Ord Volume Charts Explained

This charting program had some very simple design goals in that we are primary interested in locating stocks with a particular pattern. This pattern has been well known for almost 100 years in the early works of Richard D. Wyckoff.

The goal is to determine the path of least resistance of a stock price where there is close to a certainty as possible. This pattern is where there is a change in share volume of near 50% in the tests of the previous major swing point and the volume between the swings. In Ord Volume Charting we call this being congruent. The up and down legs are telling the same story. The result of this pattern is what has been called coined an “automatic rally”. The bearish version of this works as well but there isn’t such a catchy name for it.

The program, using digital signal processing techniques identifies the swing points and places the peak volume annotations using special rules generated statistically. The concept is to find the greatest energy at very close to those highs. Next the programs algorithms determine how to count the leg volume from swing point to swing point. These charts don’t just count the average volume from bottom to top. There are rules for what days to count to find the most predictive pattern. In Tim Ord’s book he outlines how gaps can act like swing points. The program identifies these gaps in the price from close to open the next day and shows the price for easy interpretation. Once we have all this information it’s now a straight forward exercise to find stocks to trade in the top down format Tim Ord’s book defines.

  1. Find likely turning points in the broad markets by watching the volume patterns in major indexes like S&P 500 and Nasdaq. Using this information determine which index you would like to be most bullish or bearish on.
  2. When a turning point looks close examine the ETF’s and sector funds to find the strongest or weakest sectors and follow the path of least resistance for the broad markets.
  3. Once you have found the sector use the stock lists feature of the program to go through those stocks in the sector you have identified to get the ripest candidate for action.