ShadowTrader Intraday Volume Measure

Understanding intraday market context is vital to successful day trading of the major indices through both futures

contracts and ETFs.

Several aspects of the market can be measured to increase the trader’s awareness of what is taking place during

the trading day. Knowing the strength of the forces currently at work in the market is a key factor in making the

right trading decisions.

The ShadowTrader Intraday Volume Measure (IVM) reads broad market volume data throughout the day, in

increments defined by the trader, and compares it to previous broad market volume levels at similar times on

previous days.

This information can then be used to formulate a more informed perspective of market reactions and the likelihood

of certain scenarios playing out. Color coded results make the interpretation of this information easy to understand

in the immediate time frame.

Table of Contents

Page

Loading Thinkscript Onto Your Thinkorswim Platform 1 - 6

Setting Up Your Intraday Index Volume Chart 8 - 13

Information Displayed on the Intraday Index Volume Chart 14

Why is the Intraday Index Volume Chart Important for Trading? 16 - 18

Loading thinkScript onto your thinkorswim platform

Following your purchase, the script code is provided in a large blue box. With your cursor located just before the first character within the blue box, hold the

left button down on your mouse and highlight the entire code in the blue box all the way to just after the last character of the code. Be careful to just

highlight content within the blue box and nothing outside of it. After you have done this, right click on your mouse and select “copy”.

In the upper right corner of your thinkorswim chart window, click on studies then edit studies. This will open the Edit Studies and Strategies window. Click

on the New button near the bottom left corner of the window. This will open the New script window which is pictured on the following page.

The first step in this window is to delete all of the default code that appears when this window opens. After this, right click on your mouse within the code

area and select Paste. The code you just copied from your account on ShadowTrader Should now appear in this box. Next, give the script a name. It can

be any name you’d like, just as long as you will remember it in the future. Here we’ve used the name “ShadowTrader Intraday Volume Measure”. Before

clicking OK, please see the following page.

The top white box provides an example of how your code should appear if it is in good order. Characters in the code will be white, green, blue, and purple

only. Please scroll through the code to double check it. If this is the case, click the Apply and OK button in the lower right corner of the window. Then click

Apply and/or OK on all the windows that remain open.

Note: If any of the code is highlighted in red as shown in the lower red box, you may have missed a character when copying it on the ShadowTrader

website. Please go back to the ShadowTrader website, recopy the code and paste it again. If the issue persists, try copying the code from

a different browser. If you still cannot resolve the issue, please contact us at support@shadowtrader.net

Setting Up Your Intraday Index Volume Chart – We will are using the NYSE Composite Total volume ($TVOLC) in this example.

1) Please enter $TVOLC in the quote box at the upper left corner of the screen of your chart and press “Return” on your keyboard.

2) Click on studies in the upper right corner of the screen.

3) Click on Edit studies, this will open the Edit Studies and Strategies window.

4) In the column at the left of the window, scroll the list of studies in alphabetical order until you find the name of the study you just loaded onto your

platform. Then highlight the name of the study by left clicking on it once.

5) Click the Add selected button. The study should then appear at the top of the window in the Price row. Finally, click Apply, then OK on all open

windows.

When you’ve completed the steps on the last page, your chart screen should look similar to the picture above. Next, set the chart style to a 5 day, 30

minute chart. To do this, click on Style, Indraday, 5 Days, then 30 minute. After this, add the ShadowTrader Intraday Volume Measure study to the chart

After you have taken these steps, you chart should look similar to the one pictured above.

After you have added the ShadowTrader Intraday Volume Measure as a study to the chart, click on the gear at the top of the chart, select Time axis, then

type 50 into the box next to Expansion Area. Before clicking OK, please see the following page.

Click on the gear at the top of the chart again. This time, select Appearance, then type 50 into the box next to Expansion Area. Then click Apply, then OK.

1) Click on Studies in the upper right corner of the screen,

2) Click on Edit studies. This will open the Edit Studies and Strategies window.

3) Click on the gear at the right of the study’s label. This will open your study’s Customizing window.

4) Be sure the chart minutes and the average length of days match the chart length and interval period of the chart. In this example, the chart is a 5

day 30 minute chart, so the study settings match this with chart minutes set at 30 and average length days set at 5. *Important: Please note that the

maximum number of days (average length days) the volume average can be set to is 20. The allowable intraday periods (chart minutes) are 5, 10, 20,

30, 60, 120, and 240. These numbers must match the chart length and intraday period to ensure accurate readings and proper function.

5) The default setting for TOS charts and the intraday volume measure is for regular trading hours only. If you set your chart to include extended

hours in order to view “run off” volume after the close of trading 4:00pm EST, the “include extended hours” should be set to Yes. Otherwise No.

6) Click on the arrow next to the Draw as: box to expand it. Select the 8th option in the list which is the longer dashed lines. Do not click OK at this

point. Please see the next page.

While still in the same window, click on Globals at the bottom of the window. This will expand the window. There you will find colors assigned for different

volume levels.

You have the option of changing these colors by click on the colored boxes and selecting an alternative color. If you are comfortable with the colors

assigned by default, you can ignore this step. When this step is complete, click OK in this window, then Apply, and OK in the remaining window.

Information Displayed on the Intraday Index Volume Chart

Why is the ShadowTrader Intraday Index Volume Chart Important?

Strong and Above Average Volume – These areas can alert traders to a higher probability of an intraday price continuation.

In the example above, NYSE Composite Total Volume ($TVOLC) strong each half hour period from the open up to 1:00 pm EST (left chart). This volume

level was a good indication that the current direction of price, particularly after the breakout from the prior day’s range (right chart) would continue. Later in

the day, the above average volume was a signal that price direction was not likely to reverse.

Days when Strong and Above Average volume levels occur exclusively often result in trend days. This tells a trader to trade with price direction only on

these days and to not fight the tape.

** Important: Keep in mind that whatever colors the user assigns to strong and above average bars, strong supporting volume can apply to both higher and

lower price moves. For example, if shades of green are assigned to above average and strong volume bars, these bars will show up for strong price

moves lower as well as higher.

Below Average to Weak Volume - These levels tell us that only short term traders are currently involved in the market. Breakouts are much less likely to

follow through and price has a higher probability of reacting at important price levels.

In the example above, NYSE Composite Total Volume ($TVOLC) was weak from the open up to 12:00 pm EST (left chart). The right chart shows that

price opened above the prior days range which on its own, might lead traders to think price would continue higher. However, the weak volume reading

reflected on the ShadowTrader Intraday Volume Measure of $TVOLC was a good indication that the market lacked the volume strength needed to follow

through higher.

At 11:00am EST, price traded lower into the prior days range. The lack of even average volume throughout the day left little price movement for traders to

capitalize on.

Days when Weak and Below Average volume levels occur exclusively often result small price range days and/or inside days.

Average Volume – Occurs most often and is less predictive. Price can move or stay contained on average volume. Trend days are less likely to occur

however the possibility of breakouts and breakdowns remains in play. Ultimately, price moves will most often reach a limit with average volume as

illustrated in the examples below.

Strong and Above Average Volume in early trade could have tipped traders off to continuation, however, later in the afternoon session average volume was

not enough to sustain the rallies. As a result, price flagged lower into the close.