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Volume Leads Price - VSA and Wyckoff

  • #61
  • May 14, 2019 6:16am May 14, 2019 6:16am
Quoting NewSim
{quote} Hmm can't say I'm convinced, it sounds a lot like confirmation bias to me. Did you take this trade for real or is it just an example? Do you keep stats that confirm that filtering by volume is a good idea?
No I didn't take the trade, just took an example which seemed very easy to explain.

I do not keep stats, and backtesting really does not give much but I have been trading this way profitably for some time. Of course, what works for me might not work for other. This thread is really not to share any strategy, more to share my knowledge and perspective on how supply and demand in Forex is analysed (by me)

So, hopefully, with this thread I will be able to convince those who do not see supply & demand as useful and at the same time learn something new from other with more experience and understanding than me.
There is no edge in trading. Your edge is understanding risk
  • #62
  • May 14, 2019 6:49am May 14, 2019 6:49am
So the lopsidedness of free market activity.
The heavier the lopsidedness is, the more grounded and speedier the move. Take a gander at an outline (diregard volume for the present) and take a gander at zones where value bobs and alters course VERY rapidly. This is region where the irregularity was solid.
Take a gander at another region where cost unites a few, and after that skips. Here, we had a more fragile lopsidedness.
See continuation moves, where cost completes a brisk pullback for a bar or two and after that proceeds = solid awkwardness
See contination moves, where value stops, solidifies a few, at that point break and proceeds = more fragile awkwardness
Presently look what happens when cost returns to similar regions and recognize the contrasts between the flimsier zones and the more grounded ones.
Presently include the volume and shutting costs (value conduct) into this condition as a blended factor
  • #63
  • May 14, 2019 6:50am May 14, 2019 6:50am
Getting a lot of private messages about the indicator I use on Tradingview for Volume and if there is an alternative for MT4/MT5.

I do not know if there is an alternative for Metatrader but the indicator for Tradingview is found if you search for "VSA" in Tradingview and chose the indicator called

Volume Spread for VSA by hariprasath_
There is no edge in trading. Your edge is understanding risk
  • #64
  • Edited 7:02am May 14, 2019 6:50am | Edited 7:02am
Quoting kadir98
So the lopsidedness of free market activity. The heavier the lopsidedness is, the more grounded and speedier the move. Take a gander at an outline (diregard volume for the present) and take a gander at zones where value bobs and alters course VERY rapidly. This is region where the irregularity was solid. Take a gander at another region where cost unites a few, and after that skips. Here, we had a more fragile lopsidedness. See continuation moves, where cost completes a brisk pullback for a bar or two and after that proceeds = solid awkwardness See...
Im sorry my friend, I can't understand what you said. I am not a native english speaker so if you could please rephrase yourself I would be happy to answer
There is no edge in trading. Your edge is understanding risk
  • #65
  • May 14, 2019 7:04am May 14, 2019 7:04am
Quoting naviafra
Getting a lot of private messages about the indicator I use on Tradingview for Volume and if there is an alternative for MT4/MT5. I do not know if there is an alternative for Metatrader but the indicator for Tradingview is found if you search for "VSA" in Tradingview and chose the indicator called Volume Spread for VSA by hariprasath_
The Hariprasath volume indicator is a nice variation of the TradingView volume indicator by the looks of things. The closest thing on MT4 (but different design) is the Better Volume indicator I think. Put them on a chart alongside each other and you can see the similarities and differences.
  • #66
  • May 14, 2019 7:25am May 14, 2019 7:25am
Another chart example

Let me explain how I was thinking and I will try to be clear in my explanation.

1. Here we have a supply zone. Price consolidates for some time and it moves lower.
2. Here we have MASSIVE buying coming in, pushing prices as high the previous supply zone on point 1. The supply and demand here is in imbalance
3. We definately see some selling here. But it doesnt look like it is enough right? Price really not moving at all. The supply and demand here is balanced
4. Price moves up again to a point where it is imbalanced again resulting in a quick drop in price. But the drop is still not very significant but we are ready to short the market on a retest of this area
5. Price bounces up quickly again giving us an imbalanced area once again at point 5
6. We have a short stalling of price action and then a bullish result which adds to the strength and yet again we see the imbalance. Any plans for short we had before is now invalidated. Market is strong
7. Selling appears but it is definately balanced as price moves down reluctantly. Now we are looking for a long opportunity instead. We have strength in the background and all the selling seems to be very balanced at this moment (notice how market conditions change all the time very quickly)
8. Here we are dipping down into the area from point 5 and 6 and giving us a shakeout signal on high volume, bar is back up and closing high. This catches all stop loss order placed below here. Adds to our strength and now we can go long (i actually took this trade)
9. First signs of weakness appear here. Selling comes in but it doesnt manage to push price very low, we can notice some imbalance here but nothing out of the ordinary
10. Price moves back to point 10, a decent move, not to quick and not to slow. Some more selling appear here.
11. Selling pushes price down to point 11 where price stalls and consolidates, no buying to match here. Balanced now. Now we are looking to short the market.
12. Price goes up quicky with a bearish response indicating the presence of supply. We are short (i took this trade aswell)

After we are short, we need to look at response from the market. Buying is active in the lows, but it is not pushing price higher with any force. It stops and give us some consolidation indicating some balance now present. Stop loss is being moved above this area.

