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Top Secret
Top Secret
I could not believe that such an eminent brokerage, with an apparent understanding of the
markets, could possibly behave in this way and lose such a sum and, so easily.
It was at this point I decided to take matters into my own hands, believing that if I simply
used a modicum of common sense and followed the strategies of some well-known experts
and gurus, then at least I could not do any worse.
My logic told me that if I placed 10 trades with 6 positive and 4 negative, then I would make
money, and if I did this every week I could make a considerable amount of money.
So, I started, as many new traders do, by buying and reading many of the top selling trading
education books and I also studied the theories of W D Gann and Elliott.
However, it did not take me long to realize that the theories and methods that these books
were suggesting simply did not work, particularly when trading in volatile markets. Neither
did the strategies, nor indicators they recommended, work intra-day.
Until now virtually all of my sales have come from word of mouth and personal
recommendation. Selling my software has not been my primary concern. I make my living
from using the software myself as I trade every day, mostly commodities such as coffee and
cocoa and also the indices, in particular the ES (S&P500) and YM (Dow).
I trade commodities, holding for the longer term trends over days and weeks, which is
where the big money is to be made. The indices I trade on shorter time frames using tick
and time based charts, intra-day, scalping for ticks and points. These two extremes
demonstrate the power and breadth of Hawkeye.
II am proud to say that, to date, that with now hundreds of Hawkeye traders globally, I could
count on one hand those that have written to say that Hawkeye is not working for them.
This doesn’t surprise me, because Volume Price Analysis works. It works for me, it works for
my friends, it works for hundreds of Hawkeye users and it will work for you. Indeed I would
urge you to check out the many trading forums on the internet for yourself.
.
I will continue on my own personal trading journey, which has taken me literally from the
depths of despair to the heights of trading success, using the indicators in the software.
Whatever has happened on your own trading journey so far, I would like to give you just
one piece of advice which is this:
Please do not fall for any seductive trading strategies, or software, or training programs that
do not have Volume at the very heart of their calculations.
Volume is the ONLY leading indicator.
It is the ONLY indicator which signals a price movement BEFORE it happens
It is the ONLY indicator which signals market intent
All other indicators are lagging and only look great in hindsight.
With VOLUME as your main indicator, you WILL be successful and make money. It's even
possible to be able to quit working for someone else and make trading your own full time
business.
Nigel Hawkes
My guess is that if you are reading this book you are probably one of the many traders who
knows there is a better method than you are using already to find a way of consistently
making money from the markets and are falling short of your potential.
In fact you may also be wondering why as an intelligent, educated person something so
simple and straightforward as trading can seem so difficult and frustrating.
After all, we are simply trying to predict whether a price is going higher or lower and profit
accordingly. What could be simpler? It should be no more difficult than tossing a coin.
How wrong can we be!
But, and it is a big BUT, what I want you to be clear about before you continue reading this
eBook is that if you are struggling at the moment, it really is NOT YOUR FAULT. And believe
me, you will arrive at this conclusion yourself by the end of this eBook.
You will also discover how the world’s best traders really make their money. How you only
need to understand one key relationship of market behavior to join that elite group of
traders who make significant and consistent profits every day.
Several years ago, one of the most popular game shows which was sold around the world
was called The Price is Right. Whilst the formats varied slightly, the principle was generally
the same, as contestants in the show were asked to guess the price of various items. The
winner was the one who guessed closest to the price, but without exceeding it.
Many investors and speculators still regard the financial markets as a constant game of “The
Price is Right” but, of course, in trading there are always two parties to any price. More
importantly, that price or opinion in the market is constructed from two separate parties,
agreeing to disagree. After all, if one person is selling at price X, then they are expecting the
price to fall. If another person is buying at price X, then they are expecting the price to rise.
Price is the basic building block of every chart, and indeed I once asked a very famous
trader, if he could only use one indicator, which one would it be - he answered price.
