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vsa with Malcolm

  • #33,981
  • Edited 3:58am Sep 12, 2021 3:45am | Edited 3:58am
Quoting Paulscaff1
Interesting chats from you guys. RickM's comments regarding his previous experiences using "standard" VSA got me thinking.... Ive noticed that forex and forex education has become alot more mainstream over the past 2-3 years. Prop firms seem to be a big deal now, you no longer have to start off with £1000 and attempt to compound your account over years and years, you can take £500-£800 and buy yourself an evaluation for a 200k account, and there is pretty much no ceiling now as to how much funds you can have to trade with. ( I know this cos ive...
Hi Paul

I will just make one comment then disapear into the sunset because I changed my view 15 years ago on VSA - for the better as well.

If we see a large bearish candle that shows a large tick value on a spot FXchart, I used to think in was probably Buyers entering the battle to combat the sellers - then creating a bullish move the other way soon after.
Whats the problem with that, it makes sense doesn't it. A big candle is a large war with the new army normally winning the battle because they are less combat fatigued.

But the truth is there are 4 possibilities.
A.. Strong selling then some large long orders coming in to stop the bearish move.
B.. Strong selling to exhaustion of Bids, and I mean zero buyers in the market within spread distance.
C.. Strong selling with long order blocks to halt movement but lack intend to create a bullish market.
D.. Strong selling with major long order blocks to creating an Ask imbalance of more than 3 to 1 - a bullish trend.

Which one is it?

Without knowing, its guess work and I don't feel comforable with that position - I like many professionals need to see the delta.

Cheers
Trading thin liquidity at the boundary of the charts
  • #33,982
  • Sep 12, 2021 4:36am Sep 12, 2021 4:36am
Quoting RickM
{quote} Hi Paul I will just make one comment then disapear into the sunset because I changed my view 15 years ago on VSA - for the better as well. If we see a large bearish candle that shows a large tick value on a spot FXchart, I used to think in was probably Buyers entering the battle to combat the sellers - then creating a bullish move the other way soon after. Whats the problem with that, it makes sense doesn't it. A big candle is a large war with the new army normally winning the battle because they are less combat fatigued. But the truth is...
i see what you did there mate.

What you say makes sense, and does answer most of the comments I put across.

It also potentially gives a conclusion as to why the thread maybe died off over the years, and also why VSA doesnt seem as "popular" as other methodologies, and not many talk about it.

My head for now is stuck down the rabbit hole, so Im just gona have to see how it plays out over time.

Appreciate you taking the time to post, and its a good reality check when a pro comments.

All the best bud, cheers
  • #33,983
  • Edited 1:46pm Sep 12, 2021 1:17pm | Edited 1:46pm
Quoting Paulscaff1
{quote} i see what you did there mate. What you say makes sense, and does answer most of the comments I put across. It also potentially gives a conclusion as to why the thread maybe died off over the years, and also why VSA doesnt seem as "popular" as other methodologies, and not many talk about it. My head for now is stuck down the rabbit hole, so Im just gona have to see how it plays out over time. Appreciate you taking the time to post, and its a good reality check when a pro comments. All the best bud, cheers
Paulscaff1, if you want to take a deeper dive into VSA, this is who I did it with: smartvsa DOT com . As mentioned in my previous post, I got overwhelmed and lost looking at it. Maybe it was because sometimes what happened made sense and sometimes what happened didn't make sense...not consistent for me or just my trading personality didn't mesh with it. When I found Supply/Demand, and coupled it with what I already knew about sentiment (emotions lead the market), and decided to stop jumping around from system to system (like I had done for 12+ years); that is when things took off for me. We're always learning and I like vsa for the candle concepts and pinpointing areas for potential changes in direction, but ultimately Supply/Demand within price action with sentiment, and entering trades during the high volume times of the day, is very consistent for me (85% winning trade ratio - and my human errors are the other 15%).
Being able to see bullish/bearish diversion and following sentiment when price comes into a supply/demand box or makes a new box, goes away from it and then comes back and taps it for an entry where the big $ is defending their new position and accumulating more lots is where the most fun is had.

