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-   -   Volume Leads Price - VSA and Wyckoff (https://www.forexfactory.com/showthread.php?t=916096)

naviafra May 13, 2019 3:51am | Post# 1

Volume Leads Price - VSA and Wyckoff
 
Hey guys!
I am new to this forum. I am starting this thread because most people who I talk to in my Telegram Group or who follow my Youtube Channel never really understand what I do and I how I read charts. I hope that this thread will clear up a lot of those questions.

Background
Well, I am 32 of age and I have been trading professionally for some time now. I started out with just with paper trading, reading and studying for a VERY long period of time. When the cryptocurrency fever hit the world, I was very early to join and managed to make some profits off cryptos. I had always been cruious about the relationship of volume to price, and when I came across the book Mastering the Markets by Tom Williams I was really attached.
I applied what I have learned and researched to my trading and things really changed for me. I had made money off cryptos but I quickly realised it was luck (who loses in a massive bull trend right?) and I started adapting my trading to Forex.
Now, years/months later, I am doing heavy volume studies on a daily basis, I am tutoring and mentoring new traders and I publish theories and research pretty often on Youtube, Telegram and private trading groups that I am a part of.

Reason for this thread
This thread is not posted here for me to share any specific strategy or try to push “my way” of trading into others, certainly not. The reason for this thread is to both educate new traders in some manner and also to find like minded traders, to build future friendships and have people to discuss trading to be able to benefit from eachother in order to maximize profits and stay out of the market when conditions are not favourable

The hurtful truth about financial markets
Markets are driven by the imbalance of supply and demand. The markets does not move because oil prices are hitting a new high, US going to war or a corruption scandal in some country having an effect on it’s currency. No, the fundemental, political and economical news you are hearing and reading about is just a reason for the big boys (Smart Money) to accumulate (buy) or distribute (sell) heavy blocks of stocks (or currencies) when the demand or supply is unreasonabily high. Look at major news events for a currency pair and ask yourself “The USD had VERY good news during this past week, but how did the market turn bearish as a result of this?”. Well the answer is easy, the big boys (Smart Money) had bought A LOT at the bottom, and now needed to sell off their holdings. When will they find buyers to dump their holdings on, without marking down the price against their own interest? Well, during positive news!

How does market manipulation benefit me?
Most new traders use moving averages, fibonaccis, structure (support/resistance levels) or trend lines when they trade. Some use patterns and harmonics. I am not bashing on any of the methods that you use, but what if you added volume to that? What if you traded when you KNEW sellers are overcoming buyers or when buyers are overcoming sellers? Is there a way of knowing this? Yes, with the use of volume and the powers of supply and demand. All markets are moved by imbalances in supply and demand. You just need to figure out how to read it correctly.
I do not trade using the above mentioned indicators or patterns. Never! I sell when I see the smart money are selling (the market is weak) and I buy when I see the smart money are buying (the market is strong). It is institutional money that moves the markets, not the money of the average joe trading CFD’s on his local broker.
Follow this thread, and I promise to shed some light on market movement, supply and demand and how to identify strong and weak markets and use them in your advantage to make money.

The following weeks to come, I’ll post in this thread with explanations, theories, research, pictures, trade examples and much more.
Looking forward to getting to know a lot of new people in here!
For those of you who just heard about the importance of volume, VSA or Wyckoff, I highly recommend starting to read the book Mastering the Markets by Tom Williams. It is a free book that is availableby just googling the name. The book will try to get you to buy the Tradeguider software in the end, I can assure you that is a complete waste of money. Follow me in my thread and you can decide yourself if what I have to say is worth paying attention to or not.

