PTMC team 27.10 2015

Volume as an indicator of the dominant force on the market. Part 1

Hey there, Protraders!

Most traders, who use the methods of the classical technical analysis, focus their attention only on the price, indicators and different timeframes, ignoring other important data, such as volume or open interest. Certainly, such approach is successfully applied in practice, but, unfortunately, it limits the trader’s understanding about the current market state, and which dominant force prevails on the market. The volume, for the professional market participants, it is an integral part of their trading strategies, since it takes into account the mood and opinion of all market participants. With the development of electronic trading market, the information about traded volume has become available not only to the large market participants, but also to the ordinary trader.

Before talking about the trading methods using volumes, let’s consider the basic concepts. Volume – is the number of contracts, which were bought or sold by a specific price for a certain period of time (hour, day, week, month). Simply put, the volume shows activity of the trading for a certain period. If to consider the data by the volume separately, they will not say much. It is necessary to analyze the volume in the common market context, i.e. to compare relatively to a certain period of time. Therefore, if to compare today’s volume with the volume over the previous N days (or bars), then it can be easily seen what size the volume has, high or low. In addition, it is necessary to check data by the volume with price, look near which levels the positions were accumulated, for the subsequent creation of pulsed movement.

Types of the volume

In turn, the volume can be divided into several types:

Tick volume – is the number of contracts, which were traded for a unit of the price change. I.e. roughly speaking, this is the volume that could move the price on 1 tick.
Quantitative volume – displays the number of trades made over a certain period of time.
Exchange volume – displays the number of traded contracts for a certain period of time by a specific price, creating a price level from which the pulsed movement could begin. Usually, such volume is represented as a horizontal profile for a certain time range.

Basics of the volume spread analysis method

The most common displaying of the volume is a vertical histogram as shown on the example below:

The whole volumetric analysis originates from Wyckoff's method, named for the founder – Richard Wyckoff, who was able to describe very accurately the process of accumulation and distribution of the asset price. Hereafter, this method has undergone a number of changes and additions, so now the most popular is considered the VSA (Volume Spread Analysis) method, which is based on the joint analysis of several parameters:

volatility of the price series – in understanding of VSA, this is the difference between the high and low of the bar;
the number of the traded volume;
the close price of the bar – this parameter is one of the most important in the methodic of VSA.

Why does the VSA work? When major market participants are trying to reach their financial goals, they increase their trading activity, thereby increasing the volume of the trading. Conversely, when major participants already have open positions, and do not make a significant number of trades, then on the chart it is reflected in the form of a small volume. Certainly, this is not an axiom, since a large volume can be accumulated by smaller market participants.

Common essence of the VSA method reduces to the analysis of interconnection between the magnitude of the volumes and size of the bars, or in economic terms the definition of supply and demand. In the first place, each bar must be analyzed separately, after that combined into an overall picture, and then based on a complete picture, an assumption about the future price movement can be made.

There are several characteristics, which must be used when analyzing the volume. Primarily, this is a spread, i.e. the difference between the maximum and the minimum of the bar. Spread of the bar – is one of the most important characteristics and it has a qualitative dimension.

Spread is divided into several categories – narrow, medium and wide. Thus, spread of the bar is compared with the previous 20-30 bars.

Another important parameter – is a location of the price closure relatively to the entire bar range, which is located in the top, medium or bottom part of the bar. Herewith, apart from the close price location of the current bar, traders are still looking at the closure of the previous bar. If the current closure is higher than previous closure, then it is an up bar, and if the current closure is lower than the previous one, it is a down bar.

The volumesare also compared relatively to each other and their sizes are visually estimated and divided into low, medium, high and very high.

Main VSA patterns

Based on the candle sizes and the volumes, traders have designed various patterns, which can consist of individual bars, as well as of their combinations. It is worth mentioning an important feature that in contrast to a simple technical analysis in the VSA method there are no reversal figures or continuation of the trend. Models are classified differently in this theory. All patterns are divided into so-called patterns of "strength" and "weakness". But, before proceeding to the description of the patterns, it is necessary to understand what volume is considered to be the most important on the chart. Certainly, this is an extremely high volume, since it often points on the top or bottom of the market, and gives us an advance information on upcoming reversal.

The most popular pattern is considered to be the "Up-trust", which has a similar structure to one of the Price action patterns – Pin bar. The peculiarity of this pattern is that it always occurs on a very large volume, has a wide spread and closing in the bottom of the bar. The main condition for the formation of this pattern is to update the local maximum, i.e. such a bar should always be on top of the wave. Update of the maximum with further closing of the bar in the bottom third shows that customers do not have enough resources to continue the upward movement after breaking the previous high.

