and selling volume momentum
The chart above shows a trend change and how these 3 indicators came together:
1.
2.
3.
4.
5.
Better Momentum signaled exhaustion selling volume
Professionals take profits on their Short trades and get Long
An early false rally is led by the Amateurs and the lows are re-tested
Amateurs are expecting a break to new lows but the Professionals step in
Bullish divergence on Better Momentum coincides with an "End of Trend" warning signal
on Better Sine Wave
The market ends up putting in a low at 1,060 and rallying to 1,075 before Professionals
take profits and we get exhaustion buying volume.
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Volume Patterns – How to Spot the Professionals at Work
01.04.2010
What's The Difference Between Better Pro Am & Better Volume?
The Better Pro Am PaintBars (blue and yellow bars) identify Professional and Amateur
activity using average trade size. Professionals trade in size; Amateurs trade in singles and
doubles. So analyzing average trade size directly identifies Professional and Amateur
activity.
Better Volume infers Professional activity by looking for large volume but relatively small
range bars – "High Churn" bars. The assumption is that Professionals can enter/exit
without moving price significantly. Part of the reason they can do this is that they
enter/exit at price extremes. Amateurs are seen on low volume bars.
In my personal trading I've switched 100% to Better Pro Am from Better Volume. Better
Volume was/is a great volume indicator – I made a lot of money with it plus got
recognition and website traffic by releasing it as a free indicator. But times change, trading
methodologies evolve and it's time to move on.
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Volume Patterns – How to Spot the Professionals at Work
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What People Are Saying About The Better Pro Am Indicators
“I think your Better Pro Am indicator is brilliant … It's a really clever idea measuring the
average trade size to check the Pro's and Am's. There is nothing else out there like it that I
know of.” Mark L.
“Better Pro Am has really helped me … yesterday the paint bar showed the Professionals
loading up in the morning before the big drop. As the market cycled back and forth every
time it made it back to the top of it's range the Pros stepped in. Thank you.” Paul P.
“Just love the Better Pro Am, thanks so much. This morning made 4 small trades and all
winners. Knowing what the Pro's are doing makes all the difference.” Herb C.
The Better Pro Am Indicators
The Better Pro Am indicators shown in the videos and charts above are now available for
sale and immediate download. Here's what you get:
 Better Pro Am Indicator, PaintBar & ShowMe for
TradeStation or MultiCharts
 Professional and Amateur PaintBars (blue and
yellow bars)
 No Demand and No Supply volume patterns
("NoD" and "NoS")
 Profit Taking volume pattern ("PT")
 RAMBO (Reversal of Amateur Breakout) volume
pattern ("R")
 Stopping Volume pattern (two variations "St"
and "St*")
 EasyLanguage Function to program your own
systems & indicators
 All the indicators have alerts so you can be
warned when new signals occur
 Locked code
Better Pro Am FAQs
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Volume Patterns – How to Spot the Professionals at Work
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Disclaimer: Futures and options trading have large potential rewards, but also large
potential risk. You must be aware of the risks and be willing to accept them in order to
invest in the futures and options markets. Don't trade with money you can't afford to lose.
This is neither a solicitation nor an offer to buy or sell futures, stocks or options. No
representation is being made that any account will or is likely to achieve profits or losses
similar to those discussed here. The past performance of any trading system or methodology
is not necessarily indicative of future results. If you decide to invest real money, all trading
decisions should be your own.
CFTC Required Disclaimer: Hypothetical or simulated performance results have certain
inherent limitations. Unlike an actual performance record, simulated results do not represent
actual trading. Also, since the trades have not actually been executed, the results may have
under– or over–compensated for the impact, if any, of certain market factors, such as lack
of liquidity. Simulated trading programs in general are also subject to the fact that they are
designed with the benefit of hindsight. No representation in being made that any account will
or is likely to achieve profits or losses similar to those shown.
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