I created the Price-Volume Distribution chart a few years ago because I wanted to do data analysis from a different angle. As a computer scientist by profession and an individualist by nature, I’m wired to desire to think differently and to deliberately set myself apart from the pack. Combining my knowledge of human psychology and data structure, I created my Price-Volume Distribution chart. So this chart is not just the product of a computer geek who can speak with computer processors in 1s and 0s. The human psychology is embedded in the “chips” of this chart, too. 🙂
Here are some of the many reasons why I should always have this chart when I engage in short-term trading or long-term investing.
- It helps us identify reversals, divergences, or false breakouts.
- It shows at a glance the prices that got the biggest volume with the highest number of trades.
- It helps us see if the majority of the volume is registered near the intraday high, intraday low, or median. The price bar at
the top of the chart represents the intraday high. The price bar at the bottom represents the intraday low. - It gives us a clue if cross trades happened at a certain price.
- This chart helps us decide where we should place our buying or selling price because we can see the prices that got the biggest volume with the highest number of trades at a glance.
- It helps us know the stock’s Volume Weighted Average Price (VWAP).
Today, I’d like to share with you the Price-Volume Distribution charts of the following stocks:
- Cemex Holdings Philippines, Inc. (Code: CHP)
- Now Corporation (Code: NOW)
- Philex Mining Corporation (Code: PX)
- Philweb Corporation (Code: WEB)
- Waterfront Philippines, Inc. (Code: WPI)
Disclaimer: These are not stock recommendations. I only picked random stocks from the top gainers’ list as of the time of writing this article.
Cemex Holdings Philippines, Inc. (Code: CHP)
VWAP: 1.9775
Top 5 Prices (Biggest Trades): 1.99, 1.98, 2, 1.97, 1.95
Top 5 Prices (Biggest Volume): 1.98, 2, 1.99, 1.97, 1.94
Now Corporation (Code: NOW)
VWAP: 3.6133
Top 5 Prices (Biggest Trades): 3.6, 3.65, 3.64, 3.61, 3.68
Top 5 Prices (Biggest Volume): 3.6, 3.65, 3.64, 3.61, 3.66
Philex Mining Corporation (Code: PX)
VWAP: 3.2887
Top 5 Prices (Biggest Trades): 3.3, 3.27, 3.27, 3.2, 3.23
Top 5 Prices (Biggest Volume): 3.3, 3.27, 3.29, 3.35, 3.2
Philweb Corporation (Code: WEB)
VWAP: 3.5188
Top 5 Prices (Biggest Trades): 3.5, 3.52, 3.54, 3.51, 3.55
Top 5 Prices (Biggest Volume): 3.5, 3.54, 3.52, 3.55, 3.51
Waterfront Philippines, Inc. (Code: WPI)
VWAP: 0.7493
Top 5 Prices (Biggest Trades): 0.76, 0.74, 0.75, 0.77, 0.73
Top 5 Prices (Biggest Volume): 0.76, 0.74, 0.75, 0.77, 0.73
How Can You Use This Information in Your Buying and Selling Decisions?
VWAP – This stands for the Volume Weighted Average Price. It was said that institutional brokers buy at or close to the VWAP so they won’t disrupt the normal volatility of the market. That’s the classical belief. I created my own observations. Below are a few of them.
- If the VWAP is below the current price and the current price is lower than the previous trading day’s closing, the intraday bearishness might continue.
- If the VWAP is below the current price but the current price is higher than the previous trading day’s closing, the intraday bullishness might continue.
- If the VWAP is above the current price but the current price is lower than the previous trading day’s closing, I maintain a neutral sentiment. I see that as an on-going tug-of-war between the bears and the bulls.
- If the VWAP is above the current price and the current price is higher than the previous trading day’s closing, the ball is still in the court of the bulls.
I also have other observations in relation to the mean of the intraday high and low but that’s reserved for the subscribers of EquiPicks. That’s documented in our Quick Start Guide already.
For the Top 5 Prices with the Highest Number of Trades and the Top 5 Prices with the Biggest Volume, please read this article below.
Read: How Mastering Buyers’ Psychology Has Made Me a Profitable Trader
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