EDIT: I see I have a typo in the title, it should be Volume Leads Price

naviafra May 13, 2019 4:11am | Post# 2

Supply and Demand
The markets are driven by the imbalance of supply & demand as I previously stated. Prices will move down when supply overcomes demand, and prices will move up when demand overcomes supply. Easy as that. But is it really that easy? How can one identify when supply has dried out? We only have a chart at our disposal, we cannot do market research, advertising campaigns and we cannot see order books, so are we wasting our time? Well, not exactly. There are some ways of getting this information from the charts, not all the info but good enough to give us that edge we need in our trading.
Supply will always act as resistance to higher prices, and demand will always act as resistance to lower prices. This is the law of markets, and it is a fact. Sellers are resistance and buyers are support. Knowing how many sellers are present and how many buyers are present will give you valuable information, and will also shed light onto a few of the questions you might have when trading

  1. Why is this support not holding?
  2. Why did price break the EMA50?
  3. There was a double top, but price broke it eventually and moved up?

Real life example
We do not have information to order books, order flow and many other tools needed to correctly analyse the supply and demand in a market. But we can do this with a few methods, and the information is already there on your chart, you just need to see it. Let me give you a real life example of how Supply and Demand is measured when you do not have access to any data at all. The numbers in the example below are not real numbers.

A friend of mine owns an electronic shop. He sells everything ranging from laptops to phones and tempered glass covers. One day he got an offer from a supplier, giving him huge discount on the latest Samsung phone as the supplier was going bankrupt. He actually got the phone so cheap, he could sell it way below market price and still make a decent profit, attracting all customers to himself.

He posted an ad in the newspaper and during his first week he sold over a thousand units. He bought another batch, put out a new ad in the newspaper, and this time around he only sold 150-200 units. He told me that the market is slow, and people already bought up what they needed, there is few buyers left at this price. I told him he was wrong, there must be supply in the market that is affecting you. There must be someone else selling for the same price, or close enough. We started looking around and we found someone that was selling the phone, for the same price he had advertised. He got angry at the competition and was frustrated that the one time he could make a decent profit, someone else is taking his business.

I told him dont be mad, go buy all the phones from the supplier that is left (accumulation). He said I won’t be able to sell it. I told him not to worry and just do what I am telling him to do. He bought all the phones from the supplier and he asked me what to do next. Now I told him we have two options

  1. Wait for the other seller to sell out his stock
  2. Lower prices even more forcing him to match with you

If we chose option number 1, we need to test his supply. We do not know if he has 10 phones or 10 000 phones in his warehouse. We need to put out ads in between and test the supply, if customers come around he is starting to sell out, and we can even raise prices a bit.
If we chose number two, we need to “mark down” prices in order to force him to match you. Then quickly we need to stop selling at this price, overwhelming him with customers, so he can sell out his stock fast and we can raise prices and make a bigger profit.

The financial markets works in the same fashion. We do not have access to data, order flow and other information that is needed to make correct decisions. That is why we need to look how the market is behaving when it is testing that supply.

As we proceed, more and more will make sense and you will have live examples to see how we make sense of supply and demand in the market.
Supply and demand is what drives ANY market, never should you ignore the most important part of trading


zarkon May 13, 2019 7:24am | Post# 3

Interesting.
Thank you

neilsdigest May 13, 2019 8:49am | Post# 4

The most intelligent post on forexfactory... AT LAST someone who knows what he is talking about.

Trouble is people still don't get it and I'm sure this thread won't get many replies. They just don't get it.. and go carry on with their Ma's and pivots etc.

Thanks for a fantastic thread that tells the TRUTH on how the markets and in fact LIFE works.

naviafra May 13, 2019 8:50am | Post# 5

The most intelligent post on forexfactory... AT LAST someone who knows what he is talking about. Trouble is people still don't get it and I'm sure this thread won't get many replies. They just don't get it.. and go carry on with their Ma's and pivots etc. Thanks for a fantastic thread that tells the TRUTH on how the markets and in fact LIFE works.
Wow, never really expected this kinda reaction. Very happy! Thanks bro, appreciate it

heispark May 13, 2019 8:53am | Post# 6

Subscribed!
Thanks.

