A trader explains why volume matters more than price action alone. He traces Dow Theory back to Charles Dow in the 1850s and warns that lower-timeframe charts can show fake highs. Following the money through volume and order flow reveals where most traders actually are.
I cannot explain how my vision of the market changed and how much this made me profitable, because a lot of people might use this as a way to analyze markets, right? Classic market structure: higher high, higher low, higher high, higher low, higher high, higher low. This was invented in the 1850s by a guy named Charles Dow, Dow Jones, and it's a way to read the market that tries to understand the swings in price and use price action and candlesticks as visual reference points. You're trying to understand order flow, but you're based through price. But we do not want nowadays to be caught in just price action, and because a high can be fake, especially in the lower timeframes, right? So what we want to follow is not price. We want to follow the money, and the money is where the volume is, because that's where most money is traded.