Without the price, we have no measure of market sentiment, of where the fulcrum of the
market is at any time. Price contains all the information in one simple bar, embracing all the
views, news, hopes and aspirations from traders and speculators around the world, all of
whom are driven by two primary emotions, fear and greed. Without the fulcrum of price,
these two emotions would simply wither and die.
It is price which feeds the emotional responses, which is then displayed in one simple bar,
on one simple chart. Price distills everything to one single fulcrum, where it balances for a
split second, before moving on.
So price is the basic building block of any chart. It is the DNA of the market and contains all
the collective information in one single number. As Wyckoff himself used to tell his students
“stock prices are made by the minds of men” and in 1931 he went on to write “when
demand for a stock exceeds supply, prices rise. When supply is greater than demand, prices
decline.”
Each price bar is composed of four elements: the open, the high, the low and the close. Of
these, as we will see later in this book, one element is key when considering any analysis of
price.
The open of any price sets the fulcrum for that particular trading session, and represents the
starting point, whether overnight or intraday. The open represents the benchmark against
which all other price action is then measured, whether on a one minute chart or a yearly
chart.
So, let’s consider price in a little more detail and in particular how the majority of traders
use it in their analysis. To do so, let us look at the simplest chart imaginable which has one
single bar. The open, high, low and close clearly defined.
The problem for many traders is that they compound this problem by then applying what
we call “lagging indicators” which once again are based on an historical view of what has
gone before. Imagine, for example, that we have seen 10 consecutive price bars rising. Does
this mean that the next bar will also rise?
The answer, of course, is that no-one can be sure. However, one thing you can be certain of
is that any indicator that looks at history will tell you that the next price bar is going to rise.
Put simply the reason for this is that it has no other information on which to base its
Imagine for a moment you are the casino and I tell you that I have a system for forecasting
where the little white ball will end up in the roulette wheel. I explain to you that my system
is based on the history of where it has ended up in the past. Would you consider this to be a
valuable system and helpful in forecasting the next spin of the roulette wheel?
The answer is, of course, NO. No one knows and no system or methodology can ever
forecast where the ball will land based on past events. Yet this is what traders do, around
the world, day in, day out, year in, year out. Placing their faith in systems which are based
on historical data. Every single one of these systems is flawed. These traders may as well flip
a coin, and indeed if you have read my introduction to this book you will know that I too
was reduced to this state when using these types of indicators.
There are literally hundreds of such indicators and most can be found on your trading
platform. They fall into two broad categories - trend following and oscillating. The most
popular are those such as Moving Averages, MACD, Stochastic, Bollinger bands, RSI and
Elliott wave, to name but a few.
All of these indicators have one thing in common because they all lag the market. They are
great in hindsight. This is why most traders struggle to make a living, failing to understand
that it is not their fault, but simply that they are using signals and indicators which are based
on historic data and therefore virtually useless at predicting future price direction.
Finally, the realization dawns that there must be a better way to trade, and to make money
consistently. Unfortunately, this usually comes at a high price, both emotionally and
financially, as not only is it costly but it also undermines confidence, self-esteem and self-
belief.
A further problem with all these indicators is that whilst they might work well under certain
market conditions, they fail miserably in another. Of course, at the time you are never sure
which it will be leading to further uncertainty, emotional trading decisions and further
losses.
As an example let’s take one of the most popular indicators used by traders, the MACD.
MACD stands for moving average convergence divergence - what a mouthful! Many traders
are taught, often at great expense, by a so called “veteran trader” to use this indicator to
take trading positions.
The theory is that where price is at odds with the trend of the MACD indicator, then the
price is likely to turn. Below is an example of where MACD divergence does in fact indicate
that price is going to turn up owing to bullish divergence between the price and the MACD
indicator.
It is possible to find as many examples of a failing MACD signal as you can a successful one,
but many traders are seduced by the ‘mystical’ quality of MACD and persist with its use,
preferring to believe in the system rather than abandon it for another indicator, even
though this means losing more money.