Ultimately, I think traders who become consistent at winning take the parts their mind understands of the different trading concepts/systems they've studied and group them together into their own trading system. You are well on your way. Start by finding just 1 set up that happens over and over and consistently makes money and just trade that over and over. You only need 1 trade per day making 20 pips if you're compounding your lot size as your account grows to double your account each month using 2% risk so no one even needs to trade 20 different forex pairs, etc. Keep it simple. RickM has some great insight into what the big $ is doing so is definitely worth watching and learning from.

You know you're dreaming, thinking and living trading all the time when:
When my wife says I’ve overbought something on sale (trading at a discount) in the store, I just tell her, “No, honey, it’s oversold so I’m just accumulating.”
  • #33,984
  • Sep 12, 2021 2:33pm Sep 12, 2021 2:33pm
Quoting RickM
I used to think in was probably Buyers entering the battle to combat the sellers - then creating a bullish move the other way soon after. emphasis added
RickM made the commit, but the response isn't directed at him specifically.

This is one of the largest reasons that people who look at Volume Spread Analysis (VSA) fail.

Traders see a widespread DOWN bar on Ultra High volume (tick or actual) and they start looking to get long. They reason, correctly, that Strength when it appears, usually appears on DOWN bars. Especially when the next bar is UP.

They ignore the Current TREND and they don't wait to see any change in behavior.

Take a look at the first chart.

Attached Image (click to enlarge)
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The widespread DOWN bar on Ultra High Volume appears. The close is off the lows and the next interval confirms the strength. Strength means that BUYERS entered the market. Of course, for any trade to occur, there must be both a buyer and a seller. But VSA would state that BUYERS entered or began their buying campaign. This makes perfect sense. What doesn't make sense is trying to get long when price is in a downtrend. How do we know? Simply because price is below the 20 period EMA.


Once this bar has been identified, a useful technique is to FIB this bar to create what the TradeGuider team calls "trigger numbers". When you FIB this High Volume Zone (HVZ) things become clear.

Attached Image (click to enlarge)
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You don't want to be long if price is closing below HB (50%). Except for the interval immediately following the High volume bar, the other bars that do close above HB turn out to be No Demand.

The second No Demand confirms and is followed by an Up Thrust. No Demands and Up Thrusts in a downtrend. That's what the VSAer is looking for.

So we have the option of getting short with the trend. "in hindsight" one might say, strength entered but only managed to move price sideways. I content that could have been seen in real-time, but just as importantly price never closed above the MA and you would have absolutely seen that at the time.

Therefore, you are either taking shorts or waiting to get long after a change in behavior. What you don't do is get long based simply on the appearance of Ulta High Volume.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #33,985
  • Sep 12, 2021 3:02pm Sep 12, 2021 3:02pm
Here is the 15 minute view of the same data
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  • #33,986
  • Sep 12, 2021 4:07pm Sep 12, 2021 4:07pm
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Totally agree with Hidden gaps post, I'd like to add some extra perception on these bars mainly the bar (2) after the the seling climax (1)

Bar 2 closes at the top but the next bar is down, there is no follow through, the following bar after bar number 2 is down confirming the weakness, you then end up with the no demands and upthrusts.

If you were short before the selling climax and the selling climax came in you could close your trade off untill you get the reconfirmation that the market is still weak and sell again.

I hope this adds to what has been put forward by Hidden gap, and doesn't confuse.

Thank you
  • #33,987
  • Sep 12, 2021 5:21pm Sep 12, 2021 5:21pm
Quoting SyntaxError
Here is the 15 minute view of the same data {image}
Seems we're all after the same trade entry...just arrive at the trade by different means.
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  • #33,988
  • Sep 12, 2021 8:25pm Sep 12, 2021 8:25pm
Quoting attique08
{quote} Q1: looking at even M5, i'll not take 1 as as weakness; if that was weakness why next 2 bars closed up; secondly there was range in immediate background; Q2: bar 5 is technically a test; no supply bar is at 4 Q3: hidden test bar is an upbar with lower low so bar 5 is just a regular test Q4: if you look at bar followed by bar 5 that's another test followed by upbar closing on the high and above the high of test which confirms the overall strength in background at bar 3 and 4; trade at confirmation of test after bar 5 is the way to enter the...
Glad to see a post from you, hope to see more.

Something I wanted to point out is I disagree with bar 3.

