Red and Green Volume Bars

[Reznor]

Hello All. I'm pretty new to investing and had a quick question that I couldn't find an answer to. I know that the green volume bars indicate more buying pressure than selling which a red volume bar would indicate. Isn't the buying and selling equal since somebody has to buy a share that someone sells. I was thinking that maybe the volume is green if the price closes higher or red if closed lower. Also what color would the bar be if the stock closed at the opening price. I guess I need someone to explain or point me to a thread/article that explains the color of the volume bar. Is it possible to have a green volume bar on a day when the stock price fell say 1%.

[Doc Holliday]

red means that the stock was lower at the end of the time period that the volume bar covers and green means it was higher. The colors will change when you change your time setting on the chart .. ie 5m vs 30m chart
if it closes at the same price it will be gray ... at least it is on amtd

[orange]

Originally Posted by Reznor

Hello All. I'm pretty new to investing and had a quick question that I couldn't find an answer to. I know that the green volume bars indicate more buying pressure than selling which a red volume bar would indicate. Isn't the buying and selling equal since somebody has to buy a share that someone sells. I was thinking that maybe the volume is green if the price closes higher or red if closed lower. Also what color would the bar be if the stock closed at the opening price. I guess I need someone to explain or point me to a thread/article that explains the color of the volume bar. Is it possible to have a green volume bar on a day when the stock price fell say 1%.

thanks, Doc- i've often been puzzled by the bar colors too.
but Reznor- as for, "Isn't the buying and selling equal since somebody has to buy a share that someone sells", this isn't a zero sum game, except on AMEX (and even amex is questionable). there are indicators which attempt to assess buying pressure based on intraday Time & Sales reports. they do it by matching time of each trade to the bid/ask at that time. if price is closer to bid, it was a sell, if closer to ask, it was a buy. quotetracker has a widgit for this (forgot where it is or how to load it).

but in the strict sense of there always being a buyer for every seller we have to consider the intermediary of the mm's and specialists. here's a couple scenarios...
(B= buyer, S= seller, MM= market maker)

scenario 1 (normal, as you describe)
S sells 1000 shares to MM, B gets 1000 shares from MM

scenario 2 (real mkt, aka Land of OZ)
B gets 1000 shares from MM
S doesn't do anything

scenario 3 (real mkt, aka Land of OZ)
S sells 1000 shares to MM
B doesn't do anything

scenario 4 (real mkt, aka Land of OZ)
B gets 1000 shares from MM
S sells 200 shares to mm

scenario 5 (real mkt, aka Land of OZ)
B gets 1000 shares from MM
S sells 2000 shares to mm

[lovemoney]

That would make sense if I understand what orange is saying correctly. MM, market maker (or middle man, lol) would account for a buy for every sell or a sell for every buy. But since your not dealing with just two parties but three, the buyer, MM, and seller, then the buyer/seller ratio is not always going to be even steven because the buyer's purchase from the MM is not always gonna match what the seller sold to the MM. The MM sometimes ends up holding some of the shares that he aquired.

[orange]

Originally Posted by lovemoney

That would make sense if I understand what orange is saying correctly. MM, market maker (or middle man, lol) would account for a buy for every sell or a sell for every buy. But since your not dealing with just two parties but three, the buyer, MM, and seller, then the buyer/seller ratio is not always going to be even steven because the buyer's purchase from the MM is not always gonna match what the seller sold to the MM. The MM sometimes ends up holding some of the shares that he aquired.

"The MM sometimes ends up holding some of the shares that he aquired."
ROFL, lovemoney, we're creeping closer to the truth. fact is, The MM usually ends up ends up selling us more shares that s/he has! and welcome to the creative accounting concept of "naked shorting", which provides us with the blessings of almost unlimited market liquidity. academics who study the effect of this have come to the interesting conclusion that, depending on which stocks you hold, anywhere from 10-60% of it is pure-dee counterfeit. yup, that's right. thin air LOL. but for the sake of profit we all pretend that it's real. it's kinda like a musical chairs game that's been going on for abt 50 years or so. so far, the music has kept playing and everybody's happy.

but one day, what if some stupid knothead decides they want a full accounting? in other words, what if somebody finally says, "hey, let's audit all the brokers to see how much stock everybody has and compare that to how much each company has actually issued". well, then the music stops. hmm- that would mean the mm's and brokers would have to come up with a lot of cash fast, more cash than they actually have. and you know what that means. and this is just one more reason why a lot of us most of the time don't hold any longer than we have to.
i had a couple knothead links but they're in my other browser- lawsuits by companies demanding that full accounting, suing people like NITE and others. silly knotheads, wanting to know why their stock price stays depressed, claiming that nice people like NITE have diluted it to death with counterfeit shares. tsk, tsk!

[lovemoney]

Originally Posted by orange

"The MM sometimes ends up holding some of the shares that he aquired."
ROFL, lovemoney, we're creeping closer to the truth. fact is, The MM usually ends up ends up selling us more shares that s/he has!

Lol, yeah I was gonna mention that flip side of it at the end that they many times they would also end up with a share deficiency, but I figured we had the idea. Point being, I was elaborating on your illustraton that the shares bought or sold aren't always an even share for share between buyers and sellers with the MM in the picture.

Good point about the short selling, manufacturing shares to sell out "thin air". Good way to put it, lol. And you're right, those MM's would have hell to pay if they were all of a sudden audited. Valuable insight into those "nice" guys like NITE as you described. :D

[orange]

Originally Posted by lovemoney

Lol, yeah I was gonna mention that flip side of it at the end that they many times they would also end up with a share deficiency, but I figured we had the idea. Point being, I was elaborating on your illustraton that the shares bought or sold aren't always an even share for share between buyers and sellers with the MM in the picture.

Good point about the short selling, manufacturing shares to sell out "thin air". Good way to put it, lol. And you're right, those MM's would have hell to pay if they were all of a sudden audited. Valuable insight into those "nice" guys like NITE as you described. :D

thanks, lovemoney- i figured you knew that. but i explained for passers-by who might not understand.

[BadThad]

This is almost worthy of a sticky because I answer this question a lot. Orange has it nailed, I'm going to put this into a note so I can copy/paste to people in the future. LOL

"The MM sometimes ends up holding some of the shares that he aquired."
ROFL, lovemoney, we're creeping closer to the truth. fact is, The MM usually ends up ends up selling us more shares that s/he has! and welcome to the creative accounting concept of "naked shorting", which provides us with the blessings of almost unlimited market liquidity. academics who study the effect of this have come to the interesting conclusion that, depending on which stocks you hold, anywhere from 10-60% of it is pure-dee counterfeit. yup, that's right. thin air LOL. but for the sake of profit we all pretend that it's real. it's kinda like a musical chairs game that's been going on for abt 50 years or so. so far, the music has kept playing and everybody's happy.

but one day, what if some stupid knothead decides they want a full accounting? in other words, what if somebody finally says, "hey, let's audit all the brokers to see how much stock everybody has and compare that to how much each company has actually issued". well, then the music stops. hmm- that would mean the mm's and brokers would have to come up with a lot of cash fast, more cash than they actually have. and you know what that means. and this is just one more reason why a lot of us most of the time don't hold any longer than we have to.
i had a couple knothead links but they're in my other browser- lawsuits by companies demanding that full accounting, suing people like NITE and others. silly knotheads, wanting to know why their stock price stays depressed, claiming that nice people like NITE have diluted it to death with counterfeit shares. tsk, tsk!

About as clear as one can explain it.

[swankypenguin]

beautiful thread guys