Stochastics are used to highlight overbought and oversold areas on a chart. Finding
overbought and oversold regions are an important part of a trading system and are very
powerful. They are useful where the marker is moving sideways in what we call ʻchoppy'
price action. In other words the market is moving sideways in a narrow area of the price
chart.
However, they are notoriously unreliable in trending markets, which is of course where
most traders make their profits. The problem is that it can be very difficult to know, at any
given time, whether the market is in a trend, and if it is going to stay in a trend. So in fact
most of the time Stochastics, and the many other trading indicators based on them, simply
don't work.
Many traders who persist with Stochastics ultimately become frustrated, believing it is their
fault when nothing could be further from the truth. It is simply that they are basing their
The truth is lagging indicators just do not work, and never will. When I first started I used
them too. We all do. It’s the herd mentality. All the traders I have taught over the years
have come to me because they have lost money using them. So please, don't be seduced
into using them as they all have two things in common.
First they will help you to lose money, and second, they have no value at all in forecasting
the future direction of the market.
This is the major reason why the majority (perhaps even as high as between 70% and 80%)
of trading accounts held with brokers are in deficit at any one time.
Of course being disciplined in following whatever system you are using is vital, but even
with this is you are basing those decisions on the wrong set of tools, i.e. lagging rather than
leading indicators, this creates fear, uncertainty and doubt. I am sure you will agree that this
is hardly the best mindset that is likely to create the consistent, confidence in your trading
and results.
Rather, this state of fear of losing a profit or making a loss generally means that being
disciplined in your trading becomes all the more difficult.
Trading has changed over the decades, Old indicators worked well at the end of day but fall
down at the live edge of the intraday market in these times today where everyone sees the
price in real time, at the same time. Lagging indicators cannot possibly tell you the whole
live story as it is happening now.
A further effect of using these indicators is that many traders take “the more the better”
approach. In other words, covering their trading screens with as many indicators as possible
in the hope of finding the perfect trade set up.
Example - Trader 1
Our first trader has a good record at finding profitable trades. He places 100 trades and 60
are profitable, only 40 are loss making, a good average for most traders.
The average profit on his winning trade is 25 pips. This makes a total of 1500 pips. The
average loss on the losing trades is 45 pips. A total of 1800 pips which gives an overall loss of
300 pips.
This example highlights a trap that even good traders can fall into and is caused by fear and
emotion.
In this case the trader held onto the losing trades and closed out the successful trades much
too early. Why?
Because the trader was fearful of losing a profit. One of the primary fears that all traders
face.
Of course it is correct to aim for the nest set ups at entry but this is only the start of the
story that will create your result. Remember exits are where you realise your REAL DEAL
profit or loss in any position.
Example - Trader 2
This trader takes 100 trades, 40 of them are profitable and 60 of them make a loss.
Example - Trader 3
This trader takes as many winning trades as he does losing trades, and is probably a novice,
using one of the hundreds of free trading packages available either from his broker or the
internet.
Typically he makes 25 pips on each profitable trade, and loses 25 pips on average on each of
his losing trades, therefore breaking even over time. However, these trades do not include
the cost of “the spread” so over a longer time period he may end up with a significant loss.
Sadly, Trader 1 and Trader 3 make up the 70-80% of traders who are in a loss making
situation. What’s even worse is the fact that these traders are not necessarily wrong in
selecting their trades, many do in fact find potentially profitable trades. It is simply their
indicators or system that is unable to keep them in trades long enough to profit from any
trend. In most cases they will be using the charts and lagging indicators provided by their
brokers.
So regardless of their trading strategy, the net result is small wins but bigger losses. A lethal
combination that results in frustration and loss and ultimately many of these traders leave
the market entirely, failing to fulfill the potential of a lifetime of sustainable results.