On bar 2, you have an obvious SoS, highest volume of the day and on the lows of the day. After you've seen strength like this, you want to see increased spread and volume on up bars and decreasing spread and volume on down bars. As price pushes above the highs of bar 2 you see a wide spread down bar on high volume this isn't healthy at all.

At this point then only way I would consider longs with this pair is after price pushes up and above bar 3.
  • #33,989
  • Sep 12, 2021 8:52pm Sep 12, 2021 8:52pm
Quoting RickM
{quote} Hi Paul I will just make one comment then disapear into the sunset because I changed my view 15 years ago on VSA - for the better as well. If we see a large bearish candle that shows a large tick value on a spot FXchart, I used to think in was probably Buyers entering the battle to combat the sellers - then creating a bullish move the other way soon after. Whats the problem with that, it makes sense doesn't it. A big candle is a large war with the new army normally winning the battle because they are less combat fatigued. But the truth is...
I'm not sure you understand VSA. I'm not saying you don't understand volume as there are different ways to trade volume, as this thread as clearly proven.

The most concerning part of your post is emphasis on the large bearish candle with climatic volume. In terms of VSA we do look for buyers on down bars, but once we see climatic volume we aren't rushing out to buy the instrument. When climatic volume appears, we start watching how does price react to the potential strength, we watch to see where are the sellers and how is price reacting to them as well. Climatic volume is the point when we become interested and really start studying the pair, its not a magic signal to start trading.

IIRC your first post on this thread you were going on about how you take 60-70 trades a day, I'm not saying thats wrong for you, but someone who needs to make that many trades per day, VSA flatout isn't going to fit into that mindset. I hope for the best for you and that your trading continues in the right direction.
  • #33,990
  • Edited 9:20pm Sep 12, 2021 9:06pm | Edited 9:20pm
Quoting Anotan
{quote} I'm not sure you understand VSA. I'm not saying you don't understand volume as there are different ways to trade volume, as this thread as clearly proven. The most concerning part of your post is emphasis on the large bearish candle with climatic volume. In terms of VSA we do look for buyers on down bars, but once we see climatic volume we aren't rushing out to buy the instrument. When climatic volume appears, we start watching how does price react to the potential strength, we watch to see where are the sellers and how is price reacting...
Hi Anotan

I am a liquidity trader not a VSA trader so it’s best I don’t comment too much more. My comments were related to real live delta data and how it moved price in factual terms.
That just means I hunt liquidity imbalances when Ask or bids flip to the other side.
Live Data enables me to see INSIDE climatic candles and see what’s occurring at this very instant. That is very powerful and explains how I can find 50+ trades a evening on only a couple of pairs trading the M1 timeframe only.

Some of the rules of VSA cross over to VDA and some don’t.

I wish you guys all the best, safe pips


Cheers
Trading thin liquidity at the boundary of the charts
  • #33,991
  • Sep 12, 2021 10:08pm Sep 12, 2021 10:08pm
Quoting Anotan
{quote} Glad to see a post from you, hope to see more. Something I wanted to point out is I disagree with bar 3. On bar 2, you have an obvious SoS, highest volume of the day and on the lows of the day. After you've seen strength like this, you want to see increased spread and volume on up bars and decreasing spread and volume on down bars. As price pushes above the highs of bar 2 you see a wide spread down bar on high volume this isn't healthy at all. At this point then only way I would consider longs with this pair is after price pushes up and...
thank you Anotan.

Regarding bar 3, i would have definitely avoided calling it strength-incoming if:

  1. it has closed on its low or in lower quarter of bar spread
  2. no strength in background

Now waiting for reaction resulted in another downbar with high volume closer to ultra high activity on bar 3 which couldn't even clear the low of bar 3. I interpret as if so much effort (volume) has been done here on these bars 3 (closing in mid) & 4 (closing off the the low), why bar 5 cleared the lows of bar 3 & 4, made a lowest low of the day but closed back in recent HVZ as upbar and all of this activity is happening in EU+US overlap session. So looking at effort vs result in the most active session i interpreted it as strength-incoming and favored it as a trade setup as potential sustained buying.