The "Pseudo Up-trust" pattern is often met, which must also update the local maximum, has a wide spread, and herewith is formed at a low volume. Pseudo Up-trust appears in the case, when the large players do not actively participate in the market, and allow small participants to create a correctional movement.

Pattern "Stopping volume" as well as the previous patterns can be easily found on the chart, since it often appears on the strong levels of support and resistance. The main differences are as follows: medium or wide spread, the bar must update the local maximum, should have closing in the middle or bottom of the bar. The obligatory condition is – a very high volume (over the last 20 – 30 bars). The occurrence of this pattern does not guarantee that the price will unfold. This only specifies that there was the opposite force, which starts absorbing the demand andthe reversal may start soon.

All listed above patterns are formed on the ascending trend and, therefore, they indicate on estimated completion of the trend. Thus, for the descending trends, these patterns will be identical except that they should update the local minimum and have the close price at the top of the bar.

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Referral Program Agreement

Referral Program Agreement (henceforth referred to as “the Agreement”, “Referral Agreement”) is made between PTMC (henceforth referred to as “the Company”) and Referral Partner (henceforth referred to as “Referral Partner” or “the Partner”).
Terms and conditions of the present Agreement are binding for the Company and for the Referral Partner.

The Agreement contains all the terms and conditions that shall regulate relations between the Company and the Referral Partner.

The Agreement shall enter into effect as soon as the Referral Partner registers on the PTMC official website and shall remain valid until the termination of the Agreement.

Please note that the Company reserves the right to revise, modify, change or remove clauses of the Agreement at any time at its sole discretion. Please check periodically terms and conditions of this Agreement on the Company website.

The Company reserves the right to reject the registration of any entity or person in the PTMC Referral program including the case if such entity is a person suspected of fraudulent activities фе its sole discretion.

1. General Terms

1.1. The Company and the Referral Partner agree and accept the obligations under the Agreement.

1.2. The Referral Partner undertakes rights and obligations set forth hereinafter. The Referral Partner agrees to acquire users to the Company acting in his name.

1.3. The Referral Partner acknowledges that all the users acquired to the Company are the Clients of the Company.

1.4. The Agreement is written in English language. The Company may provide the Сlient with the translation of the Agreement into the needed language on demand. English version of this Agreement is to be of prior importance. The translation may be provided only for the convenience of the Сlient.

1.5. To become an Referral Partner a user must:

1.5.1. Register on the Company website PROTRADER.ORG.

1.5.2. After the registration on the PTMC official website the Referral Partner receives an individual unique referral link which is available in user profile.

1.6. The Company has the right to request confirmation of any information provided by the Referral Partner during the registration.

1.6.1. When the information provided by the Referral Partner during the registration is changing, the Referral Partner should inform the Company about such modifications and request the Company to update the data.

1.7. After the Referral Partner accepts terms and conditions of the Agreement, he/she has the right to:

1.7.1. Conduct advertising campaigns in the interest of the Company.

1.7.2. Introduce marketing and advertising campaigns with the aim to acquire new Clients to the Company, provided that such events are legal in the country where they are conducted.

1.7.3. Provide the Clients with the necessary information about the Company, including the Company contact information, as well as general conditions of the services provided.

1.7.4. The Referral Partner has the right to use promotional materials provided by the Company representatives, they are: banners, text links, landing pages etc. The Referral Partner may use banners with the Company logo provided by PTMC and/or his personal referral link.

2. Rights and obligations of the Referral Partner

2.1. By registering on the official PTMC website the Referral Partner confirms that he/she accepts all the terms and conditions set out in the present Agreement. The Referral Partner acknowledges the fact that the Company has a right to modify the terms and conditions of the Agreement unilaterally.

2.2. The Referral Partner agrees to acquire new Clients to the Company under the present terms and conditions set by the Company.

2.3. The Referral Partner accepts terms and conditions regarding funds withdrawal and commissions charged that are specified in the Client Agreement.

2.4. It is prohibited to the Referral Partner to use any fraudulent methods, such as threatening, blackmailing etc. to attract new Clients to the Company.

2.5. The Referral Partner is obliged to get acquainted with the services provided by the Company on his own and inform the Clients he/she has acquired/is going to acquire about important changes in time.

2.6. The Referral Partner is obliged to warn the Client about the risks of currency trading on the foreign exchange market.