They could see the flow of buying and selling and when any large institutional orders came
through, then these traders would simply ride on their coat tails, taking advantage of the
market’s momentum. As pit traders they could almost “see” the buying and selling. They
could sense the fear and greed in traders’ eyes. A full market in full cry is a sight to behold,
and will tell you instantly the weight of buying and selling in the market. This is what I
wanted to replicate in my own trading.
I wanted a system that would mirror what was actually going on at the live edge of market
and underpinning the price action above. What I had discovered was, of course, VOLUME
which is the fuel that drives the market, and the more fuel there is the greater the
momentum. In other words it is the only leading indicator.
This revelation is, of course, nothing new as all the great iconic traders of the past: WD
Gann, Elliott, Wyckoff, Jesse Livermore and Richard Ney had all come to this realization as
well.
Indeed, Charles Dow himself, the founder and creator of the Dow Jones Index understood
the importance of volume, but it’s taken traders over 100 years to understand the
importance of this fact.
A leading study of market volume published in 2001 by Gervails, Kaniel and Minglegrin of
The Wharton School, University of Pennsylvania, considered market prices over a 30 year
period and one of its major conclusions was that:
This principle has been shown to apply to all financial instruments and markets, so it applies
equally to currencies, commodities, indices, equities (and of course Options based on these)
and ETF’s.
It is also a recognized fact that when prices are rising, the market will not fall purely as a
result of low volume but will simply move sideways as it takes a breather.
Conversely any reversal from a falling market cannot occur without an increase in volume,
and is sometimes also referred to as a volume climax.
This fact has been recognized for decades by pro traders as well as the iconic traders of the
last century, such as WD Gann, Elliott, Richard Wyckoff and Richard Ney. They too
understood the Volume is the most powerful leading indicator and here are some simple
graphics to illustrate some statements.
Conversely, if we have a rising trend but falling volume, then this is WEAK. After all, as we
have just seen, if the buyers are still in the market, then this would be represented by
RISING volume, and in the second example we have FALLING volume, so we can assume
here that the buyers are NO LONGER INTERESTED. The trend is running out of steam and
becoming exhausted. This is the first sign of a POSSIBLE change in trend. The buyers have
left the market, and MAY now be replaced with SELLERS in due course.
In a trend, the volume will go with the trend, so expect to see the volume fall away in the
pullback of the trend. This is NORMAL volume behavior. The buyers are taking a rest, before
re-entering the market to buy once more. The reason this happens is there has been NO
SELLING CLIMAX to signal a change in trend.
If we see the following diagram with the price in an uptrend an ultra-high volume bar
appears. This is OFTEN a signal that the trend is about to reverse, as volume climaxes
highlighting price reversals. This is particularly true if the extreme volume is associated with
no equivalent reaction in the price.
Here we can see that the price has risen strongly, with increasing volume, a positive sign.
However, on the last bar, the volume has been ultra-high, but the market has fallen with a
narrow spread price bar.
Points where the market trades on high volume are the points of strong support and
resistance, and are the first signs of a change in trend or a breakout.
Volume helps us to confirm the potential breakout from an area of price congestion. In the
example below, we can see that we have high volume at the bottom of each market
reversal, which is suggesting BUYING or ACCUMULATION at these points.
The price support region confirms this view, so that when we do FINALLY see the breakout
(as seen below), we have a GREAT signal from our volume bars, that this is a GENUINE
breakout and therefore a LOW RISK TRADE for a “Long” trade.
As this is selling volume, then when we see the breakout to the down side, VOLUME once
again VALIDATES this breakout, as we have seen the HIGH volume bars on each FAILED
attempt to move higher.
Once again we have the potential for a low risk entry, should there be a break below
support, if confirmed by volume.
However, just like price, volume in isolation tells us very little about the market’s future
direction. All it can signal on its own is interest in a market or event.
For this we need to combine price and volume together to give us the most powerful,
analytical tool available which is the only methodology that will reveal the market’s future
direction.