  • #33,992
  • Sep 12, 2021 10:24pm Sep 12, 2021 10:24pm
nice little test into previous strength, a little risky buying into resistance but a strong 2 bar gave me some confidence.
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  • #33,993
  • Sep 13, 2021 12:00am Sep 13, 2021 12:00am
Quoting Anotan
nice little test into previous strength, a little risky buying into resistance but a strong 2 bar gave me some confidence. {image}
Price ended up reversing on me and I'm completely flat on the pair, first batch of order that I took around 86.69 were taken out at BE, the positions taken higher took a loss. All in all about average of 5 lost on the entire position.

Not sure what will happen from here, I'll revisit the pair at 86.51.
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  • #33,994
  • Sep 13, 2021 1:03am Sep 13, 2021 1:03am
Quoting Anotan
{quote} Price ended up reversing on me and I'm completely flat on the pair, first batch of order that I took around 86.69 were taken out at BE, the positions taken higher took a loss. All in all about average of 5 lost on the entire position. Not sure what will happen from here, I'll revisit the pair at 86.51. {image}
Not the cleanest trade.

Yellow bar is strength on M15, price dropped back down into the previous strength and then pushed up nicely. My first trade I was expecting a quick push through resistance and obviously that didn't happen.
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  • #33,995
  • Sep 13, 2021 1:28am Sep 13, 2021 1:28am
Quoting Anotan
{quote} Price ended up reversing on me and I'm completely flat on the pair, first batch of order that I took around 86.69 were taken out at BE, the positions taken higher took a loss. All in all about average of 5 lost on the entire position. Not sure what will happen from here, I'll revisit the pair at 86.51. {image}
Was your original SL at the low of the 2br mate? Looks like its running ok now. Or were you looking to exit at the first SOW?
  • #33,996
  • Sep 13, 2021 1:31am Sep 13, 2021 1:31am
Price found some supply at London HVC from Sep 8th, I didn't expect this area to be a problem but for whatever reason sellers stepped in. I closed a few trades to cover my losses from the first trade.

I'll set some alerts, but I'm done baby sitting this trade.
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  • #33,997
  • Sep 13, 2021 1:43am Sep 13, 2021 1:43am
Quoting Paulscaff1
{quote} Was your original SL at the low of the 2br mate? Looks like its running ok now. Or were you looking to exit at the first SOW?
If you look at the M15 chart I posted, my original stop was just at the tip of the yellow bar.. It was the M15 at 5:00. I don't have a specific exit in mind, taking this trade I was looking for price to reach Friday's HVC at 86.98 then wait and see if supply hits the market or if price marks through.

I didn't do a great job of explaining why the bar in yellow is important, I just kinda showed the end of the thought process. We see that no sellers are interested in lower prices at 86.51, then on M15 you see a healthy up bar pushing up. The bar I marked in yellow rejected the close of that healthy up bar. Which for me shows that buyers are active and in control.
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  • #33,998
  • Sep 13, 2021 1:52am Sep 13, 2021 1:52am
Quoting Anotan
{quote} If you look at the M15 chart I posted, my original stop was just at the tip of the yellow bar.. It was the M15 at 5:00. I don't have a specific exit in mind, taking this trade I was looking for price to reach Friday's HVC at 86.98 then wait and see if supply hits the market or if price marks through. I didn't do a great job of explaining why the bar in yellow is important, I just kinda showed the end of the thought process. We see that no sellers are interested in lower prices at 86.51, then on M15 you see a healthy up bar pushing up. The...
Ahh I get you now mate
  • #33,999
  • Sep 13, 2021 2:29am Sep 13, 2021 2:29am
Closed this trade completely down, price is struggling a bit off the Sep 8th HVC from London.

Not really sure why price is having a hard time with this level , I thought it would be stronger after it pushed up through the 86.68 which is the close off the climatic bar from Sep 8th. No sense in fighting the market, 3.5% gain seems good enough.
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  • #34,000
  • Sep 13, 2021 5:25am Sep 13, 2021 5:25am
Quoting Anotan
Closed this trade completely down, price is struggling a bit off the Sep 8th HVC from London. Not really sure why price is having a hard time with this level , I thought it would be stronger after it pushed up through the 86.68 which is the close off the climatic bar from Sep 8th. No sense in fighting the market, 3.5% gain seems good enough. {image}
I'm still in this trade. Still feel price will go up after some struggle, but tightening my stop loss a little.
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