2.7. The Referral Partner is obliged to solve the problems the Client may face with while trading on the foreign exchange market. In case if the Referral Partner does not achieve to solve the above mentioned problems on his own, the Referral Partner is obliged to contact the Company and represent the necessary details.

2.8. The Referral Partner shall not give any recommendations or advice to the Client related to trading operations on the market. The Company shall not be responsible for the consequences of such recommendations and advice

2.9. The Referral Partner is not permitted to conduct trading operations on the account of the Client he has acquired.

2.10. It is prohibited to the Referral Partner to get referral revenue from his own accounts and those owned by his close relatives in case if the partner is an individual; as well as from private accounts of founders or accounts of their close relatives in case if the partner is a legal entity.

2.11. In case it is detected that the Referral Partner uses documents of the third parties with the aim to get referral revenue, the Company has the right to block all such accounts including personal account of this Referral Partner without any right of further renewal.

2.12. The Referral Partner shall not disclose the information received from the Company during the collaboration period and the data the containing in the Agreement to any third parties.

2.13. It is forbidden to the Referral Partner to use the following types of advertisement:

2.13.1. Advertisement on websites that contradict the laws of the country where the Referral Partner is located.

2.13.2. Advertisement on websites content of which is contrary to current legislation, morality, public order, good faith or is defamatory, aggressive, obscene, offensive, violent or incites violence, racist or xenophobic, or in general which is illegal or violates a person's rights and/or physical and/or moral integrity.

2.13.3. Spam mailing.

2.13.4. Advertisement with the false information contained.

2.13.5. Any other advertising that may affect credibility or reputation of the Company or any other dishonest marketing methods.

2.14. It is prohibited to the Referral Partner to organize monetary relations with the Clients (including receiving money, payment or banking cards, etc.).

2.15. The Referral Partner certifies and agrees that he shall act in accordance with all the applicable Anti-Money Laundering laws.

2.16. The Referral Partner is obliged to inform the Client of the need to protect security and confidentiality of account and login information and of the necessity not to disclose such information to any third parties. The Company shall not be responsible for the unauthorized use of the Client account information by any third parties.

2.17. The Referral Partner shall be responsible for the accuracy of the Client registration form and the authenticity of the data provided by the Client.

2.18. The Referral Partner allows the Company to use contact information provided during the registration, such as email address and other information specified in order to send the letters and proposals.

2.19. The Referral Partner agrees that the Company may unilaterally terminate and change terms and conditions of the Agreement without any explanations.

2.20. The Referral Partner is not entitled to: publish any negative comments (essays, letters) concerning the Company in any newspapers, magazines or other periodicals, blogs, Internet forums or other web-resources that may affect credibility or reputation of the Company. If the Referral Partner uses his own web-resource in order to attract clients to the Company, the content of the web-resource regarding the Company shall be approved by the Company.

2.21. If the Company detects that the Referral Partner has been involved in activities described in clause 2.20 of the Agreement, the Company is entitled to reject the Referral Partner request for funds withdrawal and to block his account, as well as inform the regulatory authorities of the jurisdiction of the Referral Partner.

2.22. It is prohibited to the Referral Partner to use PTMC brands in any way or manner whatsoever, including but not limited to the words “PTMC” spelled in any possible way (including with typos, spaces, signs, symbols or in any other way). Such forbidden use of the PTMC brands includes the use of such words/trademarks in the referral advertisements or in any part therewith, in the displayed URL and/or in the destination URL.

2.23. The Referral Partner shall only deal with third parties as a client of the Company. The Referral Partner shall not use the Company name, Company logo, etc. anywhere, including promotional materials, letterhead and business cards, advertisements and publications without the Company’s prior consent, with the exception of the case described in clause 1.8.4. of the Agreement.

2.24. The Referral Partner shall respect the confidentiality of the Company business and it is prohibited to him/her to disclose any confidential information or any information concerned the Company business for five years after termination or cancellation of the Agreement.

2.25. The Referral Partner guarantees the precise performance of the above mentioned obligations.

3. Rights and obligations of the acquired Clients

3.1. A user shall be considered as acquired by the Referral Partner after it is registered on the official PTMC website by following the unique link of the Referral Partner.

3.2. A client shall be considered as the acquired by the Referral Partner under the condition that the Client has not be previously registered as the client of the Company.

3.3. The Referral Partner shall not be entitled to refer his close relatives in case if the Referral Partner is an individual; or close relatives of the founders in case if the Referral Partner is a legal entity. The Referral Partner shall not be entitled to refer his own accounts.