At this stage in my trading journey I also began to study volume spread analysis which too
looks at volume and price, but only over the spread of the price bar. Volume spread analysis
only considers the high, low and close of the price bar. This technique seeks to establish the
cause of price moves by considering the imbalance between buying and selling, and thereby
predict the future direction of the market.
I continued with volume spread analysis for a considerable period of time, and whilst it had
some benefit and merit it was (and is) a highly subjective analysis of the market. It requires
a great deal of study and whilst it provided a flavor of market sentiment and future direction
it did give far too many conflicting signals. In other words, it seemed incapable of
differentiating whether the activity contained within a price bar was buying or selling, or
merely a pause in the price action.
It was at this point that I returned once again to the work of Richard Wyckoff and it was
whilst I was reading some of his writings that it hit me.
Even his studies ignored one crucial piece of information, namely, the opening price and
perhaps the best way to explain my eureka moment is to consider a simple analogy.
Imagine for a moment that you are at an auction. It is a cold, wet and miserable day in the
middle of winter, and there are only a handful of other people in the room.
The auctioneer brings the next item into the sale room, a piece of antique furniture perhaps,
and raises his hand with an opening bid, but there are no takers. There is no interest at this
price.
Now imagine the same sale room in the middle of summer. The room is packed, and it is
standing room only, and the same piece of furniture is now being sold again.
The auctioneer raises his hand with an opening bid, which is immediately accepted and the
bidding takes off, with the price climbing higher and higher as each subsequent bid is then
replaced by a fresh and eager bidder. Finally, the bidding war stops and the piece is sold for
three times its original price.
Encapsulated in this simple everyday event, are the key principles on which the financial
markets are built. However, few traders ever have the good fortune to discover these
simple secrets.
You are one of the lucky ones, as you are about to learn all about the volume secret, which
when combined with price, produces the world's most powerful trading indicator.
Understanding how this volume and price relationship works will give you your own
crystal ball into the financial markets and, possibly with it, the financial and personal
freedom you seek.
So let’s go back to our auction room to explore this relationship and the power it has for us
as financial traders.
The first concept we need to grasp is that the markets are essentially very simple. Millions of
words and thousands of books may have been published which attempt to explain how the
markets move and why, but they are still very simple.
Some even use higher mathematics, others use the stars, and yet more rely on a vast and
increasing array of technical indicators, all of which are guaranteed by the authors to make
you money.
It is PARAMOUNT to study and master this relationship between volume and price, and
once you begin to understand the power of these two forces in the market, then those
lagging indicators that you may have been using to date become irrelevant.
So let us revisit the first of these which is volume, the single most powerful leading indicator
we have, which tells us where the market is going next. And by the time you have finished
reading this book, you will know how to read the market like a professional trader.
Think back for a moment to our auction. In our sales room, the price was bid higher and
higher. Why? Well in simple terms there were several bidders for the same pieces of
furniture. In other words, if we convert these ʻseveral biddersʼ into financial terms, this is
volume. Suppose those bidders had not been there, as we saw in the first example. Would
the price have risen so fast? NO – because there was no volume activity to drive the price
higher, and you can think of this analogy in many different ways.
As Joseph Granville, the famous financial author once wrote, “Volume is the steam in the
boiler that makes the choo-choo go down the track,” and this simple statement
encapsulates what volume is all about. It is the fuel of the market. It drives the market both
up and down, and without volume, nothing happens.
After all, would you expect a car to move uphill with no extra gas applied. Of course not, so
why then should we expect anything different in the financial markets.
To move uphill takes effort, and in the financial markets this effort is volume. If the market
is moving higher and we are seeing increased volume, then this is similar to our auction
room analogy, with more bidders driving the price higher. Now the only difference in the
So, in a nutshell, volume expresses interest and enthusiasm in one simple bar. All the buying
and selling decisions of investors and speculators around the world, are all captured in the
pure activity of one volume bar. All the millions of trading decisions, whether to buy or to
sell are all captured in this one bar.