SkyLaser May 13, 2019 8:55am | Post# 7

Subbed. Look forward to reading, thanks.

gunner1 May 13, 2019 9:36am | Post# 8

Hi,
Agree with the principles of this thread. Supply/Demand governs it all. Period!

naviafra May 13, 2019 9:48am | Post# 9

Homework #1

Let's start this post with a little homework. Look at the three pairs

 

  1. EURUSD
  2. GBPUSD
  3. USDCHF

  1. Use a 1 Hour chart.
  2. Use a bar chart with HLC bars (Not neccessary but might give you some visual advantage)

Look at volume on the London Open Candle/Bar. Look at the closing price, if it's a up-bar/bull-candle does it close in the middle or low? If it's a down-bar/bear-candle does it close in the middle or high? Look at the reactions, does it lead to higher prices or lower prices? How does it react? Where is price when this happens? Is price closing in on a previous top or bottom?

Do the EXACT same thing for the New York open Candle/Bar.

Write down any relation you can find or discover. Tell me your thoughts and observations. Look at, lets say, 30 sessions back and see if you can find anything that catches your interest.

Write down all questions and observations, reply to them here in this thread.

The reason for this "homework" will not be shared with you yet, all good things take time!


heispark May 13, 2019 10:25am | Post# 10

Homework #1 Let's start this post with a little homework. Look at the three pairs EURUSD GBPUSD USDCHF Use a 1 Hour chart. Use a bar chart with HLC bars (Not neccessary but might give you some visual advantage) Look at volume on the London Open Candle/Bar. Look at the closing price, if it's a up-bar/bull-candle does it close in the middle or low? If it's a down-bar/bear-candle does it close in the middle or high? Look at the reactions, does it lead to higher prices or lower prices? How does it react? Where is price when this happens? Is price closing...
Sorry, I don't find any meaningful patterns.....

naviafra May 13, 2019 10:28am | Post# 11

{quote} Sorry, I don't find any meaningful patterns.....
That's okay. Don't worry about it. That is why I started this thread. We will sort it all out. Let's wait and see if others wants to join

cesafroyalh May 13, 2019 11:18am | Post# 12

your friend was right, people already bought up what they needed, next step is searching for a new markets

mansan May 13, 2019 11:29am | Post# 13

Subscribed
Seems i can learn a lot from you

Darastonius May 13, 2019 11:43am | Post# 14

I started with VSA too, but I'm a pure Wyckoffian for about 3 years now. I'm very curious about which way will you take this thread. Subscribed

RoyPK May 13, 2019 11:45am | Post# 15

Subscribed

Anusragger May 13, 2019 11:49am | Post# 16

The most intelligent post on forexfactory... AT LAST someone who knows what he is talking about. Trouble is people still don't get it and I'm sure this thread won't get many replies. They just don't get it.. and go carry on with their Ma's and pivots etc. Thanks for a fantastic thread that tells the TRUTH on how the markets and in fact LIFE works.
Please, no wining.

Botan626 May 13, 2019 11:57am | Post# 17

{quote} Please, no wining.
I'll recommend you to block him right away, naviafra.

naviafra May 13, 2019 12:41pm | Post# 18

My plan with this thread is to be pure educational. I am not here to share some strategy or trading plan. You will use this information as you please and if you find it useful, use it, otherwise just trash it.

Being rude or offensive against other people here does not really belong here. This is trading, and there is certainly over a million opinions about the market, how price moves and how to trade. I respect all million opinions, but lets try to keep it civil and respect eachother =)

I am not going to block anyone at this moment, but try not to offend anyone. We are all here to learn and that's it!

Anusragger May 13, 2019 1:15pm | Post# 19

{quote} I'll recommend you to block him right away, naviafra.
How are your multiple FF accounts doing?

DavidRP May 13, 2019 1:16pm | Post# 20

My plan with this thread is to be pure educational. I am not here to share some strategy or trading plan. You will use this information as you please and if you find it useful, use it, otherwise just trash it. Being rude or offensive against other people here does not really belong here. This is trading, and there is certainly over a million opinions about the market, how price moves and how to trade. I respect all million opinions, but lets try to keep it civil and respect eachother =) I am not going to block anyone at this moment, but try not...
How do you measure volume in fx?


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