3.4. Account owned by the Referral Partner and those owned by his close relatives if the partner is an individual, as well as private accounts of founders or accounts of their close relatives if the partner is a legal entity shall not be considered as those that the Referral Partner has acquired.

3.5. Accounts detected to be registered by the Referral Partner himself in order to get money through dishonest means shall not be considered as those that the Referral Partner has acquired. In case if such violation of the terms and conditions is detected the Company is entitled to terminate the Agreement and to block the Referral Partner account.

3.6. The Referral Partner himself, his relatives or any other affiliated parties shall not be considered as the Clients acquired by the Referral Partner. In case if any data of the Referral Partner coincides with the data provided by any acquired Client (such as ID data, address, telephone number, email address, IP address, etc.), such Client shall not be considered as the acquired one and shall be removed from the Referral Partner list. In such a case the referral revenue credited for this Client will not be paid.

3.7. Should the IP address of the Client be the same as that of the Referral Partner then they shall be considered affiliated and the referral revenue credited for this Client will not be paid.

4. Rights and obligations of the Company

4.1. In case if the Referral Partner fails to perform any obligations under the Agreement, the Company is entitled to terminate this Agreement.

4.2. The Company reserves the right to take legal actions against the Referral Partner in case the Referral Partner attempts to manipulate the Company and/or the Company proprietary trading platform and/or abuse the Referral Program. The Company reserves the right to withhold and/or deduct from any payment to the Referral Partner in the event of such manipulation and/or abuse.

4.3. The Company reserves the right under its sole discretion to reject the registration of any entity or person to the Referral Partner, including the case if such entity is involved in fraudulent activities.

4.4. If the Referral Partner appears to belong to one of the categories described in clause 4.3 the Company is entitled to terminate the Agreement and to block the Referral Partner account.

4.5. If any activity conducted by the Referral Partner is contrary to international law, morality, public order, good faith etc., the Company has a right to terminate the Agreement and to block the Referral Partner account.

4.6. The Company shall pay referral revenue to the Referral Partners after the Company receives payments for the software license paid by the acquired Clients.

4.7. The Company shall provide the software paid by the acquired user after the fact the payment has been carried out.

4.8. The Company shall enable Clients to conduct trading operations using PTMC software by providing them with logins and passwords to the trading terminal.

4.9. The Company maintains records of all trading operations made by the Clients.

4.10. In case if the Referral Partner fails to perform any obligations under the present Agreement, the Company has a right to exclude Clients from his list of the Clients acquired by him/her.

4.11. The Company is responsible for calculations of the referral revenue. In case if the Referral Partner wishes to check the calculations, the Referral Partner may request his Clients to provide the necessary statements. The Company shall not provide Referral Partners with the payment statements of the Clients.

4.12. The Company agrees to pay referral revenue to the Referral Partner in accordance with Appendix 1 of the present Agreement.

4.13. The Company determines method of the referral revenue calculation at its sole discretion.

4.14. In case if revenue is charged for the allegedly fraudulent accounts the Company reserves the right to cancel the revenues from such accounts and exclude such Referral Partners from the Referral Program.

4.15. Neither Party hereof shall be held liable for the complete or partial failure to fulfill its obligations in case if this failure results from Acts of God (including but not limited to fire, earthquake and other natural disasters, war or other military operations, blockades, government regulations and other extraordinary and unavoidable circumstances beyond either Party’s control).

4.16. Under the above mentioned circumstances the Party that fails to fulfill its obligations is obliged to inform the other Party through written notification within five business days from the moment of their onset and cessation.

Appendix 1. Referral revenue calculation

The Company shall pay the Referral Partner percentage in the amount from 10% up to 30% from the software license payments carried out by the Clients acquired by the Referral Partner.

The equivalent of the above mentioned referral revenue is calculated immediately as soon as the acquired client pays for the software and displayed in the user profile of the Client on the official PTMC website.

The Company shall pay the Referral Partner a certain percentage from 10% to 30% from the software license payments. This percentage is determined by the total number of the Clients acquired to the Company by the Referral Partner. The percentage is calculated according to the table attached below.

Crediting of the referral revenue shall be made on a monthly basis and shall be calculated within the first 10 days of each calendar month.

Any other payments are possible only in case if the Company and the Referral Partner agreed it in an amendment agreement.

Total number of the attracted users*	Referral revenue percentage
1 – 9 users	10,00%
10 – 99 users	20,00%
100 + users	30,00%