After all, there are only two reasons for buying or selling in the market. The first is to
increase risk in order to make money, and the second is to reduce the risk of losing money.
If everyone is happy to increase their risk then the markets will rise with a consequent
increase in volume as more buyers enter the market.
Conversely if everyone is reducing their risk by selling, then the markets will fall, again with
increasing volume. What is revealed to us in this simple example is that if this is what is
happening on our charts, then in the first case we buy, knowing that the market will rise,
and in the second we sell, knowing that it will fall.
Master this concept and suddenly we have our own market predictor, our own crystal ball,
and all from one indicator – volume.
Volume expresses interest and enthusiasm. Volume IS the fuel of the market, it is what
drives the market, and without it, the market will simply drift. Volume exposes the truth of
the market. Volume reveals conviction in the market, and all of this is revealed on our
charts.
In fact it is the only leading indicator. In other words, it is the only indicator which tells us
what the market will do next. Attempting to trade without it is much like trading with a
blindfold. You may as well toss a coin.
Now let’s consider price once again, the second key component in our volume price
relationship.
In this case, imagine that you are looking to purchase an item on eBay. You search the site
and eventually find just one seller who has the item listed for sale. How does this make you
feel? Is this a fair price or is it an unrealistic price? You have no way of knowing, as you have
no benchmark by which to judge the price, as there are no other sellers of the same
product.
Now imagine that you are looking for another product on eBay, and come across hundreds
of different listings for this product, where the price range is very narrow. How does this
make you feel? You now have a benchmark against which to judge the price in the market,
as you are able to make a comparison and reach a reasonable conclusion.
We do this all the time when we are both buying and selling. When we are buying, we
constantly look for a validation of the price, whether in the shopping arcade buying an item
of grocery, or in the car showroom, buying a new car.
When we are selling, we do exactly the same thing. We validate the price before we put our
item up for sale, and chances are that we will advertise it somewhere in the middle of the
price range.
These same principles apply in the trading world and provide the defining link between
volume and price.
To put it simply, the more people who participate in a price move, or in our case the more
volume associated with a price move, then the more that price move is validated. In other
I hope that you can start to see how volume and price are the only two aspects of a chart
that you need to understand. Learn how these work together, and you will join the elite
group of traders who have the ability to literally “read the market” and have more certainty
where the market is likely to be heading, before it happens.
Whilst volume validates the price, it also contributes to the price itself, and this is why
understanding the volume and price relationship is vital to your trading success.
The markets, as we know, are always awash with news of every type, from the daily release
of fundamental and economic data, to the political statements from governments and
politicians, to the latest announcement from a central bank.
All of these pieces of news are absorbed by the markets and built into the latest price
action. Now, as this new information is released into the public domain, volume reveals the
effect of this information on price. By watching the change in volume, as this information is
released, we can instantly see how the markets are reacting to the news, and how quickly
the latest piece of news is being absorbed by the various market participants.
What this means is that the volume substantiates the importance or otherwise of the
release. If the volume rises on the news and the price rises in tandem, then the market is
placing significant emphasis on this piece of news. Clearly in this case the price is being
validated by the volume surge.
Conversely, if the volume fails to rise on the news, then the market and the market
participants have clearly discounted this item, and consider it to be unimportant or
irrelevant, as they now wait for the next release to arrive.
So, now that you have a basic understanding of the price and volume relationship, you must
consider some of the other key aspects of this pivotal relationship, and here I need to stress
some important concepts to us as traders.
On their own, price and volume only reveal vague market information. After all, what does
price tell you, other than it is a price, to which the answer may be 'so what?'
Equally, volume on its own only tells us there is volume, and nothing else. However, when
combined, the true market intent is revealed giving clear signals of both buying and selling
intent, something that would not be revealed by either on its own.