Did this explanation make any sense?

EDIT: Forgot to say that what adds to our weakness in the last short entry is the stop loss hunt that occured at point 12
Attached Image (click to enlarge)
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There is no edge in trading. Your edge is understanding risk
  • #67
  • May 14, 2019 9:56am May 14, 2019 9:56am
Quoting naviafra
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...
I love this!!! Naviafra
this indeed is the truth!
Wisdom dwells with prudence discovering the knowledge of witty inventions
D-kings lengend trades All Time Pips: 3,675
  • #68
  • May 14, 2019 1:06pm May 14, 2019 1:06pm
Quoting naviafra
{quote} Im sorry my friend, I can't understand what you said. I am not a native english speaker so if you could please rephrase yourself I would be happy to answer
You write very good English for a non-native English speaker. Well done.
when you can accurately predict the future, you leave nothing to chance.
  • #69
  • May 14, 2019 1:10pm May 14, 2019 1:10pm
Quoting zizoo
{quote} You write very good English for a non-native English speaker. Well done.
I noticed that as well.
Really impressed compared to my poor English skills.
Cheers
  • #70
  • May 14, 2019 1:35pm May 14, 2019 1:35pm
Quoting naviafra
Another chart example Let me explain how I was thinking and I will try to be clear in my explanation. 1. Here we have a supply zone. Price consolidates for some time and it moves lower. 2. Here we have MASSIVE buying coming in, pushing prices as high the previous supply zone on point 1. The supply and demand here is in imbalance 3. We definately see some selling here. But it doesnt look like it is enough right? Price really not moving at all. The supply and demand here is balanced 4. Price moves up again to a point where it is imbalanced again resulting...
OK man this is great but where is our strategy to enter a trade in this scenario
can you explain where to enter buy and sell and stop loss and take profit
how we know if it the price will go up or down
please explain your rules
thank you
  • #71
  • May 14, 2019 1:44pm May 14, 2019 1:44pm
Quoting MhMd3eZZ
{quote} OK man this is great but where is our strategy to enter a trade in this scenario can you explain where to enter buy and sell and stop loss and take profit how we know if it the price will go up or down please explain your rules thank you
I guess he stated some pages ago that this thread is not about strategy mentoring but just sharing his knowledge in relation to the thread title.
The end user will choose how and when to use it or even not using at all.
Cheers
  • #72
  • May 15, 2019 3:55am May 15, 2019 3:55am
I created this indicator that searches for SOT and SOW
It would be interesting to put some statistics behind the statement "Volume leads price"

Attached Image (click to enlarge)
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  • #73
  • May 15, 2019 5:17am May 15, 2019 5:17am
So to recap, Supply and Demand moves the markets, any market. When something is to expensive to find buyers price will go down, and when that same thing is looking cheap buyers will come and price will move up until it balances out. Now where does volume come into play? How does volume have anything to do with this? Most of the time, volume will make no sense. But sometimes, it actually does make sense.

Accumulation & Distribution

Markets are traded on different timeframes. What looks like a top on the 1HR chart might be low enough prices on the higher timeframes. We use volume to guess if price is

 

  1. Accumulating
  2. Distributing
  3. Causing imbalance (long or short)

Accumulation

Accumulation is when large orders of an instrument are being bought. Market makers cannot fill all their orders at one price level as the orders are usually to big to be filled by the retail traders. They need to accumulate on different levels. This might be in a top, where the retail trader is looking to short or it might be in a bottom or it might be somewhere else on the chart that might not make sense to you.

Distribution

This is the exact opposite of accumulation. I do not think I need to go into detail on this one, as it is litteraly the opposite of accumulation.

Effort Vs. Result
Whenever there is an effort to achieve something, there should be a result. Remember this as this is important. So whenever we see effort WITHOUT result, things become very interesting for us. This is where we ask ourself, the failed effort (high volume/activity) must have had reasoning behind it. We then come to the conclusion of that it might be one of the following actions taking place

 

  1. Price might be accumulating at a top (where short orders will fill market makers buy orders)
  2. Price might be distributing at a bottom (where long orders will fill market makers short orders)


Let's say price comes down in a downtrend, bounces back up pretty violently (imbalance of supply and demand at the lows where buyers hugely outnumber sellers) price moves up (retracement of the down move) but on the top it says HEAVY volume consolidation.