Indeed, Ying, in his ground breaking work on the price volume relationship published in
1966, stated the following:
“Price and volume of sales in the market are joint products of a single market mechanism;
any model that attempts to isolate prices from volumes or visa versa will inevitably yield
incomplete if not erroneous results”
One of the questions many traders ask when first presented with this powerful concept is
whether volume leads price, or does price lead volume, and the answer is, of course, the
first of these – volume leads price.
This is why this technique is so powerful as it will tell you in advance, what the market is
likely to do next. In simple terms, volume signals a price change BEFORE it happens, and this
is the POWER of Volume Price Analysis.
So, for example, suppose we have a market which is rising, with rising volume. This is a
strong signal that the market is bullish and therefore likely to continue for some time.
However, sometime later, the volume begins to fall, and yet the market is continuing to rise,
but at a slower pace. Well here, the market action is much like an oil tanker which takes
time to come to a stop once the brakes are applied. It is the same with the market where
the momentum of a trend will continue for some time after the buying momentum has
either ceased or declined.
Just as with the engines of a large oil tanker when they are suddenly switched off, the ship
will continue for several miles. It is the same with the market, which just like the tanker will
continue on due to its momentum – it does not suddenly come to a dead stop.
Now that you have a basic understanding of the volume and price relationship let’s look at a
few more examples of how volume plays a key part in the current AND future direction of a
market.
Low volume tells us that there are very few participants in the market, and that neither
buyers nor sellers have any significant interest in the price. In this scenario no financial
institutions will be involved, and therefore any moves from individual traders will be weak.
Having studied volume, volume spread analysis and having seen the light with volume price
analysis, I then had to spend many thousands of hours programming and back-testing my
theory before I was finally able to deliver what I believe is the ultimate trading system based
on volume and price, and which forms the foundation of Hawkeye.
Volume Price Analysis is my own unique interpretation of the volume price relationship,
and whilst it is firmly rooted in the work done by the iconic traders of the past, in particular
This facet of price is something all other analysts and programs tend to ignore.
Volume price analysis also takes account of the work of the famous Turtles experiment
and the importance of average true range.
The result is the unique Hawkeye volume indicator which uses VOLUME PRICE ANALYSIS.
The Hawkeye volume indicator looks at the open of the previous 20 bars, the close of the
previous 20 bars, the high of the previous 20 bars and the low of the previous 20 bars
before performing over 360 calculations on each bar to determine whether the volume of
that bar is buying volume, selling volume or neutral volume.
On the other hand, currencies are bought and sold for a multitude of reasons – few of which
relate to investment and are primarily bought and sold for two reasons.
First, for practical reasons where a company has to hedge currency risk or purchase
overseas assets and resources in the local currency. Secondly, purely for speculative
purposes, which is increasingly becoming the norm and, as such, volume size is now
irrelevant.
If, for example, Honda the Japanese car manufacturer, decides to hedge 500 million Yen
before shipping cars overseas, what relevance does this have to you as a currency trader? If
you were watching this transaction using what is called level 2 data, which shows the size of
transactions passing through the market, you would see these transactions in multi-million
segments such as 15 million, 50 million etc. What does this tell you?
Nothing, you do not know who is moving this money or why. But what tick volume does tell
you IS the level of activity going through the market.
First, the forex market has a normal daily pattern of activity which ebbs and flows as the
various financial centers open and close, as the market moves across the globe.
This is generally reflected by relatively low volumes in Asia, large volumes in London, lulls
before news releases and medium volume in the US. This is a normal trading day in the
forex market and any deviation to this is something which should be considered as
important.
So, tick activity reveals all this for you to see clearly, giving you a powerful insight into
market sentiment, market interest and therefore market direction.
Until now meaningful analysis of volume in the spot forex market was merely a pipe dream
for forex traders. But now with Hawkeye volume, forex traders can exploit the currency
markets using its awesome power.
By using complex mathematical algorithms Hawkeye is able to establish with a 90% degree
of accuracy, whether the tick volume flowing through the market is buying or selling
volume.
Forex traders now have what is likely the most powerfully predictive trading system in the
world at their fingertips.
Later in this eBook you will see examples of how Hawkeye takes this data and presents
traders with the ultimate chart, where you will see a currency pair with associated volume
which reveals the future direction and trend.
Hawkeye Revealed
In trading there are only two types of risk. The financial or monetary risk on each trade, and
the risk of the trade itself. Most traders will understand the first and this is both easy to
define and to manage.
The financial risk is simply how much of your trading capital you are prepared to risk on the
trade. A simple rule of thumb, which many traders use, is to apply the 1% rule. This
effectively means that you could be wrong 100 times in row before losing all your capital.
So, for example, if you had $1000 in your trading account then you would only risk a
maximum of $10 on each trade, which would then define both the size of contract you could
trade, as well as the maximum positioning of any associated stop loss.
This trading risk is straightforward and just needs calculating and adhering to within your
trading plan. What is far more complex for most traders is defining the risk they are taking
when entering a position. In other words, the probability of success or failure.
Just like tossing a coin, we are always looking to weight the probability in our favor. For a
coin we would add a small piece of lead to one side of the coin so that it would generally fall
with a bias to one side.
This is what we are looking to replicate in our trading. On every trade we are trying to
establish the probabilities, so that we are taking the lowest risk trade with the highest
probability of success.
This is the essence of trading, this ability to judge the probability of success or otherwise of
a trade. This is something many traders find difficult and problematic as trading is much
more of an art than a science. It is an art because markets are made up of people, their
money, their hopes, their fears and their greed and it is this maelstrom of emotion, and
Now perhaps you can begin to see the predictive power of Hawkeye. It not only reveals the
future direction of the market but in doing so allows traders to stay with a trend, and so
This following chart from the US equity markets is for Honeywell which is listed on the
Dow Jones index and is a very heavily traded stock.
Shortly after, the stock began to move lower once again and this time the Hawkeye
volume in red began to increase steadily in size indicating increasing bearish sentiment in
the market and increasing selling activity which added momentum to the trend lower.
Once again a classic example of the power of having Hawkeye analyzing the price and
volume to give us our trend. Not only does Hawkeye calculate the market activity in terms
of volume and whether this is bullish or bearish, but it also paints the trend for you
simultaneously giving you two powerful and predictive indicators in one package.
Hawkeye’s unique differentiator is that the Hawkeye volume indicator interprets VOLUME
PRICE ANALYSIS and then tells you whether the volume is buying, selling or neutral
because it carries out over 360 calculations on each price bar. The volume bars are then
painted accordingly, red for selling, green for buying and white for neutral. However, it
does not stop there because the Hawkeye volume indicator then weights these bars and
triggers powerful and accurate entry and exit signals, something which no other trading
software can provide or offer. This unique approach moves trading analysis into the 21st
century adding a whole new dimension, consigning traditional volume spread analysis to
the history books, and lagging indicators to the waste bin.
And finally….
My sole objective in developing Hawkeye is to help YOU avoid the pain that many have
suffered and to achieve your own trading success, which in turn builds confidence and
further success.
Hawkeye is about giving you that confidence to take a trade and to stay with it for as long
as possible, removing emotion and taking away the fear as you start your own trading
journey.
More experienced traders can now throw away their lagging indicators with confidence
and embrace a new world free from the distortions of historic data.
I hope you have enjoyed reading this short book and found it both useful and educational.
Hawkeye is the only software that works, and works consistently, in any market and in
any timeframe because it is based on blending volume with price to give us market
direction in multiple timeframes.
If you would like to join that elite group of traders who have found financial
independence and personal freedom as part of the Hawkeye family, please join one of our
FREE live training rooms or online workshops where you will see Hawkeye in action as we
trade the markets, making real money in real time.
To join one of our FREE live training rooms, you are very welcome to register at our main
website: www.hawkeyetraders.com
Discover Hawkeye volume for yourself, and get the trading edge you have desired.
Nigel Hawkes