Obviously there is an effort to do something here, and since it is a downtrend, and this being a retracement, the massive volume must contain a lot of selling. The activity (volume) is high but price is really not going anywhere. Why? If retail traders are selling and institutional traders are selling, why the hell is price not moving? Well, probably because it is accumulating.

Accumulation and distribution can occur in ANY timeframe. Combine this with the forces of supply and demand and you will be able to see more sense in the markets.

Look at the picture example.

Attached Image (click to enlarge)
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There is no edge in trading. Your edge is understanding risk
  • #74
  • May 15, 2019 5:29am May 15, 2019 5:29am
This will create a skeptical view of the markets. Because a very bold statement here would be

If price is consolidating on high volume where the average Joe (regular trader) would see a buy opportunity this might be distribution.
- If market makers where buying where YOU would buy, then everybody would be buying and price would go up, not consolidate

If price is consolidating on high volume where the average Joe would see a sell oppurtunity, this might be accumulation
- If market makers where selling where YOU sould sell, then everybody would be selling and price would fall, not consolidate

This will create a skeptical view on a market where you once saw harmony, symmetri and clear patterns to follow. Well, if trading was really that easy 90% wouldn't lose money.

So, this leads to the thinking as previously said "If market makers want to sell large blocks of orders, they probably would be best doing so where everybody is buying"

Attach this thought process to volume and the forces of supply and demand and soon more will make sense.

If you see high volume consolidation at areas where the average Joe is seeing buy orders and you see a smaller move up followed by a huge imbalance of supply and demand causing prices to fall, this adds to the weakness of the market.

The reverse goes for

if you see high volume consolidation at areas where the average Joe is seeing sell orders and you see a smaller move down followed by a huge imbalance of supply and demand causing prices to rise, this adds to the strength of that market.
There is no edge in trading. Your edge is understanding risk
  • #75
  • May 15, 2019 5:34am May 15, 2019 5:34am
Attached Image (click to enlarge)
Click to Enlarge Name: stoploss.png Size: 330 KB
There is no edge in trading. Your edge is understanding risk
  • #76
  • May 15, 2019 6:14am May 15, 2019 6:14am
Quoting naviafra
{quote} No I didn't take the trade, just took an example which seemed very easy to explain. I do not keep stats, and backtesting really does not give much but I have been trading this way profitably for some time. Of course, what works for me might not work for other. This thread is really not to share any strategy, more to share my knowledge and perspective on how supply and demand in Forex is analysed (by me) So, hopefully, with this thread I will be able to convince those who do not see supply & demand as useful and at the same time learn something...
without backtesting, or analysis of previous patterns; how do we know if this works?
  • #77
  • May 15, 2019 6:17am May 15, 2019 6:17am
Quoting alphadude
{quote} without backtesting, or analysis of previous patterns; how do we know if this works?
I do backtest everything, but what I mean is that what happened in the past, has no effect on what can happen in the future. The conditions and variables are all different.
There is no edge in trading. Your edge is understanding risk
  • #78
  • May 15, 2019 8:28am May 15, 2019 8:28am
Great someone who knows about volume!!

What are the best indicators you have used or tested for volume? i am currently using the WAE on MT5 and sometimes the OBV indicator?
  • #79
  • May 15, 2019 8:54am May 15, 2019 8:54am
  •  WSoar
  • | Joined Jun 2018 | Status: It's a businessNot "Get rich quick" | 56 Posts
Quoting AmmaBoss
{quote} Big institutions can not just enter a sell trade and instantly find a buyer. This simple fact alone means that volume may have it uses as it can be used to determine where individuals ( retailers ) orders are being absorbed.
You are missing one simple thing-retail orders never reach the interbank market.So "big institutions" doesn't care about your 0.01 lot order on a 1:500 leveraged account.
Stop thinking that some "evil power" is hunting your stops or whatever,recent data shows that there is approximately 4-7 billion daily turnover in market, now tell me how much from this turnover is coming from retailers? You already know...
==
  • #80
  • May 15, 2019 9:19am May 15, 2019 9:19am
Quoting WSoar
{quote} You are missing one simple thing-retail orders never reach the interbank market.So "big institutions" doesn't care about your 0.01 lot order on a 1:500 leveraged account. Stop thinking that some "evil power" is hunting your stops or whatever,recent data shows that there is approximately 4-7 billion daily turnover in market, now tell me how much from this turnover is coming from retailers? You already know...
Your probably right.

You gave me a good reason to quit posting here, since I am sharing useless information.

So, you can continue this thread.

Probably should start by explaining your view of the market and not just say that I am wrong. I will follow this thread and your arguments with open interest
There is no edge in trading. Your edge is understanding risk
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